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Trinity Exploration & Production plc

("Trinity" or "the Group" or "the Company")

Q1 2021 Operational Update

Strong Production and Cash Generation

Good Progress on New Projects

Trinity Exploration & Production plc (AIM: TRIN), the independent E&P company focused on Trinidad and Tobago, today provides an update on its operations for the three-month period ended 31 March 2021 ("Q1 2021" or "the period").

Q1 2021 Summary

Production levels were resilient over the period with volumes averaging 3,107 bopd (Q4 2020: 3,202 bopd). This is a result of Trinity's pro-active approach to protecting base production, and places Trinity as a clear leader in the region.

As a result of the continued strong operating performance, the Group's unaudited cash balances remained robust at US$20.0 million as at 31 March 2021 (US$20.2 million (unaudited) as at 31 December 2020) despite increased investment in growth initiatives occurring in Q1 2021.

The Company's priority over the quarter, from an operational standpoint, has been to progress the automation and digitalisation of our core production business. The development of our proprietary Trinity Operations Management System (or "TOMS"), which measures and collates our critical production data, is key to enabling the Company to further improve our core production, operational efficiency and profitability metrics and will greatly enhance our ability to expand the business through leveraging that competitive advantage. In parallel to the push on automation, our expanded subsurface team has now begun to interpret the 3D seismic data set covering our onshore acreage, the first time that data interpretation has taken place in such detail in any of these lease areas. The team's preliminary review has already provided a new perspective of the basin, revealing additional potential and deepening our understanding of the petroleum system. We are already seeing an expanded opportunity set which can be matured for drilling within our onshore operations, and believe the potential benefits could be transformational for Trinity.

Looking to the future, we continue to work in the Jubilee data room on the offshore West Coast opportunity and we have recently learnt that we have also been short listed for the North West District ("NWD") onshore exploration bid round from Heritage, the state oil company. We are continuing to jointly evaluate both of these opportunities alongside Cairn Energy plc.

Our Echo platform development off the east coast (formerly TGAL) also progresses, with the Field Development Plan ("FDP") nearing completion for submission to the Ministry of Energy and Energy Industries in the coming weeks. Work has recently started on the onshore tank farm engineering upgrades and the pipeline shore crossing engineering, both using international contractors.

In addition, we continue to actively pursue microLNG and renewables projects with the NGC (National Gas Company of Trinidad & Tobago) to contribute towards energy transition in Trinidad and, potentially, in the wider Caribbean and Latin America.

Bruce Dingwall, CBE, Executive Chairman of Trinity, commented: "In addition to our strong core production operations, where our performance has bucked the trend, we have a number of exciting opportunities to develop and radically enhance our portfolio. We are strongly positioned to grow on a number of fronts over the next 6-12 months, from initiatives both within the current business and from new projects that could be brought into the portfolio.  We remain highly focused on scaling our business and generating increased returns."

Q1 2021 Operational Highlights

·    7% year-on-year reduction in Group average production volumes to 3,107 bopd (Q1 2020: 3,347 bopd), representing a modest 3% quarter-on-quarter drop (Q4 2020: 3,202 bopd).¹

·    No new drilling took place in Q1 2021 but 1 recompletion ("RCPs") (Q4 2020: 4) and 22 workovers (Q4 2020: 31) were completed during the period, with swabbing continuing across the Onshore and West Coast assets.

·   Continued deployment of Supervisory, Control and Data Acquisition ("SCADA") platforms with acceleration of roll-out to be implemented in Q2 2021 following the arrival of 23 additional units in March 2021.

·    Production volumes for the remainder of 2021 will depend on oil price and general market conditions supporting the economic and technical (based on onshore seismic interpretation) case for the resumption of new drilling activity.

·     Net average production for 2021 is expected to be 2,900 - 3,100 bopd (before the potential drilling of new wells and/or acquisitions) (2020: 3,226 bopd).

Q1 2021 Financial Highlights

·    Average realisation of US$52.3/bbl for Q1 (Q1 2020: US$46.3/bbl).  As a result, whilst no Supplemental Petroleum Taxes ("SPT") will be payable with respect to onshore production, SPT of c.US$0.7 million will be payable in Q2 with respect to offshore production.

·    Cash balance of US$20.0 million (unaudited) as at 31 March 2021. Q1 2021 cash balances reflect cash outflows relating to the onshore seismic acquisition at the end of 2020, capex of c.US$1.2 million and annual payments (such as insurance) which arise in Q1 of the financial year.

·    Focus on cost controls helped offset the impact of lower production levels resulting in an average operating break-even of US$25.8/bbl (unaudited) for the period compared to US$24.9/bbl for Q1 2020. 

·     Hedging income totalled US$0.2 million in Q1 2021.

o  The Company took advantage of the increase in oil prices to purchase two new instruments during Q1 offering downside protection for 10,000 bbls/month for H1 2021 and 15,000/month for H2 2021.

o  Additional hedging instruments will be put in place as appropriate.

·    With the focus on investing for growth, the Company is now targeting an average operating break-even (inclusive of hedging income) of c.US$26.0/bbl for FY 2021.

Extension of Lease Operatorship Agreements

Trinity has further extended the term of its Lease Operatorship Agreements ("LOAs") with Heritage for its WD-2, WD-5/6, WD-13 and WD-14 blocks to 30 April 2021.  If completion has not taken place by 30 April 2021 a further temporary extension would be expected. The LOAs were originally set to expire on 31 December 2020 and were previously extended to 31 March 2021. The LOAs remain under existing terms and conditions while Heritage progresses on regulatory approvals regarding new 10 year LOAs for each property.

Outlook

Finalising the 10 year LOA licence extensions, integrating the recently acquired 3D data, the improved oil price outlook and the recently implemented SPT reform (with the onshore SPT trigger now US$75/bbl) give the Company confidence that it will be able to recommence drilling during H2 with a view to further driving value and building on production forecasts for the period.

Having proven its low cost, low risk production model during the past 12 months - and with the Company now benefitting from the recovery in the oil price - the focus is on scaling the business. Increased automation across producing assets combined with a growing opportunity to significantly enhance production in collaboration with key industry partners will be core to Trinity's development for the remainder of the year.  

Notes:

¹ Reporting Quarterly production volumes, for all periods referenced, versus production sales volumes previously as more representative of actual reservoir/operational performance.

Results

The Company will announce full year results for the year ended 31 December 2020 in May 2021.  

Enquiries

For further information please visit www.trinityexploration.com or contact:

About Trinity (www.trinityexploration.com)

Trinity is an independent oil and gas exploration and production company focused solely on Trinidad and Tobago.  Trinity operates producing and development assets both onshore and offshore, in the shallow water West and East Coasts of Trinidad. Trinity's portfolio includes current production, significant near-term production growth opportunities from low risk developments and multiple exploration prospects with the potential to deliver meaningful reserves/resources growth.  The Company operates all of its nine licences and, across all of the Group's assets, management's estimate of 2P reserves as at the end of 2019 was 20.9 mmbbls. Group 2C contingent resources are estimated to be 20.1 mmbbls. The Group's overall 2P plus 2C volumes are therefore 41.1 mmbbls.

Trinity is quoted on the AIM market of the London Stock Exchange under the ticker TRIN.