The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
RRA22
No specific reforms have been signalled though, just a general intention to reform, which is nothing new. TRIN needs to know about the specific reforms before it and its partners can make business decisions.
Stuart Young also said:
“I make it very clear that part of the job of the Minister of Energy and Energy Industries, under this PNM administration, and in particular of myself in the seat, is to fight for better returns for the people of Trinidad and Tobago whilst keeping us competitive.”
This is the key to the whole thing and highlights the extent to which they want to have their cake and eat it. There is no meaningful SPT reform which is not going to initially reduce the tax take for T&T. This is something that the PNM seem to struggle with. They seem to lack the political courage to lay out a program of reform that is an immediate win for the likes of TRIN and a (not that far) down the line win for T&T. Yet there is no other way to achieve better returns for the people of T&T.
If the PNM fail them again I hope that TRIN take their available capital where it will secure a better return for us shareholders.
LuckCounts
Not undervalued, arguably fairly valued on the basis of the current fiscal regime. The authorities have after all still not even deigned to signal any reforms. They have not even reassured us that the current temporary onshore SPT reforms won’t simply be allowed to lapse!
This is the problem with TRIN: the fiscal regime makes it neither as profitable nor as able to grow production as folk seem to think. And then of course there is the likelihood of that fiscal regime changing in a meaningful way - again not as high as folk seem to think. The market gets it though, sadly. Limited downside from here at least.
I think it all comes down to the regime pulling the trigger on meaningful tax reform. If that happens Galeota and everything else will fall into place and £3+ will very much be on the cards. But I think the market is sceptical about the regime actually following through on their business friendly rhetoric.
You can see how the SPT rate gets progressively higher set out on page 11 of this:
https://assets.ey.com/content/dam/ey-sites/ey-com/en_tt/article/ey-tt-budget-2021-20201005.pdf?download
Stockable
These are reserves with limited potential profitability under the current fiscal regime - we do not know if and when the fiscal regime is going to be significantly reformed, in fact the current onshore SPT reform measures could still be allowed to lapse, in theory.
At the same time inflation will be showing up in TRIN’s costs and eroding the benefit of higher WTI. The market gets all this, hence the very limited ST effect this morning.
comeonvog
I think it is a mistake to blame the management. They are simply waiting for fiscal reform from the regime. There is not much else they can do until they know (a) whether existing onshore SPT reforms are being extended for a significant time period (or, better still, made permanent or, even better still, superseded by root and branch reforms) and (b) whether anything is going to be done about offshore SPT.
If the regime lets TRIN down I would like to see them doing only what is most profitable in T&T (despite what you read on BBs, even with WTI where it is some of TRIN’s operations are a bit marginal under the current fiscal regime) and starting to deploy capital more profitably outwith T&T.