This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended.  On publication of this announcement via a Regulatory Information Service, this information is considered to be in the public domain.

Trinity Exploration & Production plc

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

Final Results

Continued strong performance with structure in place for dynamic growth strategy

Trinity, the independent E&P company focused on Trinidad and Tobago, announces its final results for the year ended 31 December 2021 ("the Period" or "FY 2021").

Trinity delivered another resilient performance in 2021.  The Group is now positioned to leverage its cash and asset base to drive value and returns - with groundwork laid for near-term resumption of drilling, comprising a combination of high angle and horizontal as well as conventional low angle wells. This will be funded from existing cash resources and is the first phase of an ambitious growth strategy designed to maximise returns.

Highlights

·      Revenues  of USD 66.2 million (2020: USD 44.1 million)

·      Average production of 3,069 bopd (2020: 3,232 bopd)

·      Average price per barrel received increased to USD 60.4/bbl (2020: USD 37.7/bbl)

·      Adjusted EBITDA of USD 19.8 million (2020: USD 12.1 million)

·      Operating Profit* of USD 10.0 million (2020: USD 3.0 million)

·      Sixth consecutive year of sub USD30.0/bbl operating break-even with industry wide cost pressures increasing

·      Cash generated from continuing operations USD 12.6 million (2020: USD 10.3million)

·      Cash flow used in investing activities  USD 13.9 million (2020: USD 6.0 million)

·      Year end cash USD 18.3 million (2020: USD 20.2 million)

·      New 25-year Galeota Licence, Crude Sales Agreement, Joint Operating Agreement, Conversion to 100% Working Interest

·      Lease Operatorship Agreements renewed for 10 years on attractive terms

·      PS-4 acquisition completed - further enhancing Trinity's contiguous acreage

* Before SPT, PT, Impairments and Exceptional Items 

Positioned for Next Growth Phase

·      Dynamic strategy for growth is underpinned by a strong balance sheet and resilient and dependable cash flow

·      Focus on maximising value from existing assets and through acquisitions and partnerships

·      Clearly defined, risk-mitigated strategy to drive returns for shareholders through value growth and the potential to return cash

·      Strengthened Board

o  Additions of Derek Hudson and Kaat Van Hecke further strengthening commercial, operational and wider industry skill sets

·      Creation of Technical Committee

o  Focused on risk-mitigation and assurance of opportunities which can increase scale and optimise returns

o  Resumption of onshore drilling during H2 2022 is the first phase of this scaling up process

·      Commenced planning for ambitious, risk-appropriate exploration programme

o  To test the remaining material prospective onshore resources, using 3D seismic to map leads with potential to be fast-tracked to monetisation

o  Exploring various options for the Galeota asset

Post Period Highlights

·      Continued momentum into Q1 2022

o  Q1 production levels resilient with volumes averaging 3,013 bopd (Q4 2021: 3,103 bopd).  2022 average production will be influenced by the timing and outcomes of the drilling campaign.

o  Cash balance of USD 17.5 million as at 31 March 2022 (unaudited) (USD 18.3 million as at 31 December 2021)  

o  Average realisation of USD 83.1/bbl for Q1 (Q1 2021: USD 52.3/bbl)

o  2022 average production will be influenced by the timing and outcomes of the drilling campaign 

Analyst Briefing

A briefing for Analysts will be held at 14.00 today both in person -- with Chairman Nicholas Clayton and Chief Executive Officer Jeremy Bridglalsingh and via web conference for those who are unable to attend. Analysts wishing to join should contact trinityexploration@walbrookpr.com.

Investor Presentation

The Company will be hosting a presentation through the digital platform Investor Meet Company at 16.00 today. Management will discuss results and the imminent drilling programme as well as longer-term opportunities. An updated investor slide deck will be added to the Company's website later today.

Investors can sign up to Investor Meet Company for free and add to meet Trinity Exploration via the following link https://www.investormeetcompany.com/trinity-exploration-production-plc/register-investor

Jeremy Bridglalsingh, CEO of Trinity, commented: "We are delighted with the Company's performance during 2021 and look forward with confidence. The reinforced technical guidance for the upcoming drilling programme points towards the potential for this to be an inflection point for the Company as we commence the next stage of our growth, and we very much look forward to updating the market with further developments in due course.

"Our ambition is to double production over the next few years, and thereby generate sufficient free cash flow both to fund future growth initiatives and deliver meaningful cash returns for shareholders, and we believe that we now have the structure in place to deliver this challenging target."

Enquiries

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

About Trinity ( www.trinityexploration.com)

Trinity is an independent oil 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 the Group's 2P reserves as at the end of 2021 was 19.73 mmbbls. Group 2C contingent resources are estimated to be 47.22 mmbbls. The Group's overall 2P plus 2C volumes are therefore 66.95 mmbbls.

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

CHAIRMAN'S STATEMENT

It is a privilege to chair Trinity as we emerge from a period of significant change during which management refreshed our strategy and focused the business on clear and deliverable growth opportunities. Our dynamic strategy for growth is underpinned by a strong balance sheet and resilient and dependable cash flow from production - something of a rarity amongst the smaller companies in our sector - and a testament to our strong business model.

I would like to commend our team which has maintained focus, momentum and professionalism throughout a challenging year, allowing us to protect the integrity of existing assets and operate safely to deliver steady production and cash flow. Importantly, this core operating model provides the basis from which we can grow the Company into a leading independent producer of scale both by maximising value from existing assets and through acquisitions and partnerships. We have a clearly defined, risk-mitigated strategy in place and believe that this will drive returns for shareholders through value growth and the potential to return cash.

At time of publishing, the world is in turmoil and we are deeply concerned for those most affected by hostilities in the Ukraine. This global upheaval brings with it a raft of new and different challenges to an industry already coping with the perfect storm of restrictions on working practices imposed by the Covid-19 pandemic, unprecedented volatility in commodity prices and, in our own case, the shock of the sudden and untimely passing of our founder and Executive Chairman, Bruce Dingwall, CBE. As such, 2021 proved to be an extraordinarily difficult year to navigate, but one in which Trinity proved its resilience and, perhaps as importantly, its ability to act decisively for the benefit of our stakeholders, refining and prioritising our extensive opportunity set, with a view to generating significant growth in value in the relatively near term.

Board Changes

In the past year we have changed the composition of our Board to bring Trinity's governance structure more in-line with market practice, with the role of Chairman becoming a non-executive position, complimented by the promotion of Jeremy Bridglalsingh to the position of Chief Executive Officer. Jeremy is a Trinidadian whose contribution to the Company's strategy and development since becoming CFO in 2016, and more recently Managing Director in 2019, cannot be underestimated. 

Further, we added depth and breadth to an already strong Board, welcoming two important new non-executive directors, Derek Hudson and Kaat Van Hecke, both highly respected and experienced members of the international energy industry.  David Segel stood down from the board in March 2021, and I would like to place on record my thanks for his invaluable contribution to our deliberations since he joined the board following our recapitalisation in 2016.

Technical Committee

Trinity fields an expert sub-surface team whose knowledge of the geology of Trinidad's hydrocarbon-bearing basins is a core strength of the Company. To support them and assist the Board by bringing a global context to analysis of potential new projects, during 2021 we established an external advisory committee of world-class sub-surface and petroleum engineering experts who will help us to critique and filter prospects so that we can confidently focus expertise, energies and investment to fast-track only the most viable, high-grade opportunities.

The Technical Committee comprises two board members and three high-quality independent experts and has helped management refine and prioritise its existing opportunity set to focus on risk-mitigated prospects capable of being delivered with the Company's existing financial and operational resources to increase scale and optimise returns.  It has set ambitious but deliverable growth targets, and the resumption of onshore drilling during the second half of this year is the first part of this scaling up process.

Managing risk to deliver growth in production and cash flow

This additional layer of uncompromising, qualitative analysis in geoscience and petroleum engineering is matched by two of Trinity's key financial characteristics; capital discipline, with an increasing focus on risk assessment, and a relentless commitment to cost management. 2021 saw Trinity turn in its sixth consecutive year of sub USD 30.0/bbl operating break-even, in fact USD 29.2/bbl, a real achievement in such challenging times and an excellent discipline to provide a buffer against times of low market prices.  The Company expects an increase on the usual operating breakeven in FY 2022 to support medium term growth through increased technical and intellectual capacity and with industry-wide cost pressures increasing.

Furthermore, Trinity maintains a strong balance sheet, with cash resources of USD 18.3 million at 31 December 2021 (2020: USD 20.2 million), meaning we have the resources we require to deliver our near term growth objectives.

These pillars of our business culture will underpin our dynamic future strategy where we aim to grow our predictable, stable production and cash-flow allowing us the opportunity to both fund attractive new growth opportunities and deliver cash returns to shareholders.

Risk-appropriate investment for future growth

Stable cashflow forms the bedrock of Trinity's financial strength and positions us well for our next, exciting growth phase. One of our key operational objectives is to safely and sustainably build and scale production and we have already commenced planning for an ambitious, risk-appropriate exploration programme that will tap into the region's material remaining reserves, using 3D seismic to map prospects with potential to be fast-tracked to monetisation, generating material growth for our shareholders whilst understanding and hopefully ameliorating technical and commercial risk.

An additional layer of potential comes from the ongoing farm-down process for our Galeota licence, comprising the producing Trintes field, the Echo Prospect and potential from the Foxtrot and Golf accumulations. The Company has engaged with a range of potential partners and whilst initial feedback has been encouraging, several participants have indicated their inability to fully assess the economics of the opportunity without clarity being considered by the Government of Trinidad and Tobago ("GORTT"). As these considerations seem to have been delayed, and to ensure that the Company attains the best possible value proposition for this highly valued asset, we have made the decision to pause our farm-down process until the GORTT fiscal reforms have been concluded.

We continue to explore a variety of options for this asset, with the aim of maintaining exposure while avoiding the need for material additional debt or diluting existing shareholders. These key criteria must be met, together with tax reform in Trinidad, which has been flagged by the Government, before your Board will commit to/progress any partnership offers.

We eagerly anticipate T&T's new bidding rounds for exploration blocks both onshore and near offshore. We will target licences that provide additional opportunities to expand our footprint in Trinidad. Concurrent with that, we will continue to evaluate acquisition opportunities.

Investing in future energy and transition

Unfolding geopolitical events have made it clear that, for many years to come, 'traditional' energy (i.e. oil & gas) will remain an essential part of the energy mix. However, the clock is ticking towards Energy Transition & Net Zero and Trinity's goal is to be at the forefront of T&T and the wider Caribbean region's energy transition.

During 2021 we established a new senior executive role of Innovation, supported by a small but highly qualified team, and have already instigated several meaningful studies and ground-breaking collaborations that we believe will challenge conventional thought and help to develop innovative new approaches to energy production.

Trinity's ESG programme is designed to build environmental considerations into the mindsets of our people and the heart of our business culture such that sustainability becomes one of the cornerstones of our future vision.

Financial Discipline

Our 2021 results demonstrate your Company's resilience. Adjusted EBITDA for the year was USD 19.8 million (2020: USD12.1 million) and cash resources were USD 18.3 million (2020: USD 20.2 million) at year end despite the absence of new drilling activity. In 2021, in line with previous years, we hedged around 50% of our production to counteract the impact of low oil prices and the effects of Supplemental Petroleum Tax ("SPT"), which is at its most punitive when realised oil prices are between USD 50.01 and USD 55.0 per barrel. The adoption of a similar policy for 2022 has significantly reduced the immediate benefit of high oil prices on our profitability and cashflow, especially in the first half of the year.  However, we expect the impact will decrease in H2 2022, as a lower proportion of our existing production is hedged and our onshore drilling programme will bring new production onstream.

Financial restructuring

At an appropriate future point it is our goal to make returns to shareholders either in the form of cash dividends or share buy-backs. With this in mind, during 2021, your Board undertook a complex share capital re-organisation to position the distributable reserves at PLC level that will enable us to return cash to shareholders as and when appropriate.

Fiscal Reform

Throughout 2021 Trinity continued to leverage its deep and long-standing relationships with Government, Heritage and the region's energy participants more broadly to make the case for positive fiscal reform. We remain confident that the Government understands the requirement for fiscal reform, despite the near-term outlook for crude oil prices, in order to stimulate investment and development of the country's oil and gas resources, to the benefit of all T&T stakeholders.  We understand that the Government's deliberations on tax reform, specifically in relation to SPT, are ongoing, and we look forward with keen interest to receiving positive news on this matter in the near term.

Thanks

I would like to conclude by extending the thanks of the Board to our Shareholders who have remained supportive and engaged despite a difficult year. As the frustrating limitations imposed by the Covid-19 pandemic hopefully subside we look forward to engaging 'in-situ' with shareholders and our broader stakeholder community with plans for a busy agenda of presentations and events throughout the coming year. I would also like to extend the sincere thanks of the Board to our management and employees whose unstinting dedication has allowed us to successfully and safely navigate the challenges posed by the Covid-19 pandemic.

We entered 2022 with a refreshed strategy, a strong balance sheet and a dynamic vision for growth. We believe the time is right for Trinity and are energised to deliver optimum value on your behalf.

Nicholas Clayton

Non-Executive Chairman

CHIEF EXECUTIVE OFFICER'S REVIEW OF 2021

The sudden and unexpected passing of our founder and Executive Chairman, Bruce Dingwall, in August 2021, has accelerated our plans to focus the business, building on the strong foundations he had built to take Trinity into a new and dynamic growth phase.

In this context, I am extremely proud to be leading a strongly bonded, talented team of hard-working individuals who have consistently brought their top game to bear throughout the year, enabling Trinity to deliver an applaudably resilient performance in challenging circumstances.

Growth Strategy

We believe that this is an inflection point for the Company with the imminent resumption of drilling commencing the next stage of our growth. During the past year we have re-focused, prioritising Trinity's existing opportunity set to focus on risk-mitigated prospects capable of being delivered with the Company's existing financial and operational resources to increase scale and optimise returns. In addition, we now have the expertise and processes in place to mitigate risk and appropriately prioritise the various opportunities we continue to consider.

This rigorous approach has resulted in the Company de-selecting some options, a signal of the important contribution of our Technical Committee's mentorship and guidance. The level of commercial and operational input their experience brings is now enabling us to shape our decision-making process by adding quality reviews alongside technical risk assurance of the options we are pursuing.

Whilst we are focused on expanding our portfolio we will not put undue pressure on the Company's cash and operational resources. We are now positioned to activate our refined strategy with a view to driving value. Our ambition is to double production over the next few years, and thereby generate sufficient free cash flow both to fund future growth initiatives and deliver meaningful cash returns for shareholders.  And we believe we now have the operational and financial resources we need to deliver this challenging target.

Financial Performance

Following a difficult year in 2020, when commodity prices dipped dramatically and Trinity's average price received was USD 37.7/bbl, we welcomed the market's recovery and the subsequent uplift in our realised price for 2021 to USD 60.4/bbl. The combined effects of this uplift and our relentless pursuit of cost efficiencies delivered an adjusted EBITDA of USD 19.8 million (2020: USD 12.1 million) and ending cash of USD 18.3 million after meaningful capex invested of USD 13.9 million (2020: USD 6.0 million) 

Our hedging policy has historically been designed to provide protection from low commodity prices and to ameliorate the impact of realised prices in the USD 50-55/bbl range where SPT in Trinidad is most punitive. In the context of the recent extraordinary and unpredictable uplift in commodity prices, magnified by Russia's invasion of Ukraine in March 2022, we are not alone in finding that our hedges have blunted the otherwise positive impact these higher prices would have had on our operating cashflow.  We expect the impact will decrease in H2 2022, as a lower proportion of our existing production is hedged and our onshore drilling programme will bring new production onstream.  Going forward, we expect that growing our onshore production, further driving down our operating break-even, and the expected reform of the SPT regime will significantly reduce our future hedging requirements.

HSSE

My first priority is the health and safety of our workforce and contractors as well as minimising the environmental impact associated with our operations. However, while our leading indicators continue on a favourable trajectory, we incurred three Lost Time Incidents ("LTIs") during 2021. This has prompted us to place even greater emphasis on HSE throughout the organisation, from the Boardroom to the well head. We have created an HSE Steering Committee, and have also appointed an HSSE champion at Board level, Kaat Van Hecke, to oversee this function and highlight its critical importance to us as a company. This has begun to inject greater rigour into our HSE oversight, with a prime focus on creating Trinity's Safety Rules to underpin our safe systems of work.

I am delighted to chair the HSE Steering Committee and the energy and enthusiasm of those involved is helping to drive improvements in the effectiveness of our HSE function. This will further strengthen our operations, motivate our team and demonstrate to our partners and regulatory stakeholders our competency as an operator.

OPERATIONS IN 2021

Reducing Volatility

During 2021, having taken a commercial decision not to recommence drilling activity, we opted to underpin our base production via a programme of seven recompletions, 96 workovers and increasing the volume under surveillance via Supervisory Control And Data Acquisition ("SCADA") to ~50% of total production. The impact of these activities, allowing us to increase the predictability of our production profile and mitigate natural reservoir decline for the second consecutive year, has been significant. Despite the absence of drilling, production for the year reached the upper quartile of our guidance (2,900-3100 bopd), averaging 3,069 bopd, slightly lower than 2020's 3,232 bopd.

In particular, our strategic decision to invest in technology to automate and optimise our wells has proved to be highly effective. The operation of 31 Tier 1 onshore wells, over half of all Trinity's production, is now automated, helping to ensure steady, low-cost production whilst minimising non-productive downtime. As a result, 2021 saw Trinity deliver its sixth consecutive year of sub-USD 30.0/bbl operating break-even, a real achievement in such challenging times and an effective buffer against times of low market prices.   Shareholders will see a small upward shift in our breakeven to low USD30's in 2022 as we increase the intellectual resource to achieve our medium term vision of scaling up Trinity, but our relentless focus on optimising production and reducing cost continues.

Trinity is already one of T&T's top five crude oil producers, giving us a deep historical knowledge of the region's hydrocarbon basins and strong working relationships with our partners and regulatory stakeholder. The benefit of this unique skillset came to the fore during 2021 when our Field Development Plan ("FDP") for Galeota attained full Ministry approval within just three months, an unusually short timeframe and testament to the quality of our technical rationale. This was aided by the timely acquisition of the full suite of Certificates of Environmental Clearances for Galeota's Echo project from the Environmental Management Authority.

In line with our strategy to refine and prioritise the range of growth options at our disposal, our sub-surface team, supported by world class external consultants, continued their study of the 37 km2 of 3D seismic acquired during 2021 from Heritage Petroleum Company Limited ("Heritage"). This activity was significantly complemented by gaining access to the entire 287 km2 3D seismic data made available via our participation in the NWD process.

The Technical Team continues to work hard to accelerate its interpretation and integration of this data to enable Trinity to develop a regional geological framework with a view to identifying new play concepts, deeper, largely undrilled reservoirs, and the best locations for drilling into the key productive Forest and Upper Cruze horizons, being the dominant producing reservoirs onshore Southern Trinidad.

Our principal objective is to improve our drilling returns by developing a mix of lower risk, conventional wells, with technically more challenging but potentially higher return, high angle, horizontal and deeper wells. These more complex wells have the potential to increase the ratio of barrels recovered to the capital invested, and thereby provide stronger economics.

Growth through acquisition and collaboration

The Company is in robust financial health, and is conservatively financed compared with many of our peers, where operating break-evens are higher and finances more constrained. We are therefore well placed to take advantage of commercial opportunities as and when they arise. A prime example of this was our acquisition of the PS-4 Block Lease Operatorship Sub-Licence, onshore Trinidad, which was finalised in December 2021. We moved quickly to secure this synergistic asset, adjacent to our core WD5/6 and WD2 producing assets, funding this acquisition out of existing cash resources.

To progress some of the exciting opportunities in the T&T region Trinity continues to develop excellent working relationships with potential partners, both Heritage (the state-owned oil company) and larger international operators. 

Reviewing opportunities for growth, we consistently apply rigorous technical and financial metrics to balance risk with reward. In this context, having carefully appraised the NWD exploration play in Trinidad's Southern Basin with partner Capricorn Energy PLC, the Board decided not to participate further with this process as neither we nor our partner Capricorn Energy were comfortable with the technical and operational risks associated with the deeper Cretaceous leads that were identified.

GALEOTA

Our Galeota prospect offers a broad range of opportunities to add value for Trinity

-       The Trintes field, currently producing at 1,107 bopd, in which the significant 2P reserve potential has not been fully exploited,

-       The Echo Prospect, which has an approved FDP, with potential peak production of 7,000 bopd

-       The Foxtrot and Golf appraisal prospects with combined peak production of 7,000 bopd

-       Significant tax losses of circa USD164 million

A crucial milestone

In July 2021 our negotiations with the Ministry of Energy and Energy Industries ("MEEI") and state oil company Heritage were rewarded with the award of new and improved commercial terms including

-       A new 25-year licence commencing 14 July 2021, covering an area of 19,280 acres

-       A significant reduction in minimum work obligations and performance guarantees

-       A new Crude Oil Sales Agreement ("COSA") provides greater pricing clarity

-       An improved Joint Operating Agreement ("JOA") more aligned with international standards

One of the outcomes of this development is that Management's estimate of the net 2P plus 2C reserves increased to 50.16 mmbbls (previously 27.60 mmbbls). An additional benefit is the conversion of Heritage's 35% working interest to an Overriding Royalty ("ORR") whereby the Company now benefits from holding a 100% Working Interest over the entire block, enabling Trinity to apply the bulk of its tax losses across the entire Galeota Licence area.

These improved terms provide Trinity and prospective funding partners with more attractive commercial terms and the requisite visibility to bring on new low carbon development projects such as Echo, incentivising maximum resource extraction at a time of high oil prices and a transition towards lower carbon intensity energy supplied.

The Galeota farm-down process got underway in December 2021, hosted by Stellar Energy Advisers, and whilst initial feedback has been encouraging, participants were unable to fully assess the economic opportunities at Galeota without clarity on expected SPT reform.  On this basis the Company has decided to pause the Galeota farm down process pending SPT reform.  This will enable the Company to seek the best value proposition for Galeota. In keeping with our prudent commercial strategy, Trinity is working hard to achieve the most capital efficient outcome, balancing acceptable and proportionate levels of investment with a desire to maintain a significant share in the project and thus our ability to deliver significant upside for shareholders.

Sub Licence Renewals

We were delighted that Heritage reconfirmed their trust in Trinity's skills and commitment by extending five of the Company's six Lease Operatorship Agreements ("LOAs") for an additional 10 years, effective 1 January 2021, on improved commercial terms. This will allow Trinity to plan and commit to future work programmes across its onshore assets with greater confidence. 

New Exploration Licences

In response to the recent announcement made by the T&T Government of its intention to conduct new onshore, shallow water and deep offshore bidding rounds, Trinity has registered non-binding interest in six onshore blocks. Details of the shallow water blocks have not yet been released. We anticipate that further details will become available following announcements relating to fiscal reform, which we consider to be essential to the success of the bid rounds.

Fiscal Reform

We remain optimistic about the prospects for imminent, and necessary, reform of T&T's fiscal regime, specifically SPT which significantly discourages investment and stifles activity in the sector.  This is, in our view, essential if Trinidad is to attract the necessary investment to maximise the value of its world class hydrocarbon deposits within the Net Zero time frame. We continue to work with the MEEI and wider Government with the goal of delivering a positive outcome.

Our ESG Activities

In 2021 a structured and focused approach has been initiated towards our ESG Programme as we position Trinity on a trajectory to deliver a sustainable future for your Company.  The measurement and reporting of environmental performance is an emerging science and Trinity is taking the important steps to understand what is required and to ensure that what we measure and report is transparent, provable and, most importantly contributes positively to sustainable operations in years to come.

In Q4 2021 we appointed an expert external advisory team to help us refine our ESG strategy and develop a clear process by which ESG becomes embedded across the business. They have hosted several well-attended workshops including both office and field-based staff, tailor-made to explain the regulation framework in the context of our own operations and provide ongoing guidance on the necessary changes to our work methods to ensure that the data we report is reliable. Internally, an ESG Committee was established and a new senior post of Executive Manager, Innovation was created along with an Innovation Team.

With regard to the Social element of ESG, our HR and Business Administration Teams have been pro-active in enhancing our healthcare provision, devising wellness programmes and ramping up our community engagement to provide much needed support for school children and families. In collaboration with the University of West Indies ("UWI") a scholarship fund in our recently deceased Bruce Dingwall's name has been established. 

Our Chairman has already alluded to changes made to our Board to upgrade our governance model and we are delighted to have welcomed two new members, one of whom, Kaat Van Hecke, brings specific expertise and focus on HSSE matters.

Renewables

Momentum in energy efficiency and transition to renewable energy is picking up. We believe that in the medium term there may be renewable power opportunities with the potential to be accretive to shareholder value. For that reason, Trinity is building a strong network of partners to ensure that our Company is part of the vanguard leading T&T's commercialisation of emerging renewable technology.

We are delighted to continue to develop these important relationships, helping to explore and develop new projects with the National Gas Company ("NGC") and the UWI. The scope of their mission is to enable energy transition not only in T&T, but potentially in the wider Caribbean and Latin America. We have no doubt that a number of innovative projects will come out of this important collaboration which is already bearing fruit with:

·     Commencement of T&T's inaugural Solar irradiance study adjacent to Trinity's Galeota field office, with plans for a further Wind Resource Assessment

·      Installation of a solar power system for the WD5/6 field office

In summary, 2022 marks the start of a planned growth phase for Trinity; a robust operating platform, a refreshed Board, further complemented by the formation of a world-class technical advisory committee, a refined strategy and a healthy balance sheet all put Trinity in an ideal position to accelerate growth and generate meaningful returns for shareholders.

Jeremy Bridglalsingh

Chief Executive Officer

OPERATIONS REVIEW

In the face of a year dominated by lockdown and Covid-19 restrictions, a decision was made to desist from any new drilling within our portfolio, meaning that Group production for 2021 aligned with natural reservoir decline of ~7%. As we weathered the pandemic we were forced to adapt our operating plans to achieve the budgeted level of production and with production growing by 4% from Q3 to Q4 we exited 2021 at 3,143 bopd. This has provided us with a stable platform entering 2022.

Current onshore production is from Lease Operatorship Blocks: WD-5/6, WD-2, FZ-2, WD-14, WD-13, PS-4 and Farmout Block, Tabaquite.

Average 2021 net sales from the onshore assets was 1,644 bopd (2020: 1,793 bopd), which accounted for 55% of total annual average sales. The projections for the year anticipated this decline since no drilling was planned. The team's multi-faceted approach to production delivery included recompletions ("RCPs"), work-overs ("WOs"), reactivations, sand exclusions, an expanded swab portfolio and production optimisation initiatives to maintain production delivery.

Trinity executed 7 RCPs Onshore during the year (2020: 16) as well as 74 WOs (2020: 92), and 5 sand control jobs (2020:2).

Overall, we aim to minimise the need for well interventions, and reduce the frequency of WOs, as we target an increasingly predictable and sustainable production base. Timely execution of WOs when they are required is an essential component of our strategy, in returning base wells to production as quickly as possible. Our sand control measures focused on high frequency wells impacted by formation entry.  As described below, the combination of surveillance and automation further assisted in our ability to improve our response to our Tier 1 ( > 25 bopd) wells on which they were installed in WD-5/6.

Natural annual field decline of 7-10% can be significantly mitigated via the execution of RCPs and, in spite of a slow approval process (within Heritage and the Government) due to Covid-19, our campaign delivered substantially all of the intended production targeted from the RCP programme.

In 2022, the team intends to explore further cost-effective means of production maintenance through the expansion of the active well stock via RCPs, reactivations and swabbing.

Automation continues to enhance efficiency

Trinity's use of automation to optimise our production uptime took a significant step forward in 2021, with the execution of the automation of 31 Top Tier wells that covers 85% of the Block production in WD-5/6, which has delivered some preliminary results:

·     11 WOs have been avoided during the period due to remote surveillance by the  SCADA monitoring team

·     Real time data collection through the SCADA system is facilitating faster responses to changing well conditions and optimised real time production. Speed ramp up and pump stroke optimization in real time netted > 3000 bbls increased production.

·      Reduction in Man Hours required for production and monitoring.

·      Carbon footprint has been reduced by having less frequent wellsite visits and fewer WOs.

Further works are being progressed to building internal competency and leveraging more cost-effective automation that can be deployed on lower producing wells.

East Coast Assets

Current East Coast production is generated from the Alpha, Bravo and Delta platforms in the Trintes Field which resides within the Galeota Block.

Average 2021 net sales from the East Coast were 1,107 bopd (2020: 1,188) accounting for 37% of the Group's total sales broadly in line with 2020. To achieve this, the team conducted 15 restorative WOs (2020: 16) including 1 well reactivation to underpin production (2020: 4 well reactivations) and 2 electrical submersible pump ("ESP") WOs were conducted (2020: 1 ESP WO), with continuous emphasis being placed on optimisation and stabilisation of all wells via a data driven strategy utilising automation. An enhanced chemical injection strategy was executed to counteract increased solids deposition in the mature wells.

Again, our ongoing approach of digitalising the Trintes field to provide reliable and informative essential data in relation to the wells, thereby pre-empting potential issues and problems, allowed us to stabilise production.  The result is an ongoing reduction in the production fluctuations in the field brought about by proactively predicting possible failures and effectively developing mitigation plans. These production focused operations were coupled with the team's ongoing efforts to maintain the integrity of our mature offshore assets. This process is ongoing and is expected to further improve the team's ability to execute essential workplans safely.

Galeota Asset Development (Trinity: 100% WI)

The TGAL discovery area (proposed Echo hub) lies in the Galeota Licence and sits within a separate Fault Block (mapped as Fault Block 6), an updip panel located to the northeast of the Trintes Field, confirmed as being oil bearing in six major stacked reservoir horizons by the TGAL-1 exploration well with an internal best estimate STOIIP of 187.5 mmstb. Trinity received FDP approval for the Echo Development from the Ministry of Energy and Energy Industries ("MEEI") in November 2021. The approved FDP proposed a conservative eight well configuration. Both the MEEI and reserve auditor, NSAI, have indicated that the current approved FDP Case leaves considerable upside potential for recoverable hydrocarbons with an increased number of well slots. On this basis, Trinity has considered a variety of development cases to maximise the recoverable hydrocarbons from the Echo Development. Trinity's preferred development case (Most Likely Case) consists of an Echo twelve well configuration. This aligns with MEEI's FDP and NSAI 2021 CPR recommendations and strategy to accelerate the development and production of its remaining oil and gas reserves in the time available during the energy transition.

The Most Likely Case, a 12 well configuration may be adopted and will not only target TGAL but also additional proven oil and reservoir sands from the adjacent Trintes fault blocks FB4 and FB5; targeting recoverable resources of 25.2 mmbbls with peak annualised production of 6,977 bopd, approximately one year after first oil.

Works on various pre-FEED studies to improve the topside and other aspects of the facilities design was completed in 2021. In addition, subsurface model building to support dynamic reservoir simulation for forecasting production performance and cumulative estimated ultimate recoverable (EUR) volumes were completed in 2021. The Environmental Impact Assessment ("EIA") is a key item on the critical path to Final Investment Decision ("FID") which was submitted in February 2021 and represented a significant milestone. The Certificate of Environmental Clearance was granted in February 2022.  Other key milestones achieved in 2021 included the conversion of the working interest in the Galeota block from 65% to 100% and attaining FDP approval from MEEI

In Q4 2021, the Company commenced a formal marketing process for a farm-down of the GAD Project and has appointed Stellar Energy Advisors as its advisor for the divestment.

There is potential for the GAD Project, which encompasses the Trintes Field's current production, the Echo Field Development and the Foxtrot and Golf appraisal areas, to significantly change the scale of Trinity's operations. As previously announced, the combined 2P reserves and 2C/2U resources from these fields exceeds 50 mmbbls, with dynamic modelling indicating peak annualised production of circa 7,000 bopd from Echo alone.  An Independent Competent Person's Report on these assets was completed in Q4 2021 by Netherland, Sewell & Associates, Inc., which offers significant support to Trinity's own internal volumetric assessment of the Galeota Block. 

The Company has engaged with a range of potential partners as part of the Galeota farm down process. Whilst initial feedback has been encouraging, a number of participants have informed the Company that they are unable to fully assess the economics of the opportunity at Galeota without clarity on the expected reforms to Supplemental Petroleum Tax ("SPT"), which are currently being considered by the Government of Trinidad and Tobago ("GORTT") and which were initially expected to have been confirmed sooner than now appears likely.

Pending SPT reform, which management still expects to happen, the Company has decided to pause the Galeota farm down process. This will enable the Company to seek the best value proposition for Galeota when the GORTT's fiscal reforms have been confirmed.

West Coast Assets

West coast production is generated   from the Point Ligoure-Guapo Bay- Brighton Marine ("PGB") and Brighton Marine ("BM") fields.

Average 2021 net sales from the West coast was 255 bopd (2020: 245 bopd) which accounted for 8% of the Group's total annual average sales and a 4% increase from 2020 average. This increase was achieved by continuing infrastructural initiatives coupled with the production enhancing project to arrest the decline from the West Coast assets.

The team remains focused on exploring opportunities to optimise production from all offshore platforms in this asset.  No RCPs (2020: 0) were conducted, however two WOs were completed in the PGB asset for the period.

BM asset sales experienced a 17% increase to 155 bopd (2020: 133 bopd). This was achieved by the team implementing a number of rigless production enhancing initiatives. No WOs or RCPs were conducted during this period (2020: 2 RCPs and 1 WO).

The team remains focused on improving asset integrity on its offshore platforms to create a safer working environment and ensure production is maintained.  We continue to evaluate additional initiatives to extend the operations horizon by increased WO, RCP and swabbing activity.

Facilities Management and Infrastructure

In 2021, the Facilities team paid particular attention to upgrading production and the welfare infrastructure on its East Coast Trintes Field and addressed key integrity challenges in relation to the West Coast Brighton Marine Field. These marine installations require a higher level of maintenance due to the harsher East/West Coast offshore environment. The internal team was supplemented by the recruitment of highly experienced contractors, mechanics and electricians, to ensure a higher level of operational reliability and uptime on the assets at lower cost.

In 2021, the Team focused on structural and operational reliability, as such, we progressed 36 projects of which 23 were completed and 13 rolled over in 2022.

One key activity is the construction of the new 10,000 bbls storge tank to service the Trintes field. This experienced some delays as a result of inclement weather and Covid-19 related issues. However, the works have resumed, with an anticipated completion during Q3 2022. This tank will bring additional storage capacity and operational flexibility to the Trintes operations ensuring tank certification compliance without any disruption to production.

Facilities Management and Infrastructure spend in 2021 totaled USD 3.2mm.

Reserves and Resources

A comprehensive management review of all assets has been concluded and has estimated Trinity current 2P reserves to be 19.73 mmstb at the end of 2021, compared to the year-end 2020 reserve estimate of 19.55 mmstb. This represents a 0.9% year-on-year increase. The overall increase in reserves of 0.18 mmstb results from a combination of both negative and positive influences on oil volumes across all assets. However, a Reserves Replacement Ratio (RRR) of 100% was achieved in 2021 with production of 1.10 mmstb fully replaced together with updated well numbers and decline curve analysis on planned infill and producing wells Onshore and Offshore the West and East Coast.

Brent Forward Price Deck applied to Reserves Economic Limit Testing ("ELT") as at 3 January 2022

Management considers the reserves presented in the table below represent the best estimate as at 31 December 2021 of the quantity of reserves that will actually be recovered from our current assets.  It represents production which is commercially recoverable, either to licence/relevant permitted extension end or earlier via the application of the economic limit test. The subsurface review has defined investment programmes and constituent drilling targets to commercialise these reserves as detailed by asset area shown in the table:

Unaudited 2021 2P Reserves

Note (*):

-   

East Coast 2P reserves decreased due to a reclassification of three Trintes infill wells to horizontal well targets for Echo (-1.89MMstb) which was partially offset by the impact of wells optimisation and maintenance and economic limit testing improvements (+0.4 MMstb)

Onshore and West Coast 2P reserve changes primarily reflect ongoing well optimisation across all assets to arrest decline from our base wells and, for the Onshore, the acquisition of PS4 adding 2P reserves of 0.67MMstb

The planned 2022 onshore drilling campaign, comprising a combination of high angle and horizontal wells, conventional wells and more materially, stratigraphically untested deeper reservoirs within the fields have utilised improved performance prediction methods (ie dynamic simulation, inflow equations etc) and decline curve analysis for assurance in forecast predictions.

Management's best estimate of 2C resources as at 31 December 2021 is 47.22 mmstb (2020: 23.25 mmstb). The positive movement of 23.97 mmstb in 2C resources primarily reflects our increased working interest in Galeota, now 100% compared to 65% at YE 2020 following the successful revision of the license terms.

Management's Estimate of 2C Resources as at 31 December 2021

Note (*):

·    East Coast:

o Working interest in Galeota is now 100% compared to 65% used in YE 2020

o Year End 2020 ECHO FDP conservative 8 well development vs. Year End 2021 most likely Case of 12-well development inclusive of re-categorization of three Trintes infills now being carried as 2C at ECHO

o Additional contingent resources for the shallower TGAL G, H, and M Reservoirs, which are not targeted for initial TGAL (Echo) development, but forms part of phased future development plans.

·    Onshore:

o Base Production Optimisation Operations to recategorize some 2C to 2P

o Improved Well Decline Analysis on planned 2P infills to capture more 2C;

·    West Coast:

o Recently concluded subsurface work across the Point Ligoure sub-licence asset has re-defined the subsurface structure resulting in a downward revision of 2C resources

o  Base Production Optimisation Operations to recategorize some 2C to 2P in particular execution of ABM151 RCP in Brighton

Management's Estimate of Reserves and Resources as at 31 December 2021

 Financial Review

Strong financial performance underpinned by robust operational cashflows.  The recovery in crude oil prices, combined with our continued financial discipline, meant we were able to generate solid results and invest in short to medium term growth initiatives.

KPIs

The Group's robust performance resulted in it being profitable at both an operating and total comprehensive income level in 2021, despite the backdrop of the ongoing Covid-19 pandemic.

A summary of the year-on-year operational and financial highlights are set out below:

Notes:

1.          Average realised price (USD/bbl): Actual price received for crude oil sales per barrel ("bbl").

2.          Average net sales (bopd): Production sold in barrels per day in a given year.

3.          Adjusted EBITDA (USD MM): Operating Profit before Taxes for the period, adjusted for non- cash DD&A, SOE, ILFA, FX gain/(loss) and Fair Value Gains/Losses on Derivative Financial Instruments less Covid-19 expenses.

4.          Adjusted EBITDA (USD/bbl): Adjusted EBITDA/Annual sales. 

5.          Adjusted EBITDA margin (%): Adjusted EBITDA/Revenues.

6.          Adjusted EBITDA after Current Taxes: Adjusted EBITDA less Supplemental Petroleum Taxes ("SPT"), Property Taxes ("PT"), Petroleum Profits Tax ("PPT") and Unemployment Levy ("UL").

7.          Consolidated operating break-even: The realised price/bbl where the Adjusted EBITDA/bbl for the Group is equal to zero.

8.          Net cash plus working capital surplus:  Current Assets less Current Liabilities (other than Derivative financial asset / liability and Provision for other liabilities).

Note (*): See Note to Consolidated Financial Statements - Adjusted EBITDA for further details

Adjusted EBITDA Calculation

Adjusted EBITDA is an Alternative Performance Measure ("APM") used by the Group to measure business performance. The Group presents Adjusted EBITDA metrics as they are used by Management to assess the Group's underlying operational and financial performance.

2021 Trading Summary

A five year historical summary of realised price, sales, operating break-even, Royalties, Production Costs ("Opex") and General & Administrative ("G&A") expenditure metrics is set out below.

Notes

1.        Metrics for 2018 and prior are pre-IFRS 16 adoption effective 1 January 2019 which impacted the Operating Break-Even Levels and Opex/bbl & G&A/bbl Metrics for historical comparative purposes. Full details of the impact were set out in the 2019 annual report and accounts.

2.        G&A/bbl - Consolidated: Excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.

3.        Operating break-even: The realised price where Adjusted EBITDA for the respective asset or the entire Group (Consolidated) is equal to zero.

4.        Consolidated operating break-even: Includes G&A but excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.

Review of Financial Statements

Trinity and its subsidiaries ("the Group") consolidated financial information has been prepared on a going concern basis, in accordance with international accounting standards as adopted in the United Kingdom. This consolidated financial information has been prepared under the historical cost convention, modified for fair values under IFRS. The Group's accounting policies and details of accounting judgements and critical accounting estimates are disclosed within Note 1 of the Financial Statements.

Throughout this report reference is made to adjusted results and measures. The Board believe that the selected adjusted measures allow Management and other stakeholders to better compare the normalised performance of the Group between the current and prior year, without the effects of one-off or non-operational items, and better reflects the underlying cash earnings achieved in the year. In exercising this judgment, the Board have taken appropriate regard of International Accounting Standards ("IAS") 1 "Presentation of financial statements".

In particular, the APM measure of Adjusted EBITDA excludes the impact of Depreciation, Depletion & Amortisation ("DD&A"), as well as the non-cash impact of Share Option Expense ("SOE"), Impairment losses on financial assets ("ILFA"), FX gain/loss and Fair Value Gains/Losses on Derivative Financial Instruments.  Each of these are summarised on the face of the Consolidated Income Statement as well as being described in Note 1 to the consolidated financial statements.

Summary of Results for the Year

Revenue increased due to the material higher average realised oil price in 2021: The positive impact of a 60% increase in average oil price realisations to USD 60.4/bbl (2020: USD 37.7/bbl), was partially offset by a 7% decrease in average annual sales to 3,006 bopd (2020: 3,226 bopd), resulting in a 50% increase in revenues to USD 66.2 million (2020: USD 44.1 million).

Continued financial discipline on costs and preserving strong operating margins: The Group continued to deliver strong operating margins despite an increase in costs incurred in dealing with the pandemic. The Adjusted EBITDA margin increased to 30% (2020: 27%), with consolidated operating break-even maintained at below USD 30 (2021: USD 29.2/bbl, 2020: USD 20.1/bbl) demonstrating the Group's ability to be profitable across a broad range of oil prices. The 64% increase in Adjusted EBITDA to USD 19.8 million (2020: USD 12.1 million) is a direct result of the increased realised oil price and strong operational performance.   

Increased capex investment programme to drive growth in the short to medium term:

USD 13.9 million (2020: USD 5.3 million) invested acquiring a new onshore lease operatorship (PS 4, onshore), acquiring 3D Seismic data covering Trinity's onshore acreage, exploration and evaluation spend on the Galeota Asset Development, continuing investment in the Group's Infrastructure, Subsurface, Drilling planning and execution of 11 RCPs.

Capex invested comprised:

·      USD 3.8 million acquisition of PS-4 Lease Operatorship

·      USD 3.2 million Exploration and Evaluation ("E&E") assets relating to the Galeota Asset Development

·      USD 3.2 million Infrastructure Capex

·      USD 1.1 million acquisition of 3D Seismic Data

·      USD 1.1 million Subsurface time-writing costs

·      USD 0.8 million 11 RCPs

·      USD 0.4 million in computer software and research and development

·      USD 0.2 million renewal of Galeota block licences

·      USD 0.1 million Drilling planning (no New Wells drilled).

Refer to Notes to Financial Statements: Note on Property, Plant and Equipment - Additions (USD 10.3 million) and Note on Intangible Assets - E&E Additions (USD 3.6 million) inclusive of accruals.

Continued financial strength: The Group's cash balances at year end reduced marginally by 9% to USD 18.3 million (2019: USD 20.2 million), primarily reflecting a strong operating performance offset increased taxes and derivative expenses and a material increase in capital spending. In aggregate, despite these significant cash outflows, the Group's net cash plus working capital surplus stood at USD 20.8 million, a modest 3% decrease (2020: USD 21.4 million).

Statement of Comprehensive Income

2021 Financial Highlights

Average realisation of USD 60.4/bbl (2020: USD 37.7/bbl)

Operating Revenues

Operating revenues up 50% to USD 66.2 million (2020: USD 44.1 million).

Operating expenses

Operating expenses increased by 37% in 2021 to USD (56.2) million reflecting a return to a cost structure similar to that which prevailed in 2019 (2020: USD (41.1) million) and comprised:

Operating Expenses (excluding non-cash items): USD (45.7) million (2020: (31.9) million):

·      Royalties of USD (19.9) million (2020: USD (11.7) million), this increase being driven mainly due to higher average realised oil price.

·      Opex of USD (17.6) million (2020: USD (16.5) million) mainly due to a recovery in crude oil prices from lows in 2020 which had a commensurate impact on supply chain prices as well as increased workover and swabbing activity in the year.

·      G&A expenses of USD (7.0) million (2020: USD (5.1) million) mainly due to an increase in new hires, employee bonuses, a one off director payment to the estate of Bruce Dingwall, an increase in professional services provided for the 2021 reserves audit and increased levies.

·      Derivative expense of USD (1.2) million (2020: Derivative income of USD 1.3 million) being the cash impact of derivative instruments.

Non-Cash Operating Expenses: USD (10.5) million (2020: USD (9.1) million):

·      DD&A of USD (7.4) million (2020: USD (8.2) million).

·      Fair Value of Derivatives: Expense of USD (3.2) million (2020: Derivative income of USD 0.3 million) being the FV impact of derivative instruments

·      SOE of USD (0.6) million (2020: USD (1.0) million).

·      ILFA reversal/(charge) USD 0.7 million (2020: USD (0.3) million).

Operating Profit Before Supplemental Petroleum Taxes ("SPT") and Property Tax ("PT), Covid-19 expenses, Impairment and Exceptional Items

The operating profit before SPT, PT, Covid-19 expenses, impairment and exceptional items for the year amounted to USD 10.0 million (2020: USD 3.0 million) and was mainly due to higher operating revenues resulting from the higher oil prices.  

SPT & PT

SPT & PT were net USD (3.6) million (2020: USD (0.4) million) and comprised:

·      SPT of USD (5.1) million (2020: USD 0.2 million) mainly due to the higher realised oil prices in relation to the Group's offshore operations in 2021. There was no SPT payable in respect of the Group's onshore operations during the year.

·      Reversal of PT charge of USD 1.5 million (2020: USD (0.5) million). The Property Tax Act and subsequent Amendment to the Act requires the Board of Inland Revenue to issue a Notice of Assessment on or before the 31 March in each year. As none have been received for the years 2018 to 2020, it is highly unlikely the tax will be required to be paid for these years and there is also no method to determine a reliable estimate for the liability. As such, the Company has made a reversal of the liability for periods 2018-2020 and not recognised any liability for 2021.

Operating Profit before Covid expenses, Impairment and Exceptional items

The Group's reported operating profit before Covid-19 expenses, impairment and exceptional items was USD 6.5 million (2020: USD 2.6 million). Adjusting for non-cash expenses, the Group's Adjusted EBITDA after Current Taxes was USD 14.8 million (2020: USD 10.6 million) (further details below).

Covid-19 expenses

Covid-19 expenses incurred by the Group for 2021 was USD (0.7) million. This was triggered when the Covid-19 impact to the country was at its highest and the Company sought to protect its workforce by early detection through Covid-19 testing USD (0.3) million, Offshore employee isolation prior to offshore rostering USD (0.3) million and heightened sanitisation efforts across the assets USD (0.1) million. Covid-19 expense of USD (0.1) million was previously recognised in 2020 in General and Administration expense relating to sanitation.

See Note 7 to Consolidated Financial Statements - Exceptional items and Covid-19 expenses for further details

Impairments charge

Impairment charges taken were USD (1.3) million (2020: USD (1.2) million) relating to the Impairment of property, plant, and equipment USD (0.1) million and Inventory (1.2) million.

See Note 3(d) to Consolidated Financial Statements - Impairment of Property, Plant and Equipment for further details

Exceptional items

Exceptional items were USD (0.1) million (2020: USD (0.04) million) mainly related to fees for corporate restructuring advice.

See Note 7 to Consolidated Financial Statements - Exceptional items and Covid-19 expenses for further details.

Finance Income

Finance income is solely related to bank interest income received on short term investments with financial institutions of USD 0.1 million (2020: 0.1 million).

Finance Costs

Finance costs amounted to USD (1.5) million (2020: USD (1.4) million) and comprised the:

·      Unwinding of the decommissioning liability USD (1.2) million (2020: USD (1.2) million).

·      Bank overdraft USD (0.2) million (2020: (0.1) million).

·      Interest on Leases USD (0.1) million (2020: (0.1) million).

See Note 9 to Consolidated Financial Statements - Finance Costs for further details

Income Taxation

Income Taxation Credit for 2021 of USD 4.7 million (2020: USD (2.9) million expense), comprise the following:

·      Increase in Deferred Tax Assets ("DTA") recognised on available tax losses of USD 5.5 million credit resulting from higher oil prices (2020: Reduction in DTA of USD 3.4 million expense).

·      Decrease in Deferred Tax Liabilities ("DTL") USD 0.6 million due to accelerated accounting impairments/depreciation (2020: USD 1.6 million decrease).

·      Unemployment Levy ("UL") USD (0.4) million (2020: USD (0.3) million).

·      Petroleum Profit Tax ("PPT") charge USD (1.0) million (2020: (0.8) million).

See Note 10 to Consolidated Financial Statements - Income Taxation for further details

Total Comprehensive Income/(Loss)

Total Comprehensive Income for the period was USD 7.7 million (2020: USD (2.8) million loss).

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS measure used by the Group to measure business performance. It is calculated as Operating Profit before SPT & PT, Covid-19 expenses, Impairment and Exceptional Items for the year, adjusted for non-cash DD&A, SOE, ILFA, FX and FV of Derivative Instruments.

The Group presents Adjusted EBITDA at USD 19.8 million and Adjusted EBITDA after Current Taxes at USD 14.8 million as it is used by Management and judged to be a better measure of underlying performance.

Statement of CashFlows

Cash inflow from operating activities

Operating Cash Flow ("OCF") was USD 12.6 million (2020: USD 10.3 million):

·      Operating activities 2021 generated an operating cash flow before working capital and income taxes of USD 16.1 million (2020: USD USD 11.9 million)

·      Changes in working capital resulted in a net decrease of USD (1.8) million (2020: USD 0.6 million decrease), primarily as a result of the increase in trade receivables compared to the 2020 year end.

·      Income taxes PPT and UL paid USD (1.7) million (2020: USD (1.0) million paid) resulting from higher oil price.

Cash (outflow) from investing activities

Cash outflow from investing activities was USD (13.9) million (2020: USD (6.0) million):

·      Acquisition of PS 4, onshore 3D seismic, and property, plant and equipment for the year totalling USD (10.0) million (2020: USD (5.0) million)

·      Expenditure on exploration and evaluation assets and other intangible assets USD (3.6) million (2020: USD (1.0) million) as the Group continued to invest in Galeota asset.

·      Performance bond increase in renewal of Onshore Lease Operatorship Assets USD (0.3) million (2020: nil)

 Cash (outflow)/inflow from financing activities

Cash outflow from financing activities was USD (0.6) million (2020: USD 2.2 million inflow):

·      Principal paid on lease liability USD (0.4) million (2020: (0.4) million)

·      Interest paid on lease liability USD (0.1) million (2020: (0.1) million)

·      Finance cost of USD (0.1) million (2020: (0.0) million).

·      No further drawdown on of CIBC working capital Facility (2020: USD 2.7 million drawdown).

Closing Cash Balance

Trinity's cash balance at 31 December 2021 was USD 18.3 million (31 December 2020: USD 20.2 million).

Net Cash Plus Working Capital Surplus

Note: Net cash plus working capital surplus: Current Assets less Current Liabilities (other than Derivative financial asset/liability and Provision for other liabilities).

Reconciliation between Adjusted EBITDA after Current Taxes and Cash Inflow from Operating Activities

Events since Year End

1.     Hedging

The Company implemented crude oil derivatives over the Group's monthly production in 2021 and 2022.

The derivative protection currently in effect for 2022 is as follows:

2.     On 24 February 2022, Russian forces invaded Ukraine, causing wide-ranging economic sanctions to be applied against the Russian regime by the US, EU and other major economies. The event caused both Brent and WTI oil prices to soar, peaking well above USD 100 per bbl in March 2022. The increased oil prices has positively impacted the Group's crude oil revenue but negatively impacted derivative expenses. Overall, whilst there has been no significant adverse impact to the Group, management continues to closely monitor the event's impact as it unfolds.

3.     In 2021 Trinity engaged with a range of potential partners as part of the Galeota farm down process. The Company on 3 May 2022 indicated, whilst initial feedback has been encouraging, a number of participants have informed the Company that they are unable to fully assess the economics of the opportunity at Galeota without clarity on the expected reforms to Supplemental Petroleum Tax ("SPT"), which are currently being considered by the Government of Trinidad and Tobago ("GORTT") and which were initially expected to have been confirmed sooner than now appears likely. Pending SPT reform, which management still expects to happen, the Company has decided to pause the Galeota farm down process. This will enable the Company to seek the best value proposition for Galeota when the GORTT's fiscal reforms have been confirmed.

In the interim, the Company will continue to refine its plans for Galeota. In particular, it will advance preparations for exploiting the 9.77mmbls of 2P reserves remaining in the Trintes field.

* See note 23 regarding restatements as a result of the share capital reorganisation.