Member Info for ab76

Once the realised oil price averages $75.01 or more during a full quarter, Supplementary Petroleum Tax applies (until recently it was $50). That means that the initial gains on a realised oil price over $75 are lost in tax, but as the price rises higher gains start to be made again. I can’t say for sure, but between a realised price of about $75 and $85 you probably won’t see much difference in profit ($75 is still pretty good though).

Note that producers have to sell their oil to Heritage, the state owned oil company. It pays about a $10 discount to WTI (it doesn’t distinguish between heavy and light oils, but pays one price and blends everything together selling it on at a discount to WTI),

The incentives were set by Trinity’s remuneration committee, which until recently and at the time these awards were issued included Angus Winther and David Segel. Those two own 18.6% of Trinity. You can be confident that they were planning for company growth and shareholder returns, not intending to reward failure. In any event, these are exciting times as we await the next Jacobin update and find out how much it will increase production by.

Jon Cooper looks like a good addition to the board. He replaces Angus Winther, who resigned at the AGM and who also had a financial background.

One of the differences between Trinity and many other AIM companies is the depth of its board. We’re now back to having four non-executive directors and a non-executive chairman. They all have extensive oil and gas management experience (James Menzies and Mr Cooper are chief executives, Derek Hudson was a Shell Vice President and Country Chairman for Trinidad and Tobago, and Kaat Van Hecke was an interim chief executive for 9 months as Nostrum), and two are also geologists (Mr Menzies and Mr Hudson).

Here are some of the local reports on Trinity’s “very significant and material achievement” of discovering oil at Jacobin, in both the primary targets and the secondary target (“adding to the commercial attractiveness of the well”), that validates the “geological model and are within pre-drill range for a commercial discovery”:

https://trinidadexpress.com/business/local/trinity-discovers-virgin-oil-onshore-trinidad/article_6fc20406-358a-11ee-8fca-871b7bc91da6.html

https://guardian.co.tt/business/trinity-discovers-virgin-oil-in-new-well-6.2.1770855.3d6f141de1

https://newsday.co.tt/2023/08/07/trinity-confirms-palo-seco-onshore-oil-find/

https://tt.loopnews.com/content/trinitys-jacobin-1-oil-discovery-confirmed

Trinity have been confident about Jacobin for some time. They’ve made that confidence clear, including by going as far as to describe it as an appraisal well rather than an exploration well (see the box on the right hand side of page 12 of https://trinityexploration.com/wp-content/uploads/2023/06/Investor-Technical-Presentation-June-2023-Hummingbird-Buenos-Ayres-vF.pdf) and by stating that the 63% chance of success was about as good as it gets in the oil industry. Jacobin was never a speculative drill, but rather the result of years of careful analysis and planning supervised in part by independent experts.

Trinity’s confidence in Jacobin clearly remains. There’s little caution in describing the discovery as “very significant and material”. Furthermore, it’s notable that the purpose of the heavy-duty workover rig, that will soon replace the drilling rig, is “to run the completion, perforate and tie the well into production facilities.” Why would they want to tie the well into production facilities other than because they intend to produce from it?

Obviously we’ll have to wait for the production figures, but part of the excitement of Jacobin’s primary targets is the high “virgin pressures” as no production has previously been taken from these pools.

Of course, the bigger prize remains that Jacobin unlocks the other eight deep prospects and Buenos Ayers. More details will follow in September, but after a very slow start to drilling (not much has happened over the past three years whilst the careful analysis has been taking place) these are now exciting times.

…The well has been cased to 10,021 feet and is being prepared for a series of production tests that is likely to commence with the deepest oil-bearing reservoir, and first production is expected during September. This timeline is driven by the demobilisation of the drilling rig from the site and installation of a heavy-duty workover rig to run the completion, perforate and tie the well into production facilities. A further update on production rates, fluid properties, as well as future plans will be provided at that time.

The Jacobin results validate both the structural and stratigraphic model demonstrating the existence of a deeper turbidite play across Trinity's entire Palo Seco area, and the recently awarded Buenos Ayres block. The integration of the onshore 3D seismic over the Lease Operatorship blocks purchased in 2021 has been key to the understanding of the sub-surface. Data from the well will now be used to de-risk and re-rank the remaining "Hummingbird" prospects across the Palo Seco blocks and those recently mapped within the Buenos Ayres block.

Jeremy Bridglalsingh, Chief Executive Officer of Trinity, said, "This is a very significant and material achievement by the Team. To find virgin oil in our mature acreage points to a step-change in our understanding of the hydrocarbon system, the remaining resource potential and how we can approach the exploitation of these resources.

"I would like to congratulate the Trinity Team on this success. We have demonstrated a true competitive advantage by the hard work in, building our geological understanding, working through the many aspects of planning and delivering a complex well and critically, safe execution of drilling operations.

"I would also like to thank our partner Heritage, for their valued help and assistance in facilitating the drilling of this well. The next step is to undertake a full production testing programme, that is expected to commence during September. We look forward to updating shareholders on our progress."

Here’s Trinidad and Tobago’s Energy Chamber (see https://energynow.tt/blog/trinity-jacobin-1-oil-discovery-confirmed ) write up on Jacobin:

Trinity Exploration has confirmed the Jacobin-1 oil discovery in the Palo Seco area. The company has stated that over 290 feet of net oil pay was encountered in the Jacobin well, including 63 feet of net oil pay in the deeper exploration targets.

While production volumes are still to be determined, the news of the exploration success will be welcomed in Trinidad & Tobago, where oil production has been declining for many years. In an attempt to attract new investment in Trinidad’s mature oil sector the Government responded to industry advocacy in 2022 and made some changes to the tax regime to improve project economics and attract investment in oil production. These changes included making permanent the previously temporary measure to raise the threshold price at which windfall Supplemental Petroleum Tax (SPT) comes into effect for small onshore producers (defined as companies producing less than 4,000 barrels per day). Other changes introduced last year also included a new lower sliding scale SPT for production from new offshore wells. While these changes were welcome by the industry and helped attract investment from companies like Trinity, there has been a continued call for further reforms to encourage new investment in mature fields and the infrastructure needed to safely increase production.

The Jacobin-1 well was spudded on 15 May 2023 with an objective to appraise and explore the potential of Lower Cruse sandstones within the Palo Seco area of the prolific Southern Basin.

According to Trinity, drilling samples, wireline logs and pressure testing indicate that the well encountered significant reservoir and hydrocarbon accumulations in the Lower Forest, Upper Cruse and Lower Cruse. The exploration section of the well encountered net reservoir thicknesses varying between 45 to 190 feet. An aggregate of 63 feet of net hydrocarbon pay was identified in the deeper exploration section of the well. Reservoir pressures appear to be high (up to 7,500psi) and indicate virgin pressures.

In addition, and as previously announced, 228 feet of net pay was found in the secondary target section, adding to the commercial attractiveness of the well.

Data acquired from the well are being analysed further by Trinity's reservoir and petroleum engineering teams through dynamic modelling to design an optimal completions strategy for the stacked pay encountered within the exploration section…

And here’s Malcy’s comment:

“This is undoubtedly a great find by Trinity, over 290′ of net pay in the well and deeper targets is not to be sneezed at. They say that there is a ‘significant reservoir and hydrocarbon accumulation in the Lower Forrest and the upper and lower Cruse’ which sounds good.

“However at present there are no flow rates, the drilling rig is being replaced with a heavy duty workover rig in order to not only test but also run the completion, perforate and tie the well into production facilities. This means I guess that the company are certain of the well flowing but I would just prefer to see the flow rates before giving it a definitive value.”

https://www.malcysblog.com/2023/08/oil-price-beacon-trinity-egdon-reabold-prospex-and-finally/

Touchstone appears to have risen today, at least in part, in sympathy with Trinity. Although they’re different, success with Royston’s testing (which is due soon) may repay the favour whilst we wait for September’s results.

Here’s the link: https://www.investorschronicle.co.uk/ideas/2023/08/07/an-oil-stock-that-could-double-in-value/

Only boost to production and reserves from Jacobin will be welcome (especially as Trinity have forecast that a successful well will pay for itself, $4.5 million, in less than a year), but the real prize is what success means across Trinity’s licences.

Success at Jacobin proves the seismic analysis showing another eight deep wells in the Palo Seco area and many more in the newly acquired, previously un-drilled, Buenos Ayers licence. The presence of deep oil in BA alone may enable Trinity, in the words of James Menzies at the last presentation, to double, triple, quadruple reserves. Doubling, tripling, quadrupling reserves should increase the share prices by at least a similar magnitude. And that’s before taking into account that Trinity’s share price is considerably undervalued at present (on Friday it was trading on about four times 2023 earnings) and the boost that will come from successfully developing Galeota (which has proven reserves, but which isn’t yet in production as it’s offshore - update due next month, with potential drilling next year).

It’s excellent news that Jacobin is commercial, but even better still is that it “validates the existence of a deeper turbidite play across Trinity's entire Palo Seco area, and the recently awarded Buenos Ayres block”. There are another eight deep well prospects in the Palo Seco area and many more in the un-drilled Buenos Ayres block.

Hopefully Trinity and shareholders will now reap the reward. And a big reward it should be: as James Menzies, one of the members of the Technical Committee that reviewed the detailed analysis that revealed the existence of these deep plays, said at the last presentation, “if this hypothesis works out we have the opportunity to double, triple, quadruple our reserves base just from this one [Buenos Ayres] block alone” (see https://youtube.com/watch?v=vpvDZW_NAE8&pp=ygUjdHJpbml0eSBleHBsb3JhdGlvbiBhbmQgcHJvZHVjdGlvbiA%3D at 33 minutes in).

There are 13 new questions and answers on the website: https://www.angusenergy.co.uk/media/investor-questions/

The new warrants will raise £4.5 million if exercised during their lifetime and I imagine the existing unexercised ones will bring in a similar amount (I asked Angus at the beginning of the month how many are outstanding and hopefully they’ll answer at the end).

It’s a little peculiar that in an attempt to raise money without issuing shares, the warrants (albeit exercisable at a significant premium to the current share price) could wipe out a large chunk of the debt by the issuing of shares.

Especially at this price though, I expect that will soon be a blip on the road to success. I’m less hopeful that we’ll see 3p any time soon though (1.5p to 2p would be nice from here), but with reserves due to reevaluated, the potential for further wells and storage, possible gas spikes, possible oil field production and maybe even a bit more energy tax reform, you never know. The risk is getting much higher though and although I remain open to buying more, caution and moderation are appreciated guides for now.

You can only appeal to the Supreme Court on a point of law. In this type of case, appeal to the Court of Appeal is usually as far as you can go.

There’s no date by which the court has to make a decision, but it will be expected to do so as quickly as possible. If there’s very little merit/little for the judge to think about, judgment could come during the hearing (at the end, obviously). It’s more common for judicial review judgments to be reserved. One potential problem is that the High Court’s summer recess runs from August 1st to October 1st, so if there’s no judgment by the end of July we might have to wait until October.

George Lucan is George Charles Bingham, 8th Earl of Lucan. Although it’s unfortunate that there have been delays (in the short term Angus’ finances would have been significantly better without them), he’s still done an excellent job in bringing Saltfleetby back into production. A couple of years ago it was a field containing a load of abandoned equipment, whereas now it’s by far the largest onshore producer of gas. Moreover, it was achieved at a cost that is small compared to the value of the gas. There may well be more to come as reserves are re-examined and the potential for storage explored.

I’m surprised by the drop in gas prices. They usually start picking up in July, but are down another 8% at the moment to just under 65p - see https://www.ice.com/products/910/UK-NBP-Natural-Gas-Futures/data?marketId=5419491

But as LSE report, there are no open shorts in Angus (although if they total below 0.5% of the shares they’re not disclosable).

So it appears that Aleph haven’t reduced their stake, but rather have transferred part of it to the beneficial owners. Why not say that last week?

I fear it means that the lenders are being demanding.

The condy is a little gold mine attached to the big gold mine. Some posters complain about the costs, but it makes a very nice profit and there’s more of it than expected.