LONDON (Alliance News) - Trinity Exploration and Production PLC Tuesday said its pretax loss narrowed in the first half of 2015 despite production falling in the period, as the company continues to try to sell some of its assets to generate funds to service its debt.
The company has secured another extension from its lender Citibank for the repayment of its USD13.0 million loan until October 9 to allow Trinity further time to complete its formal sales process.
The oil and gas company reported a USD13.0 million pretax loss in the first six months of 2015, narrowing from a USD15.9 million loss a year earlier, even as revenue halved to USD27.8 million from USD62.2 million.
The loss narrowed mainly as a USD17.5 million write off against its exploration assets a year ago was not repeated, partially offset by exceptional items totalling USD8.3 million compared to no such items a year earlier.
Those exceptional items comprised of losses on asset disposals and the winding up of subsidiaries, loss on the sale of casings and the write-off of some pre-acquisition costs.
Although revenue fell, Trinity also slashed its operating costs to USD29.1 million to yield a USD1.3 million operating loss, compared to costs of USD58.5 million a year ago which had generated a USD3.8 million operating profit.
Earnings before interest, tax, depreciation, amortisation, exceptional items and exploration write-offs came in at USD1.6 million, down from USD12.5 million.
The main cause of the revenue drop was lower production. Average production in the first half was 3,085 barrels of oil equivalent per day compared to 3,795 barrels per day a year earlier.
Trinity said production was also lower in the second quarter, only averaging 2,939 barrels of oil equivalent per day.
Trinity is currently conducting a strategic review of its business and is subject to The City Code on Takeovers and Mergers as it has opted to conduct discussions with parties interested in making a proposal under the framework for a formal sales process of some or all of the company's assets.
Its principal lender, Citibank, which is awaiting the repayment of its USD13.0 million outstanding loan, has provided Trinity with at least five extensions to the loan as it waits for the formal sales process to be completed to generate the funds in order for the company to repay the debt. The new extension runs until October 9.
On Tuesday, Trinity said as long as Citibank does not recall the USD13.0 million owed on October 9, it will have enough funds to operate for the next 12 months.
Under the strategic review and sales process, Trinity has so far sold its wholly-owned and producing Guapo-1 block in Trinidad for USD2.8 million, against a book value of USD2.2 million. Those funds will be used to service its debt.
The Tabaquite block, which is currently classified as "held-for-sale", is due to be sold to fellow AIM-listed LGO Energy PLC for a total of USD2.0 million after the pair signed a binding sale and purchase agreement. However, on Tuesday Trinity said no proceeds have been received from LGO so far.
The immediate focus for the company is to lower its full-year operating expenditure to below the USD26.0 million, meaning it will have to slash at least USD3.0 million in the second half, and to submit the TGAL field development plan to the relevant authorities.
The TGAL field in Trinidad holds the TGAL-1 exploration well within the Galeota license, in which Trinity has a 65% stake.
Trinity said it also plans to identify and arrange financing to fund the company's future developments.
"Further to the strategic review and formal sales process that we announced in April, Trinity is in discussions with a number of parties. Trinity Shareholders are advised that there can be no certainty that any offer or other transaction will result from the formal sales process or as to the terms on which any offer or other transaction may be made," said the company.
Trinity shares were down 5.2% to 5.33 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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