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LuckCounts
I think you are mistaken if you are imagining that your posts help your investment in any way - you can shout as loudly as you like from the side of the racecourse, but you have either backed the right horse or you haven’t.
You crack on though.
LuckCounts
Again, name calling is pointless. Any number of posts, however abusive, are not going to make a blind bit of difference to the outcome here - this one is all down to whether or not meaningful fiscal reform happens.
No AIM share is worth getting that attached to. At some point the people involved let you down, or there is a problem with the jurisdiction the company is operating in, or both.
The people are not the problem here, but the figures in that last update, bad enough for me to put even the value case under review, illustrate that Trinidad and Tobago is a toxic jurisdiction - TRIN takes the risks but the rewards are forever withheld.
jfk9
It is not like it has gone missing, it is just the point I have made before about revenue flowing into various buckets on its way to the bottom line, being why so little of it actually makes it to the bottom line, whatever the oil price (and don’t get me started on the price TRIN is actually paid). The consensus seems to be that the amount in question flowed into the royalties bucket.
Reflecting on yesterday’s update, particularly the financials, I don’t think anyone can now talk with a straight face about TRIN throwing off cash - it really does seem that the current fiscal regime has TRIN running to stand still. I am now less convinced that there is a value case here, not without significant fiscal reform anyway. The worry has to be that TRIN is being strung along on fiscal reform.
I bet TRIN wish that Galeota was in some other jurisdiction.
Luck, my point is that there is no explanation for a sum of $7.9m of apparent expenditure in Q1, what was is spent on?
LuckCounts
SPT reform: the last we heard from them (three months ago) was “Trinity is increasingly confident that SPT reforms will be implemented in the near term”, with them buying into talk of “a comprehensive review of Trinidad and Tobago's taxation regime underway with outcomes expected during H1 2022”. Are they still buying into all this? Three months later that term does not seem to have got any nearer: “We understand that the Government's deliberations over tax reform, specifically in relation to SPT, are ongoing, and we look forward to news on this matter in the near term with keen interest.”
New drilling: last we heard was “Trinity continues to be well placed to deliver growth with the recommencement of onshore drilling now targeted for H2 2022. This is likely, initially, to comprise two infill wells at the under-exploited PS-4 Block, and Trinity is also working up a potential appraisal well targeting deeper horizons identified by the ongoing seismic interpretation.” Now we have “The Company has committed to resuming onshore drilling, which is expected to commence early in H2 2022, with the precise timing subject to receipt of regulatory approvals and long lead items for more complex wells. This drilling campaign will be carried out in the areas defined by Trinity's Lease Operatorship Agreements and will initially comprise at least five wells, inclusive of low angle (traditional) wells, high angle to horizontal wells and testing of deeper structures with the aim of significantly increasing initial production rates and cash returns. The Company will provide further details regarding the resumption of drilling during May 2022.” Certainly fleshing out what they told us previously, but I would not suggest that anyone should hold their breath for those “regulatory approvals” and, particularly in this market, those “long lead items”.
Farm down timing: we previously had “The process is expected to commence during December with a duration of approximately six to nine months. We will keep the market updated as the farm-down process progresses.” Now we have “The farm down process for the offshore Galeota Asset continues, with the bid deadline in late Q2 2022. The marketing process is being conducted by Stellar Energy Advisors. The Company expects to provide a further update early in H2 2022.” No significant change there, although when read with their now more tentative take on SPT reform, it does not bode well for anything conclusive in the near future - potential partners may decide that the missing SPT reforms “significantly challenge the commercial attractiveness of the opportunity”.
Well done though closing (just) in the blue.
Cash balance $17.5m, seemingly down 0.8 from 18.3 at Q4
Revenue $21.9m
Operating cost $8.3m (91•2929•31.1) from op break even
Costs $6.5m (hedging, capital spend, tax and prepayments)
Leaves £7.9m not explained, would that be management costs, overhead and royalties?
Cash balance $17.5m, seemingly down 0.8 from 18.3 at Q4
Revenue $21.9m
Operating cost $8.3m (91•2929•83.1)
Costs $6.5m (hedging, capital spend, tax and prepayments)
What accounts for the balance of $7.9m?
Cannot see how this could possibly close today in the blue, not after that update.
One always hopes they will get their act together but not this year it seems.
Familiar RNS story. Production is flat as they are not drilling new wells. After 9 months of analysis of the PS-4 they still haven't decided what to do with it. Some RCPs and swabbing and a bit of tinkering with controls. Maybe some new wells but elsewhere in the RNS they say they haven't ordered the hardware so we can't expect meaningful production improvement this year. Caribbean snooze. A dividend would really help!
LuckCounts
We will have some indication of how astute they are in ten days or so. But if you look at the TRIN threads on ADVFN you will see that having holdings significantly larger than my usual 10K shares do not lead to those holders calling TRIN right - in fact this seems to incline them more to talk their books. Look at how consistently over-optimistic the usual suspects on ADVFN have been. Do I need to give examples?
We’ll know the date and location by the end of next month - see you there perhaps (assuming I have bought back in by then and there is no clash with hols).
I would certainly do London but be happy to travel to Edinburgh if that is the only opportunity.
Pretty sure they will. They had tended to alternate between Edinburgh and London before the pandemic. I can do Edinburgh, London not so much.
Ross, let’s hope they are prepared to hold F2F agn/ presentations this year, that will provide an opportunity to push them on such matters.
jfk9
Totally agree. I would love to see an RNS about them starting to explore opportunities in other jurisdictions. It just feels like they are being mugged off by the T&T Government.
If fiscal reform is not forthcoming, which increasingly looks to be the case then Trinity need to be bold and state that it will limit investment, exploit existing assets to the most and return value to shareholders. I believe this is quite likely the most attractive outcome for shareholders, it certainly avoids risk.
LuckCounts
Let’s see what the Q1 update says in a couple of weeks. The market will tell us whether TRIN is cheap.
As for the Newlands, you can track their investing history via RNSs and decide for yourself whether they are likely to be on to something. They may be in the long run, but for most retail investors it comes down to whether meaningful fiscal reform is tabled in the near future.
LuckCounts
Yes, but not that much higher income. TRIN is a solid enough business but it is hardly throwing off money, even though this is often suggested on TRIN BBs. As with any business right now, TRIN’s costs will be rising. The current fiscal regime only allows businesses like TRIN to do modestly better than running to stand still. This is why capital is flowing elsewhere. This is neither de-ramping nor misleading, it is simply the way things are. We are still waiting for the fiscal reform that could change all this and that was supposedly imminent. I’m afraid that what I have been saying about TRIN stacks up better than most of the over-optimistic BB commentary.
You know that I could give examples.
LuckCounts
I am not currently invested, I ditched my 10K recently for a small profit as I just don’t think meaningful SPT reform is imminent and I have therefore decided that I do not want to be holding when the April update comes out. Do you realise that the rate of SPT goes up with higher oil prices? If is not simply a flat rate that kicks in at $75 ($50 for offshore). Consider the possibility that your take on this may be wrong and that the market may have this one about right.
crl123
At least we are having a good day on the pharma front!
In the Budget delivered in late 2019, against the background of calls for root and branch SPT reform, all we got was an increase in the investment tax credit allowable against SPT from 20% to 25%. A very small positive. But at the same time we had a potentially negative change to capital allowances and a clear negative on loss relief with a reduction from 100% allowability to 75% allowability, basically a PPT tax rise by the back door.
Then we looked to the Budget to be delivered in late 2020, after further calls for root and branch SPT reform and rising hope that meaningful reform was really going to happen this time. But arguably the less reform-minded party got in and we ended up with reform that was limited in scope (small onshore) and duration (2 years).
At least, as the oil price slips back, the threat of higher rate SPT is receding.
Courtesy of Ab76 on ADVFN:
The IMF has released a new country report on Trinidad and Tobago (see https://www.imf.org/-/media/Files/Publications/CR/2022/English/1TTOEA2022001.ashx ). Paragraph 34 says “Moreover, comprehensive review of the oil and gas taxation regime will soon be conducted to ensure that the domestic hydrocarbon sector remains internationally competitive. The authorities reiterated their strong commitment to reducing emissions and developing solar energy, calling for a delicate balancing act and recognizing natural gas and ammonia as cleaner carburants.”
RRA22
No specific reforms have been signalled though, just a general intention to reform, which is nothing new. TRIN needs to know about the specific reforms before it and its partners can make business decisions.
Stuart Young also said:
“I make it very clear that part of the job of the Minister of Energy and Energy Industries, under this PNM administration, and in particular of myself in the seat, is to fight for better returns for the people of Trinidad and Tobago whilst keeping us competitive.”
This is the key to the whole thing and highlights the extent to which they want to have their cake and eat it. There is no meaningful SPT reform which is not going to initially reduce the tax take for T&T. This is something that the PNM seem to struggle with. They seem to lack the political courage to lay out a program of reform that is an immediate win for the likes of TRIN and a (not that far) down the line win for T&T. Yet there is no other way to achieve better returns for the people of T&T.
If the PNM fail them again I hope that TRIN take their available capital where it will secure a better return for us shareholders.