Page 16 - LatAmOil Week 29 2021

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INVESTMENT

Trinity Exploration

announces Galeota
licence update

Trinity Exploration & Production, the inde-
pendent E&P company focused on Trinidad
and Tobago, has announced that a new Galeota
Exploration and Production Licence, on the East
Coast of Trinidad, has been issued by the Min-
istry of Energy and Energy Industries (MEEI). Override Agreement (CVORR) for its 35% inter- project in our view.
Contemporaneously, Trinity has agreed new and est in the wider Block, which increases Trinity’s The Phase 1 offshore development on the
improved commercial terms with its partner on interest across the entire Galeota Licence area to Galeota Licence will be the first of its kind in
the Block, Heritage Petroleum Co. (HPC). 100%. Trinidad, being powered from the shore. The
Bruce Dingwall CBE, Executive Chairman Revised Licence Terms: Core focus area Project has the potential to add additional peak
of Trinity, commented: “Today’s announcement defined with new licence area comprising 7,802 production of at least 4,000 bpd on the cur-
marks the start of the next phase of the Galeota hectares (versus 12,300 hectares) following rent development concept. Work is currently
Block development. The Galeota Block, which relinquishment of acreage. Significant reduction ongoing on pre-Front End Engineering Design
includes the current Trintes Field production, in minimum work obligations and performance (FEED) studies and environmental approvals
the Echo Field Development and the Foxtrot and guarantee. Revised financial obligations broadly as we move towards FID at the earliest oppor-
Golf appraisal areas is a core asset of the Group. similar, with immaterial impact on NAV. tunity. The First Phase currently contemplates
We are extremely pleased with the outcome of Revised Commercial Terms with Herit- the installation of a low cost, minimum foot-
our constructive negotiations with the MEEI age, New CVORR: Under both the old and print, eight well conductor supported platform
and Heritage. The improvements in the Licence new licence, the ORRs are set on a sliding scale for the Echo development area, a new pipeline
and JOA terms support a return to sustained against production and realised price. How- from Echo to shore (also tying in the existing
investment across the Block, to the mutual ben- ever, as part of the CVORR, Trinity has agreed Trintes production and including T sections for
efit of Trinity, Heritage and the Government of significantly improved licence-wide ORRs to future-proofing the potential development of the
the Republic of Trinidad and Tobago (GORTT). incentivise higher activity levels and maximise Foxtrot and Golf appraisal areas). It is expected
“The significantly improved ORR terms and economic recoveries (lower ORRs applied across that Echo will be powered from shore (employ-
new COSA provide Trinity and prospective all production levels and realised oil prices). In ing wind power and solar technologies) with
funding partners with attractive commercial particular, the Echo development (and any sub- tiebacks to the Trintes platforms. As there will
terms and the requisite visibility to bring on new sequent developments within the Block) will be no offshore power generation (i.e. no diesel,
low carbon development projects such as Echo, benefit from a nominal ORR rate for an initial no generators, no fuel transfers or storage), and
incentivising maximum resource extraction at a six-year period on first oil from Echo. with the platform being normally unmanned,
time of high oil prices and a transition towards New COSA: Under the previous arrange- the development will have a nominal carbon
lower carbon energy supplies. ments, Trinity received an equity land blend footprint when compared to standard offshore
“We appreciate the commitment of both the price for its crude oil from Heritage. Under the developments.
leadership team at Heritage and the proactive new COSA with Heritage, all crude sale receipts The revised ORR structure significantly
approach and support that we have received will be index linked to ICE Brent with an agreed improves the economic potential of the Block
from the MEEI and we look forward to working discount (and the removal of a previous trans- with a nominal Super Enhanced ORR on pro-
with all stakeholders to optimise the significant portation fee) on a one year rolling basis effective duction above 1,200 bpd in the initial six-year
mutual benefits of these new arrangements.” August 1, 2021. This formula is now aligned to period from first fiscalised oil from Echo (com-
Background: Trinity has been operating an internationally recognised index and pro- pared to 10% previously). In addition, the sig-
the Galeota Licence area under rollover terms vides much greater pricing transparency to Trin- nificant reduction in the Base ORR (when
since the expiration of the 2009 Galeota Licence ity and to potential funding partners. production is below 1,000 bpd) will enable Trin-
in 2015. The new exploration and production Outlook/Next Steps: As well as the current ity to push out the economic life of the Block.
licence has been granted by the MEEI for a 25 production from the Trintes field, the Galeota This new arrangement reflects Heritage’s proac-
year period, an initial period of six years com- Licence also includes a series of development tive approach to ensure value is sustained and
mencing July 14, 2021, after which Trinity will and appraisal opportunities (Echo, Foxtrot and future reserves recovery is maximised for all
have the opportunity to extend the licence for a Golf) which are being progressed. The agree- stakeholders.
further 19 years. ment of a new 25-year Licence and the improved It is also worth noting that the bulk of Trin-
Under the old licence, Trinity held a 100% commercial terms are crucial milestones in ity’s substantial tax losses can now be applied
interest in the Trintes producing area and a 65% being able to attract funding partners and move across the entire Galeota Licence, enabling them
working interest in the wider Block (including towards a Final Investment Decision (‘FID’) to to be utilised more quickly, which further under-
the contiguous Echo, Foxtrot and Golf appraisal bring the Echo development to fruition. Echo’s pins the attractive economics of Echo and any
areas) with Heritage holding the remaining 35% location near to existing infrastructure, includ- future developments. More detailed updates on
WI as part of a JOA. Contemporaneous to nego- ing Trinity’s producing Trintes field, and prox- the Galeota Licence and the plans going forward
tiating the new Licence terms with the MEEI, imity to the shoreline (and our existing tank will be made in due course.
Trinity has agreed with Heritage a Conversion to farm) makes it a highly attractive development Trinity Exploration, July 19 2021

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