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Note from John Kemp at Reuters: "U.S. commercial inventories of crude oil are only up ~3 million barrels since January 1st. This compares to +48 MMBbls in 2017 and +26 MMBbls for the 10 year average." So what happens when refiners come out of maintenance season and demand for crude oil spikes?" In 2017, refinery throughput increase by over 2.0 MMBbls per day from February to April and refiners stayed near 95% capacity until Hurricane Harvey arrived. This year, inventories of gasoline, diesel and jet fuel are much lower than they were a year ago. REMEMBER THIS FACT: Every oil price cycle we've every had, overshot the mark causing shortages and higher oil price. he doubts that it is different this time.
Agree...some great posting on Twitter. Impressive!
Best view this on a computer (not phone). Results in line and solid: thank you Bruce & Jeremy for a great update. The company is slowly metamorphosing into something really strong; it is just doing this via a quieter chosen path. (This is fine as long as you don't need to hurriedly raise capital via equity market). There are a number of external catalysts that will materially affect TRIN: Expect SPT to get overhauled this year in Trinidad: Gas now (after small delay) paying fair share to State from 1st Jan 2018 (12.5% royalty). THIS is of GREAT importance; it places Trinidad in a stronger position to overhaul the ailing oil sector...from what I can observe...everyone knows it needs to change...it seems to be a question of when...) GIVE OR TAKE...Cash in bank (with 5.9 mln paid off for MEEI/BIR, 7.7mln for CLN's, 5 mln of capex and drilling combined (bit light)) at end of 2018 with Oil price per barrel sold (2900 bopd): at 49 dollars= $6.6 mln. 50(.01) = -$0.1. 51 = 0.4. 55 = 2.5. 60 = 5. 65 = 6.7 70 = 8.5 This includes short upside leg of the hedge (through to end of 18). So, you can see how oil price and SPT overhaul are key drivers for the company at present (notwithstanding ongoing efforts made by the company to improve their reality). What does this look like (broadly/all being unchanged / rule of thumb etc) for 2018 with hedge off ALL with 2900 BOPD? POO / CASH PRODUCTION ($) / PE ratio (16p share price with $ at 1.39) 49 / 15.1 / 4 50(.01) / 7.7 / 8 55 / 10.6 / 6 60 / 13.5 / 4.6 65 / 16.4 / 3.8 70 / 18.7 / 3.2 75 / 22.1 / 2.83 Clearly some of this would need to be used for capex / drilling etc Now for the juicy bit...if SPT was rolled into PPT where TRIN has retained losses (all same assumptions): 49 POO / $15.1mln / 4.1PE 50 / 15.8 / 3.9 55 / 19.5 / 3.2 60 / 23.3 / 2.69(!) 65 / 27 / 2.3 70 / 30.7 / 2 75 / 34 / 1.8 (None of this pricing implies any benefit from drilling or further workovers!!) So...for those whose nerves are jangled by today's price action (which in my opinion was to be expected): Is it reasonable to assume that WTI will not sit at 54.4 for next two years? reasonable Is it reasonable to trust that the company intends to pay off the CLN's? Likely Is it reasonable to assume the company will work to improve its reality? high caliber management...yes Is it reasonable to assume that oil might be higher next year? (who knows but I believe it will) Is it reasonable that T&T overhauls SPT over the next year with swelling coffers from NatGas? I think so. Is it unlikely that you will be able to buy Trin for 14 pence again, barring a disaster? (so don't sell unless you have something better elsewhere)... G
https://spearsresearch.com/podcast/ Episode 55...shape of things to come. The IEA need their heads examining....
Hi M... it strikes me that the selling / low price we are witnessing owes much to under-communication by the company in the face of a legacy uncertainty...I think this roots to noble intention but I am not a fan. If the market always expected something good from Trin it would be a building excitement in the quiet times...if the market always expected something bad (once bitten, twice shy) then a sense of anxiety grows instead. Given its history, which do you think the market is (falsely) expecting of Trin...something bad or something good? I really hope that the company remedies this in the upcoming publication...we shall see. As some know, I am not a particular subscriber to excessive manipulation but I do agree that it exists. We need to see / sense a good road map, and the company is eminently capable of delivery...I am excited to see by how much things have moved forward (debt reduction etc...) Nature abhors a vacuum and the market hates uncertainty. It was unfortunate to produce some financial info in early Feb that showed the cash levels remaining constant without publishing the debt reduction at the same time...it allowed some tools to sew doubt that Trin was producing no cash...watch for this debt reduction number...it is a real indicator! C - what is life without a bit of teasing...are you walking the dogs in this cold? Bike is in the garage with the battery on charge... GO
Cheer up all....Numbers surely round the corner... Can anyone decipher my title...it's a code that anyone can use on any occasion but it is still valuable ;-)
Living on hope does not make a great company... Hope in a good Oil Price / Hope in an <unexpected> announcement on SPT A company relying on Hope = most undervalued share in sector Plan of attack / strong ambitions that market can get behind = Best valued share in the sector Just an observation...
Some thoughts going into the weekend...backdrop: low volume, low interest and enthusiasm from shareholders / market participants & not much communication. Bruce, Jeremy...What this company needs is a well publicized plan of attack that grabs shareholder / potential investor attention: Announcement of a decent drilling campaign Solid forward looking statement A statement of intent to pay back the CLN (I assume the MEEI overhang will go as a given) The sale of the West Coast Asset to proceed freeing up money to move forward A longer dated plan of attack Asset review More Twitter... Go on TRIN...set out to surprise the market! What we don't need... Next to zero communication GO
Quote on Range...“I am visiting Trinidad shortly and hope to visit all the assets and meet with all the key local management so will report back in a couple of weeks but they do seem to be getting to grips with the situation so patient investors may eventually be rewarded.” GO
C...don’t forget the decline rates of the mature fields globally supplying 35 ish % of world supply...declining 6-8% a year largely through a combination of age and chronic underinvestment. The press is dodgy on oil. Under-reporting the bullish and over-reporting the bearish. It’s a reckless approach in the long term. G
I am only concerned with the monthly numbers...volatility all over the shop: 58...or is it 59 etc expect some chop for the next 6 weeks owing to Refinery maintenance season. My numbers are also inaccurate without knowing the Petrotrin purchase discount rate that gets applied...assuming minimal at the moment then the number for January against an average price of around $63: throws off a really solid pre SPT cash in the bank of circa $2.1mln. This is assuming 2850 bopd which I view as conservative (but appropriate)...if 14 days of production hit 3000 then broadly the other 14 or so days would have to be 2700 bopd for my number to stack up...i am too low. Remember these are the barrels that count with that fixed cost base... From this subtract a theoretical $480k of SPT (ish)...but remember SPT is calculated quarterly and if we go sub 50 for the quarter then it won't be charged...and we will have an amazing result...here is hoping to that one Mr Imbert!<Seriously?> Incidentally, the SPT payment is taken 15 days after quarter end. FWIW I think / hunch / don't know for sure / extrapolate that the MEEI / BIR payment outstanding is circa $6mln now...a staggering achievement down from over $13mln. I want to look into my assumptions around the ORR...I think they might be a touch heavy. GO remaining calm, most of the time...this company is well run, consistent, conservative, has a great hedge in place if we dip excessively (almost nil probability unless the Russians and Arabs succumb to the temptation of sticking two fingers up at the US shale guys...and ramp up production for a pyrrhic victory) , is very considered in its approach going forward, has Jeremy as a great CFO - independently corroborated for me as very precise with his numbers / costs, has great assets, an honest and shrewd board...you know the story. I predict shale will stumble in next 2-3 years... One final thought...Oil has had a great run up...settling back and finding the inflection point / considered base number is really important here...where will that be...we will see! Signing off...GO
Of course there are lots of jangled nerves on this one and it’s all down to appetite.
W - I do agree, although an added definition on debt in this case is debt that will see most shareholders diluted...call it a menacing overhanging debt. The MEEI and contingent CLN payment really are linked in my mind as their net effect has a strong diluting effect on shareholders. Post these being paid off...are you averse to the company borrowing say $10mln (unconnected to equity dilution) to fund a strategic drilling campaign? For me, I would rather have that manageable debt, be paying it off through the year and drilling from the start of the year...rather than build the cash up and spend it in the following year. There is nothing wrong with strategic manageable debt to help with the time factor in the equation... There is not a lot stopping TRIN from doing this right now... Just a thought...
...away from paying off all the MEEI/BIR, closing out the CLNs, putting some decent money into 2018 drilling/CAPEX & providing a reasonable buffer of cash (...accruing into the end of the year.) Assuming oil at these levels and no sale of West Coast Asset. My thoughts are starting to turn more to asking what is the plan once we get to that very satisfactory state; is management planning for this now - if oil rallies from here are they going to be aggressive? GO
Answer has to incorporate costs of workovers as Weissy points out...
Thanks W Makes sense. So the $9mln at end of Q2 was premature. I think the number was 13.6 possibly less the first payment of circa 1mln= 12.6mln of debt. The cash position was 11.5...so net position was -1.1 or so at this point. Therefore 9mln should read 12.6 (ish) at end of H1. This was reduced to 7-8 mln by Sep/Oct, so where is it now ? Interesting to track... GO
2017 mid way through year (end of Q2)...Trin Cash balance: $11.5 mln 2017 close of year (end of Q4) ...Trin Cash balance: $11.7mln What has been made in H2? Unless I am missing something, and Trin “makes money every day above $28” there should have been a cash uplift...? To explain this away: 1 I am wrong that TRIN is cash positive 2 The company has been paying down MEEI/BIR payments significantly. (As stated) So...the BIR/MEEI payments can be deduced from what was actually made in the second half. My reckoning is that they owed about $9mln at the end of Q2 but this is a guess...please correct me. The question: how much did Trin pay off of their debt to the Trinidadian govt in H2 last year given the cash balance has not moved? Answers on a post card? GO
All in line with their forecast EXCEPT for one big factor: they forecast cash levels of $6mln at this juncture...revised number is now $11.7mln (unsure whether WH has accommodated the faster than expected paying down of MEEI/BIR)...either way this company is throwing of some good amounts of cash! Extract below: "Trinity has released a production update this morning, with an 11% increase in production qoq for Q417. Full year 2017 production was inline with our forecasts but YE cash of $11.7m was above our forecast of c$6m. The ongoing work programme has continued to increase production, and with the initiation of new drilling in Q118, Trinity is on track to meet its short term production target of 3kbopd in 2018. We believe the 45% share price discount to our PT of 32p is unwarranted, given continued strong execution, and reiterate our BUY recommendation. " GO
Monday, 6th March 2017....production sub 2,500...WTI = 53.19 ...share price peak 16.93p. Monday, 16th Oct 2017....production just over 2,500...WTI = 51.86 ...share price peak 19.57p. Monday 5th Feb 2018...production approaching 3000 BOPD...WTI = 64 ...shareprice = ? With debt lower / balance sheet strengthening, production up a lot, oil up a lot, a drilling plan ahead, cash position strong...delivery delivery delivery...let's see what happens.