Page 19 - LatAmOil Week 29 2020

LatAmOil NEWS IN BRIEF LatAmOil

Q2-2020 Operational Highlights: 8.5% year- in the current low oil price environment thereby
on-year increase in Group average production preserving balance sheet strength. Progress
volumes to 3,272 bpd for the second quarter towards the low target break-even highlights the
(Q2-2019: 2,996 bpd) without any new wells strength of the Company’s operating model. The
being drilled, representing broadly flat quar- Company’s strong production base combined
ter-on-quarter production (Q1-2020: 3,291 with its ever-increasing use of analytics provides
bpd). H1-2020 average production volumes of a solid base for continued organic growth. In
3,282 bpd represent a year-on-year increase of addition, asset acquisitions and partnerships are
9.1% (H1-2019 3,008 bpd). another possible source of growth, offering the
Three recompletions (RCPs) (Q1-2020: potential to increase scale, drive economies and
three) and 17 workovers (Q1-2020: 39) were thereby improve operating break-evens and cash
completed during the period, with swabbing generation to further enhance shareholder value.
continuing across all onshore assets. Success- Bruce Dingwall CBE, Executive Chairman of
ful application of Weatherford’s Supervisory, Trinity, commented: “Sustaining production lev-
Control and Data Acquisition (“SCADA”) with els under the current exceptional circumstances
improved quantitative and qualitative perfor- is an incredible achievement and ought not to
mance from the wells; improved problem diag- be underestimated. To maintain higher produc-
nosis; more accurate operational responses to tion levels with very limited financial investment
issues; better understanding of system perfor- and the added restrictions of COVID-19-secure
mance as related to technical design; extending impacted by COVID-19, but we continue to practices is a testament to the strength of the
run-life; greater optimisation of wells. monitor the situation and have put further business and ultimately the intense efforts of the
Production volumes for the remainder of appropriate measures in place (including tem- team.
2020 will depend on oil price and general market perature checks) and will continue to adapt as “It is this extreme, and unexpected, stress
conditions supporting the economic case for the and when required. testing event that has given the Company the
resumption of drilling activity. The Company’s continued focus on manag- increased confidence and ability to focus on
Even if the prevailing oil price environment ing production decline has resulted in produc- scaling the business. When one considers our
does not support the case for a resumption of tion levels being maintained at close to recent financial discipline, balance sheet strength and
drilling in the near term, net average production highs even in the absence of new wells being credibility, as well as our differentiated operating
for 2020 is still expected to be in the range of drilled and a reduced number of RCPs being model and corporate ambition, we are very well
3,100-3,300 bpd (2019: 3,007 bpd). undertaken. Protecting past investment is a placed to grow our business both organically and
Q2-2020 Financial Highlights Average real- key priority and ensures that rates of return are via external opportunities.”
isation of $26.4 per barrel for Q2-(Q1-2020: maintained despite the dramatic reduction in the Trinity Exploration, July 16 2020
$46.3 per barrel) yielding a H1-2020 average of oil price.
$36.3 per barrel (H1-2019: $59.1 per barrel). As The extent and timing of the resumption of Petrobras concludes
a result, no Supplemental Petroleum Taxes (SPT) the onshore drilling programme will be depend-
will be payable with respect to H1-2020 produc- ent on the prevailing economic environment the sale of the Ponta
tion. Cash balance of $19.7mn (unaudited) as during the remainder of this year. In the mean-
at June 30, 2020 (December 31, 2019: $13.8mn, time, the sub-surface team has been tasked with do Mel and Redonda
audited). prioritising the identification of high angle well
The H1-2020 cash balance reflects:cash (HAW) drilling locations and the Company will onshore fields
outflows for Q4 2019 taxes (including SPT) of continue to roll out further SCADA platforms on
c.$2.2mn, as well as annual payments (such as selected existing wells. Petrobras has finalised the sale of its entire par-
insurance and licence obligations) of $0.7mn On the Company’s east coast Galeota licence, ticipation in two onshore production fields,
and capex of c. $2.5m during H1-2020; cash dialogue continues with both Heritage Petro- Ponta do Mel and Redonda, located in the
inflows of $2.7mn (from the drawdown of the leum Company Limited (Trinity’s partner) and Potiguar Basin, in the state of Rio Grande do
CIBC First Caribbean working capital facility), The Ministry of Energy and Energy Industries Norte, to Central Resources do Brasil Producao
$2.8mn (from the sale of the recently received (Trinity’s regulator) in moving both the Trintes de Petroleo.
VAT Bonds) and net hedge income of $0.8mn Field area and the TGAL field development After the fulfilling of all precedent conditions
received during H1-2020; robust production forward. and considering other further conditions sub-
levels combined with strict cost controls resulted The Environmental Impact Assessment sequently agreed, the operation was concluded
in an average operating break-even of $22.6 per (EIA) study commenced in February with all totaling $7.2mn for Petrobras, with payment to
barrel (unaudited) for Q2-2020 versus Q1-2020 dry season data collection having subsequently be made over 18 months.
at $26.7 per barrel (unaudited) and compared to been completed and wet season data collection The fields of Ponta de Mel and Redonda are
$26.0 per barrel for Q2-2019. is due to commence shortly. Work on building located in the municipality of Areia Branca, in
The downward trends in operating break- the dynamic reservoir model continues on the the state of Rio Grande do Norte. The average oil
even continues, with the June 2020 level of $21.6 TGAL development. This important work assists production of the fields in the first half of 2020
per barrel (post hedging income: $19.8 per bar- in optimal platform and well placement and in was around 493 barrels per day. The company
rel). The Company is on track to meet its target better understanding the best strategy to drain Central Resources already had rights arising
for average operating break-even (inclusive of the maximum amount of reserves with the min- from service contracts for oil exploration with
hedging income) of $20.5 per barrel for FY 2020. imum number of wells. a risk clause, linked to the Ponta do Mel and
Operations Update: The Company’s field Outlook: The focus remains on tight cost Redonda fields, signed with Petrobras in 1982.
operations have not, to date, been negatively controls and maintaining profitable production Petrobras, July 16 2020

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