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*Mibb - annoying auto-correct!
Mine
The first mistake you are making is to look at gross figures. Have a look at recent annual and interim accounts for a better idea of the profitability and trajectory here and what the market is getting at with the current share price.
All the best
Ross
AB76, good to know that you are still about, presumably you have not sold out! Does the fact that you have remained so quiet of late choosing not to contribute to the discussion on shareholder action, mean that you are not in favour and would not be prepared to lend your support? If that is the case I hope your confidence in management to do something sensible does not prove to be misplaced.
Consistent with many AIM stocks though, they've become literally detached from their share price representing them? Nobody cares, like the share price correlating with revenue doesn't matter anymore?
In early January, Cavendish (Trinity’s broker), observed that Trinity is “A FCF Generative Business Trading at a Significant Discount. In an already undervalued sector, Trinity is trading on an EV/Sales of 0.2x, EV/2P of US$0.9/bbl and an EV/boepd of US$5,687/boepd – significantly below that of its peer group. With recent investor attention focused on the Jacobin
well, we believe investors have lost sight of Trinity’s core fundamental value.” I agree.
The market cap is £15.4m, but they're selling 2,700 barrels of crude a day? So like $218,700 a day? So they'll earn the Market Cap in revenue in about 103 days ?? The annual revenue could exceed $78m ?? So the market cap is 3.5 times lower than annual revenue? What am i missing?
Thanks i will look however still think its a low mkt capt .
Scoredagainsteps
I would read the disclaimers that accompany those Cavendish notes before you thank Ab76 for peddling them.
All the best
Ross
KIND thanks ab76 only bought a few thousand as was in before and she dropped . But this time feels better
With a core net asset value of 201.8p (a valuation which places no value on 48.8mmbls of 2C reserves or the new Buenos Ayres licence), there’s little doubt that Trinity is seriously undervalued. Cavendish’s reports, setting out the valuation, are available free of charge on Research Tree and Cavendish’s website.
SURELY MUST BE THE BEST VALUE OUT THERE 15 million mkt capt and 2600 bopd maybe im a fool but i see great value .WE will soon see
Thought the other day great buy good luck all i just think its undervalued
Mkt capt tiny plus producing i feel risk reward now is very good
I have too many green boxes to engage here regarding this.
Any holders who wish to promote real action from the inert BOD of Trin, please visit Advfn Trinity Oil Production thread. Shares are being amassed.
There is only so long we can be ignored.
Over on the ADVFN board there is a proposal to initiate some form of shareholder action, to stir the BoD. If anyone from here is interested in participating then register with your share holding over on ADVFN. A 5% threshold is required to proceed with any form of shareholder action, currently 2.5% pledged.
The continual dive in the value of the TRIN shares means that the dividend yield is an increasing %. We have got to find some good news out of this investment graveyard -) LOL
Ab76
That seems an incredibly naive approach to the present valuation of TRIN. Historical valuations of TRIN’s assets, or any part of them, really are neither here nor there and the amount of additional funds that shareholders have poured into TRIN over time is just a sad testament to the risks of investing in AIM companies. The present valuation of TRIN has to be based the present realities of TRIN. No one is now going to offer what they once might have offered for its assets and almost all the money extracted from shareholders is just gone.
All the best
Ross
In the new blog, I’ve argued that Trinity is potentially worth at least $166.3 million (£131 million or 336p per share). That sounds like a lot compared with the current £18.5 million market capitalisation/47.75p share price, but: (i) it’s based upon prices offered for two of Trinity’s three asset groups within the past 8 years; and (ii) is dwarfed by the $226 million of additional funds that shareholders have poured into Trinity since 2012.
If my estimate is wrong, it’s because oil assets have fallen significantly in value since 2016 (which seems unlikely in Trinidad given the fiscal reforms - which are now worth between $7.5 to $8.5 million per year to Trinity, and much more if we get some production from Galeota) and/or because management have squandered it (there have been several unsuccessful drills, but that’s part of oil exploration and there hasn’t been $226 worth of failed drills or for that matter $226 million worth of payments to managers - the combined salaries for senior management have been between about $1.2 and $1.8 million per year for years).
If my estimate is wrong, I’d be surprised if it’s out by more than 50%, which would still give a share price of 168p.
Obviously, it would be helpful if Trinity or its brokers set out their opinion on asset value and I’ve asked them to do that.
Ab76
Either you can see something that the market is missing or the market can see something that you are missing. I think it is the latter. Have a think about what it might be.
All the best
Ross
What’s Trinity worth? At the moment, the stock market says £18.5 million. However, over the past 12 years $226 million has been poured into the company. I think most of that value remains (at least $166.3 million) and set out why in this new blog: https://andrewbyles.blogspot.com/2024/01/trinity-exploration-and-production-plc.html
…An additional 20% to account for the SPT reform lifts the potential value to $4.1 million and the significant reduction in costs (worth just over $2 million per year) could potentially double it (to $4 per barrel).
Considering the above, Trinity’s cash, onshore and West Coast assets have a likely minimum value of $43.43 million (cash of $5.8 million, onshore $34.18 million based upon the 2015 valuation of $5.69 per barrel of 2P, and West Coast $3.45 million based upon the 2017 valuation of $1.72 barrel of 2P). Taking account of the SPT reforms, reduction in costs, business developments and the higher oil price, that valuation could easily increase to $54 million.
Between $43.43 to $54 million amounts to between £34.16 and £42.5 million or between 88p and 109p per share.
In addition to cash, Onshore and West Coast, Trinity also has the Galeota assets. In my recent blog (see hTTps://twitter.com/AndrewPByles/status/1745396252659929563 ), I argued that they could be worth between £68.15 million and £75.37 million. That valuation was based partly upon Trintes being worth at least $2 to $3 per barrel of 2P. The $2 to $3 valuation may be too low as Trintes, with production costs of $23 versus West Coast’s costs of $30, is arguably more valuable than West Coast, but not as valuable as Onshore (where production costs are $17), suggesting a possible value of around $5 per barrel - adding another £14.46 million to the valuation. Sticking with t£68.15 million as the lower figure and increasing the higher figure to £89.83 million, Trinity has a potential break-up value of between £102 million and £132.33 million or between 262p and 340p per share.
The lower figure is based very much upon the prices at which offers were previously made for two thirds of Trinity’s producing assets and a relatively modest valuation of Galeota, where as the higher figure is more speculative. However, on the basis of the lower figure alone there’s plenty of value in Trinity and it’s only a matter of time before it’s realised.
Over the past four years, Trinity’s share price hasn’t closed higher than 175p. An ambitious competitor that wanted to get its hands on Galeota could, at the moment, probably succeed with a £2 per share bid, which would cost about $97 million (less if bought shares in the market before making an offer). Trinity’s cash would reduce that cost to $91.2 million and the cost could potentially be reduced by at least a further $37.63 million to $53.57 million by selling Onshore and West Coast. It would then find itself the owner of Trinites (producing 900 to 1,000bopd, with 2P reserves of about 9mmbls), the significant tax losses and Galeota (exploration costs of about $30 million, 2C reserves of just over 37mmbls, over 770mmbls of oil in place, and potential near-term production of 7,000bopd).
I remain confident that Trinity’s management can unlock the value in the business, but if they can’t it’s only a matter
What’s Trinity Exploration and Production’s potential break-up value?
Trinity’s owed $4 million by the government in VAT refunds, but has offset this with a $4 million overdraft. They cancel each other out, so there’s no asset or liability here.
Trinity ended 2023 with cash of $9.8 million, but owes about $4 million in drilling fees. Therefore, it effectively has cash of $5.8 million.
On October 21st 2015, Trinity announced the sale of its Onshore assets for $20.8 million (a sale that was subsequently abandoned). At that time, Onshore had 2P reserves of 3.59mmbls and so that potential sale was worth $5.69 per barrel of reserves. Also at that time, production costs were $17.40 per barrel, oil prices were $45.50 per barrel, and Supplementary Petroleum Tax (SPT) was payable when the oil price was between $50.01 and $75. Onshore’s 2P resources were around 5.9mmbls at the end of 2023 (assuming similar production to 2023 and no other adjustments; it’s unknown at the stage whether Jacobin will result in any increase to reserves). If those resources are worth $5.69 per barrel (as they were in 2015), Onshore is worth at least $34.18 million. There’s no reason to think that the per barrel value has decreased. Rather, in all likelihood it’s value has increased as consequence of the significant reforms to the SPT (worth at least a few million dollars per year), slightly lower production costs ($17 per barrel) and a higher oil price. On the strength of the SPT reforms alone, Onshore is likely to be worth at least $40 million (ie, an additional 20% or $6.78 per barrel of 2P) and perhaps more. A great deal of work has gone into the Hummingbird prospects, there is a proof of concept for deep oil and Trinity won the bid for the Buenos Ayres licence.
On August 11th 2017, Trinity announced the sale of its West Coast assets for $4.55 million (a sale that was also subsequently abandoned). At that time, West Coast had 2P resources of 2.64mmbls and so the potential sale was worth $1.72 per barrel of reserves. Also at that time, production costs were $48.60 per barrel and the SPT was payable when the price of oil was between $50.01 and $75. The West Coast’s 2P reserves were around 2.05mmbls at the end of 2023 (assuming similar production to 2023 and no other adjustments; however, the reactivation of AMB-151 might result in an increased). If those resources are worth $1.72 per barrel (as they were in 2017), West Coast is worth at least $3.45 million. Again, there’s no reason to think that the per barrel value has decreased. Rather, in all likelihood it’s value has increased as consequence of the significant reforms to the SPT (worth a few hundred thousand dollars per year to this asset), significantly lower production costs (now $30), a significant increase in production (from 190bopd to 365bopd) and a higher oil price….
Correction: I meant a special dividend of 2p (which will still cost about $1 million).
Trading at little more than one times likely cash flow for 2024 ($16 million following the recent SPT reforms), Trinity is woefully undervalued. There are four steps that the company should take:
1. Promptly release the 2024 cash flow/production projections (according to the December presentation they’re due in January).
2. Pay an immediate special dividend of 1p. It’ll cost about $1 million (so less than the $1.33 million of cash flow due to generated in January) and prove both the commitment to returning 15% of cash flow to shareholders and their believe in the projections.
3. Provide details on the likely value of Galeota and set out a plan for realising it (ie, selling it or selling a chunk of it) this year. Galeota is likely worth multiples of the current share price. Nearly 37 million barrels of oils have already been discovered and established as 2C reserves, at a cost of about $30 million. See https://twitter.com/AndrewPByles/status/1745396252659929563 for my detailed view on the potential value.
4. Further improve communications with shareholders. They’ve improved at lot over the past few months, but there’s still room for more improvement. For example, more detailed information in RNSs and more opportunities to ask questions.
About 130 posts since last look in August 2023.
My broker showed them down 18% at close this site down 10% with 5% spread after bad Rns.
In hindsight the good news RNS 7th August 2023 up 35% to 100p would of been a good sell .
The low was 18/12/23 when 36p share returned to that today .
Typo below rebought these and doubled up just before Christmas 2022.
Approx third of that price now.
Noticed VLS. low takeover this morning at huge loss for me .
AIM is to be well avoided .