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LONDON (Alliance News) - Trinity Exploration and Production PLC on Tuesday said it has secured yet another extension from its principal lender for the repayment of its outstanding USD13.0 million debt.
The latest extension gives Trinity until this Friday to repay its USD13.0 million debt. Its lender Citibank has given no fewer than eight extensions since June.
Citibank has granted extension after extension because Trinity is currently completing a strategic review to try to monetise assets and re-position the business through a formal sales process. That review was launched in April when it said the review could lead to the potential sale of the company, a merger, or the sale of the company's existing assets.
Since then, Trinity has sold the Gaupo-1 block in Trinidad for USD2.8 million in cash, completed at the start of September. That block had 154 wells operated by Trinity, of which nine were producing when the sale was finalised.
It also pulled out of an agreement back in July to buy 80% interests in Blocks 1a and 1b, offshore Trinidad, from Centrica PLC because it was unable to extend the term of its agreement to buy the interests. Trinity had originally signed the deal to acquire the interests in the two blocks for USD23 million in July last year, when oil prices were still at a healthy level way above USD100 per barrel.
The whole reason for the strategic review was because the fall in oil prices meant the oil producer could not develop and capitalise on its portfolio independently.
In the middle of 2014, Brent was trading at around USD115 per barrel, but prices collapsed and by the start of 2015 prices had dropped to only USD58 per barrel. At the start of April, when Trinity launched the strategic review, Brent had fallen even further to only USD55 per barrel, and on Wednesday morning oil was trading at just USD50 per barrel.
In August, Trinity sparked talks that the company was set to be taken over after it said it was in talks with a number of potential suitors. However nothing has materialised in that regard since.
In the meantime, Trinity continues with its cost cutting programme to try to husband cash. In September, Chief Operating Officer Craig McCallum was made redundant and will leave the company at the end of March 2016.
The cost-saving measures implemented, including the departure of McCallum, will lead to a USD1.6 million reduction in general and administrative costs to save around USD300,000 in the current financial year. However, that saving will be offset by cash costs totalling USD200,000, Trinity said.
General and administrative costs had already been substantially slashed to USD5.7 million in the first half of 2015 compared to USD10.4 million a year earlier. Trinity also said operating costs would fall to below USD26.0 million in 2015 compared to the USD33.0 million spent in 2014.
Trinity shares were down 2.5% to 5.75 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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