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(Sharecast News) - Trinidad and Tobago-focussed Trinity Exploration said in an update on Wednesday that it maintained "robust production" in its third quarter, leading to a 25% increase in operating cash flow before corporate taxes and pre-hedging.
The AIM-traded firm said the first two wells of the six-well, fully-funded onshore drilling campaign were safely drilled, completed and brought into production during the three months ended 30 September.
It said the wells commenced production at an initial aggregate rate of about 113 barrels of oil per day.
The third well in the programme had subsequently been drilled successfully and was in the process of being completed, with production expected to commence within the next two weeks.
Extended supply chain lead times for specialist drilling tools would result in a delay to the company's planned horizontal well, however, which was now expected to be drilled in the second quarter of 2023.
Trinity said it had decided to delay the fourth conventional well in the programme, which was scheduled to be drilled immediately in advance of the horizontal well, to create "operational synergies" with the rig operations across the two wells.
The company said it was actively looking to drill the planned deep well, or additional conventional wells, in advance of the horizontal well, but any decision would be subject to matters outside of its control, including regulatory approvals and supply chain constraints.
Its production guidance for 2022 remained unchanged, at between 2,900 and 3,100 barrels of oil per day.
Trinity said its successful drilling campaign, along with its programme of workovers and re-completions, was forecast to lead to a material increase in operating cash flow for 2023, for which no hedging instruments were in place as it saw the benefit of the recent reforms to supplemental petroleum tax (SPT).
As announced on 18 October, the firm's share buyback programme was successfully completed on 17 October, with 672,000 shares repurchased for a total consideration of $1m.
The board said it would consider a further share buyback programme.
"A key element of delivering Trinity's strategy is maintaining, and now increasing, our base production, with results from the first three wells in our drilling campaign being in line with our expectations," said chief executive officer Jeremy Bridglalsingh.
"The difficulties with the global supply chain for our horizontal well is frustrating, but notwithstanding these issues, we are pleased that we will begin to see the impact of the current drilling campaign by the end of October, and a meaningful step-change in production is expected in 2023 when the horizontal and deep wells are expected to be on production.
"I welcomed the fiscal reforms announced by the government of Trinidad and Tobago, which will reduce the amount of tax we will pay from next year."
Bridglalsingh said the company would continue to champion further tax and regulatory reform to make investment in Trinidad competitive in an international context.
"Trinity has a strong hopper of exciting opportunities, which include further drilling in our core onshore areas, the East Coast Galeota licence and participation in the ongoing onshore licence round.
"I am pleased that we have built a resilient business and we are now targeting significant opportunities in our portfolio that have the potential to deliver material economic returns to the company and its shareholders."
At 1321 BST, shares in Trinity Exploration & Production were down 4.98% at 117.35p.
Reporting by Josh White at Sharecast.com.
