Annual Report & Accounts
for the year ended 31 December 2021
Company Number: 07535869
Stock Code: TRIN
Contents
Strategic Report
Financial Accounts
85 Consolidated Statement of Comprehensive Income
86 Consolidated Statement of Financial Position
87 Company Statement of Financial Position
88 Consolidated Statement of Changes in Equity
89 Company Statement of Changes in Equity
90 Consolidated Statement of Cash Flows
91 Company Statement of Cash Flows
92 Notes to the Consolidated Financial Statements
Glossary of Terms
134 Glossary of Terms
Company Information
137 Company Information
2021 Highlights
At a Glance
Bruce Dingwall CBE Tribute
Chairman’s Letter 2021
CEO’s Review of 2021
1
2
4
5
8
12 Business Strategy and Model
14 Operations Review
22 Technical Review
25 Stakeholder Engagement
27 Sustainability
35 Financial Review
44 Risk Management and Internal Controls
Governance
50 Directors' Statement under S 172(1) CA 2006
52 Corporate Governance Statement
53 QCA Principles
58 Board of Directors
60 Executive Management Team
61 Board Activities
62 Audit Committee Report
64 Remuneration Committee Report
66 Directors’ Remuneration Report
74 Directors’ Report
77 Statement of Directors’ Responsibilities
78 Independent Auditors’ Report
For more information on
Trinity Exploration & Production visit
trinityexploration.com
Annual Report & Financial Statements 2021
Highlights of 2021
1
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Sales (bopd)
3,006
(2020: 3,226 bopd)
Adjusted EBITDA (USD)
19.8m
(2020: $12.1m USD)
Operating Profit Before
SPT, PT, Impairments, Covid 19
Expenses and Exceptional
Items (USD)
10.0m
(2020: $3.0m USD)
Cash generated from
continuing operations
(USD)
12.6m
(2020: $10.3m USD)
Cash flow used in
investing activities (USD)
Total year-end
cash (USD)
13.9m
(2020: 6.0m USD)
18.3m
(2020: $20.2m USD)
West Coast
Onshore
East Coast
mmstb
19.73
47.22
2P
2C
66.95
Total
mmstb
2.70
3.01
5.71
2P
2C
Total
mmstb
7.26
3.82
2P
2C
11.08
Total
mmstb
9.77
40.39
50.16
Total YE 2021
2P Reserves
+ 2C Resources*
2P
2C
Total
Note:
Refer to the Financial Review pages 35 to 43 for additional information.
* 2021 Management estimates for reserves and resources
2
Trinity Exploration & Production plc
At a glance
Trinity is an independent energy producer focused on
Trinidad & Tobago.
Trinidad & Tobago is our home. Trinity is based in San
Fernando, in South Trinidad, and we have developed a deep
understanding of the country, its culture and the geology
that hosts such exciting hydrocarbon opportunities. We are
a forward-thinking, modern energy producer, harnessing the
benefits of new technologies to drive efficiency and
maximise production.
We deliver around 5% of the country’s oil production and
provide excellent careers for a wide range of skilled workers,
employing 250 personnel at the end of 2021, almost all of
whom are based in-country.
TOBAGO
Producing Wells
TRINIDAD
Tabaquite
PGB
Guapo Bay
Brighton
Marine
Outer
Brighton
Marine
Inner
Point
Ligoure
WD-13
WD-14
FZ-2
WD-5/6
PS4
WD-2
● Onshore
● West Coast
●
East Coast
Trintes
Field
Galeota
Echo
development
(cid:79)
Onshore (66%)
(cid:79)(cid:3) West Coast (25%)
(cid:79)(cid:3)
East Coast (9%)
Asset Agreement Trinity Heritage Production 2P 2C Exploration
Key
l West Coast
PGB (Point Ligoure, Guapo Marine, JOA 70% 30% LI DRC
Brighton Marine - Outer)
BM (Brighton Marine - Inner) CVORR 100% LI DRC
l Onshore
FZ-2, WD-2, WD-5/6 LOA 100% LI DRC
WD-13 & WD-14 & PS4
Tabaquite FOA 100% LI
l East Coast
Galeota - Trintes JOA 100% FDP DRC
Galeota - Other (i.e.: TGAL/Echo) CVORR 100% FDP OI
Crude oil production
Farmout Agreement
Joint Venture
Agreement
Lease Operatorship
Agreement
Offshore Infrastructure
Drilling, Recompletions
& Workovers
Field Development
Plan
Land Infrastructure
Offshore Exploration
FOA
JOA
LOA
OI
DRC
FDP
LI
OE
CVORR Conversion to
Overriding Royalty
Annual Report & Financial Statements 2021
3
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Financial Accounts
Glossary
Company Information
$56.4m
5%
Spend in 2021
(USD)
of the country’s oil
production delivered
250
Skilled workers
employed
Our business contributes significantly to the local
economy through payments made to the Government
of the Republic of Trinidad and Tobago (“GORTT”)
in royalties and current taxes (USD 25.0 million in 2021),
operating and capital expenditure (USD 31.4 million in
2021) which supports an extensive supply chain,
employing more than 380 contractors, and supporting the
communities that surround us with a number of initiatives,
many of which are conceived and driven by our own staff.
This network of relationships sits at the very heart
of our business and our Core Values of Behaviour,
Rigour & Purpose apply wherever we are present
Behaviour
Rigour
Purpose
professionalism,
respect
and fairness
initiate thought
before action
fit for delivering
our business
goals
Trinity provides excellent careers for 250
Male / Female Staff
Field Office Staff
(cid:79)(cid:3) Male (79%
(cid:79)
Female (21%)
(cid:79)(cid:3)
(cid:79)
Field (67%)
Office (33%)
Our Environmental Social and
Governance (“ESG”) Commitment
ESG is at the forefront of our minds as we drive
towards the future and good ESG practices are at
the core of Trinity’s forward planning. We are currently
making significant steps in the development of our
ESG Strategy and reporting. You can read more in
our Sustainability Review on pages 27 to 34.
4
Trinity Exploration & Production plc
Bruce Dingwall CBE
Tribute
The tragic and sudden passing of Bruce
Dingwall CBE, Executive Chairman and
Founder of Trinity on August 3rd, 2021 was
a serious shock to the entire Trinity “family”.
Bruce was the heartbeat of our Company, he created
its value system, he pioneered the introduction of the
innovative technologies that help to set us apart from
the crowd today, and he acted as a mentor to so many
employees and members of the Executive Management
Team. He was also a key driving force behind the
activities of our subsurface team, illustrating his life-long
fascination for “rocks”. He was a unique, enthusiastic
and irrepressible leader who will be sadly missed
by all in the Company.
Bruce was Trinidadian by birth, having been raised
adjacent to the onshore oilfields, and loved everything
about Trinidad including its culture, its natural beauty
and especially its people. It is no exaggeration to
describe Trinity as a “family” and Bruce was its patriarch.
He started the Company in 2005 via the purchase
of a package of assets from Venture Production, the
successful UK based independent that he also helped
to establish and then built it, step-by-step, into the
successful business it is today.
“Behaviour, Rigour, Purpose”, the mantra that drives
Trinity’s activities today are values that were central
to Bruce. Do the right things, examine the impact of
your actions and make sure those actions benefit all
stakeholders. This describes what Bruce was seeking
to achieve with Trinity and we have carried this value
system forward into the refreshed strategy and
operating philosophy that run through this year’s
Annual Report.
Bruce was passionate about technology, and
believed that the successful application of cutting-edge
technologies, tried and tested in other hydrocarbon
basins around the world, could help differentiate Trinity
from other operators and most importantly, provide a
source of commercial advantage. The roll-out of
Supervisory Control and Data Acquisition (“SCADA”)
and the purchase and interpretation of the 3D seismic
covering our onshore licences are classic examples of
Bruce’s ethos in action in the Company.
Bruce had a genuine love for people. One of his biggest
attributes was helping his friends and colleagues in
Trinity to believe that they could achieve so much more.
Bruce provided support and guidance to many of our
younger employees and was an important mentor for
the Executive Management Team. The promotion of
Jeremy Bridglalsingh to the role of Chief Executive
Officer following Bruce’s passing bears testimony to
this. Bruce coached Jeremy to be his natural successor,
whilst he served as CFO and then Managing Director, but
whilst this was always the plan, none of us expected the
baton to be handed over in such tragic circumstances.
Bruce’s love of the subsurface, the “rocks”, meant
that he was always intimately involved in driving the
Company’s strategy in this area. There can be no
question that the gap left by Bruce’s passing drove the
Board’s decision to establish the Technical Committee.
On a personal note, Bruce was a big and endearing
personality and this shone through in our interactions
at Board level. He was an optimist, with great faith in
people, and irrepressible in his enthusiasm for the array
of opportunities available to the Company. We will all
miss his leadership, experience and council.
The Board wanted, in some way, to acknowledge and
celebrate the immense contribution that Bruce has
made to the Company, and to the land and its people
that he loved. To do so, we have started a bursary fund
at the University of the West Indies, sponsoring young
and talented women and men to study geology and
geoscience. Our hope is that they will develop a similar
love of the ”rocks”, and find productive and fulfilling
careers in the industry which was so central to
Bruce’s life.
Annual Report & Financial Statements 2021
Chairman’s Letter
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Financial Accounts
Glossary
Company Information
“It is a privilege to chair Trinity as we emerge from a period
of significant change during which management refreshed
our strategy and focused the business on clear and
deliverable growth opportunities. Our dynamic strategy
for growth is underpinned by a strong balance sheet and
resilient and dependable cash flow from production -
something of a rarity amongst the smaller companies in
our sector - and a testament to our strong business model.
I would like to commend our team which has maintained
focus, momentum and professionalism throughout a
challenging year, allowing us to protect the integrity
of existing assets and operate safely to deliver steady
production and cash flow. Importantly, this core operating
model provides the basis from which we can grow the
Company into a leading independent producer of scale
both by maximising value from existing assets and
through acquisitions and partnerships. We have a clearly
defined, risk-mitigated strategy in place and believe
that this will drive returns for shareholders through
value growth and the potential to return cash.
At time of publishing, the world is in turmoil and we are
deeply concerned for those most affected by hostilities
in the Ukraine. This global upheaval brings with it a raft
of new and different challenges to an industry already
coping with the perfect storm of restrictions on
working practices imposed by the Covid 19 pandemic,
unprecedented volatility in commodity prices and, in
our own case, the shock of the sudden and untimely
passing of our founder and Executive Chairman,
Bruce Dingwall, CBE. As such, 2021 proved to be an
extraordinarily difficult year to navigate, but one in which
Trinity proved its resilience and, perhaps as importantly,
its ability to act decisively for the benefit of our
stakeholders, refining and prioritising our extensive
opportunity set, with a view to generating significant
growth in value in the relatively near term.
Board Changes
In the past year we have changed the composition of our
Board to bring Trinity’s governance structure more in-line
with market practice, with the role of Chairman becoming
a non-executive position, complimented by the promotion
of Jeremy Bridglalsingh to the position of Chief Executive
Officer. Jeremy is a Trinidadian whose contribution to the
Company’s strategy and development since becoming
CFO in 2016, and more recently Managing Director in
2019, cannot be underestimated.
Further, we added depth and breadth to an already
strong Board, welcoming two important new non-
executive directors, Derek Hudson and Kaat Van Hecke,
both highly respected and experienced members of
the international energy industry whose impressive
biographies can be found on pages 58 to 59. David
Segel stood down from the board in February 2022,
and I would like to place on record my thanks for his
invaluable contribution to our deliberations since he
joined the board following our recapitalisation in 2016.
Technical Committee
Trinity fields an expert sub-surface team whose
knowledge of the geology of Trinidad’s hydrocarbon-
bearing basins is a core strength of the Company. To
support them and assist the Board by bringing a global
6
Trinity Exploration & Production plc
Chairman’s Letter (continued)
context to analysis of potential new projects, during 2021
we established an external advisory committee of world-
class sub-surface and petroleum engineering experts who
will help us to critique and filter prospects so that we can
confidently focus expertise, energies and investment to
fast-track only the most viable, high-grade opportunities.
The Technical Committee comprises two board members
and three high-quality independent experts and has
helped management refine and prioritise its existing
opportunity set to focus on risk-mitigated prospects
capable of being delivered with the Company's existing
financial and operational resources to increase scale
and optimise returns. It has set ambitious but deliverable
growth targets, and the resumption of onshore drilling
during the second half of this year is the first part of this
scaling up process.
Managing risk to deliver growth in production
and cash flow
This additional layer of uncompromising, qualitative
analysis in geoscience and petroleum engineering is
matched by two of Trinity’s key financial characteristics;
capital discipline, with an increasing focus on risk
assessment, and a relentless commitment to cost
management. 2021 saw Trinity turn in its sixth consecutive
year of sub USD30.0/bbl operating break-even, in fact
USD 29.2/bbl, a real achievement in such challenging
times and an excellent discipline to provide a buffer
against times of low market prices. The Company expects
an increase on the usual operating breakeven in FY 2022
to support medium term growth through increased
technical and intellectual capacity and with industry-wide
cost pressures increasing. Furthermore, Trinity maintains
a strong balance sheet, with cash resources of USD
18.3 million at 31 December 2021 (2020: USD 20.2 million),
meaning we have the resources we require to deliver
our near term growth objectives.
These pillars of our business culture will underpin
our dynamic future strategy where we aim to grow
our predictable, stable production and cash-flow allowing
us the opportunity to both fund attractive new growth
opportunities and deliver cash returns to shareholders.
Risk-appropriate investment for future growth
Stable cashflow forms the bedrock of Trinity’s financial
strength and positions us well for our next, exciting
growth phase. One of our key operational objectives is
to safely and sustainably build and scale production and
we have already commenced planning for an ambitious,
risk-appropriate exploration programme that will tap into
the region’s material remaining reserves, using 3d seismic
to map prospects with potential to be fast-tracked
to monetisation, generating material growth for our
shareholders whilst understanding and hopefully
ameliorating technical and commercial risk.
An additional layer of potential comes from the ongoing
farm-down process for our Galeota licence, comprising
the producing Trintes field, the Echo Prospect and
potential from the Foxtrot and Golf accumulations. The
Company has engaged with a range of potential partners
and whilst initial feedback has been encouraging, several
participants have indicated their inability to fully assess
the economics of the opportunity without clarity being
considered by the Government of Trinidad and Tobago
("GORTT"). As these considerations seem to have been
delayed, and to ensure that the Company attains the best
possible value proposition for this highly valued asset, we
have made the decision to pause our farm-down process
until the GORTT fiscal reforms have been concluded.
We continue to explore a variety of options for this
asset, with the aim of maintaining exposure while avoiding
the need for material additional debt or diluting existing
shareholders. These key criteria must be met, together
with tax reform in Trinidad, which has been flagged
by the Government, before your Board will commit
to/progress any partnership offers.
We eagerly anticipate T&T’s new bidding rounds for
exploration blocks both onshore and near offshore. We
will target licences that provide additional opportunities
to expand our footprint in Trinidad. Concurrent with that,
we will continue to evaluate acquisition opportunities.
Investing in future energy and transition
Unfolding geopolitical events have made it clear that,
for many years to come, ‘traditional’ energy (i.e. oil & gas)
will remain an essential part of the energy mix. However,
the clock is ticking towards Energy Transition & Net Zero
and Trinity’s goal is to be at the forefront of T&T and the
wider Caribbean region’s energy transition.
During 2021 we established a new senior executive role of
Innovation, supported by a small but highly qualified team,
and have already instigated several meaningful studies
and ground-breaking collaborations that we believe will
challenge conventional thought and help to develop
innovative new approaches to energy production.
Trinity’s ESG programme is designed to build
environmental considerations into the mindsets of our
people and the heart of our business culture such that
sustainability becomes one of the cornerstones of our
future vision.
Financial Discipline
Our 2021 results demonstrate your Company’s resilience.
Adjusted EBITDA for the year was USD 19.8 million (2020:
USD 12.1 million) and cash resources were USD 18.3 million
(2020: USD 20.2 million) at year end despite the absence
of new drilling activity. In 2021, in line with previous
years, we hedged around 50% of our production to
counteract the impact of low oil prices and the effects of
Supplemental Petroleum Tax (“SPT”), which is at its most
punitive when realised oil prices are between USD 50.01
and USD 55.0 per barrel. The adoption of a similar
policy for 2022 has significantly reduced the immediate
benefit of high oil prices on our profitability and cashflow,
especially in the first half of the year. However, we expect
the impact will decrease in H2 2022, as a lower proportion
of our existing production is hedged and our onshore
drilling programme will bring new production onstream.
Annual Report & Financial Statements 2021
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Financial Accounts
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Company Information
Financial restructuring
Thanks
At an appropriate future point it is our goal to make
returns to shareholders either in the form of cash
dividends or share buy-backs. With this in mind, during
2021, your Board undertook a complex share capital
re-organisation to position the distributable reserves
at PLC level that will enable us to return cash
to shareholders as and when appropriate.
Fiscal Reform
Throughout 2021 Trinity continued to leverage its
deep and long-standing relationships with Government,
Heritage and the region’s energy participants more
broadly to make the case for positive fiscal reform.
We remain confident that the Government understands
the requirement for fiscal reform, despite the near-term
outlook for crude oil prices, in order to stimulate
investment and development of the country’s oil and
gas resources, to the benefit of all T&T stakeholders.
We understand that the Government’s deliberations on
tax reform, specifically in relation to SPT, are ongoing,
and we look forward with keen interest to receiving
positive news on this matter in the near term.
I would like to conclude by extending the thanks of the
Board to our Shareholders who have remained supportive
and engaged despite a difficult year. As the frustrating
limitations imposed by the Covid 19 pandemic hopefully
subside we look forward to engaging ‘in-situ’ with
shareholders and our broader stakeholder community
with plans for a busy agenda of presentations and events
throughout the coming year. I would also like to extend
the sincere thanks of the Board to our management and
employees whose unstinting dedication has allowed us
to successfully and safely navigate the challenges posed
by the Covid-19 pandemic.
We entered 2022 with a refreshed strategy, a strong
balance sheet and a dynamic vision for growth. We
believe the time is right for Trinity and are energised
to deliver optimum value on your behalf.
Nicholas Clayton
Non-Executive Chairman
23 May 2022
8
Trinity Exploration & Production plc
Chief Executive Officer’s Review of 2021
“The sudden and unexpected passing of our founder and
Executive Chairman, Bruce Dingwall CBE, in August 2021,
has accelerated our plans to focus the business, building
on the strong foundations he had built to take Trinity into
a new and dynamic growth phase.”
In this context, I am extremely proud to be leading
a strongly bonded, talented team of hard-working
individuals who have consistently brought their top
game to bear throughout the year, enabling Trinity
to deliver an applaudably resilient performance
in challenging circumstances.
Growth Strategy
We believe that this is an inflection point for the Company
with the imminent resumption of drilling commencing the
next stage of our growth. During the past year we have
re-focused, prioritising Trinity’s existing opportunity
set to focus on risk-mitigated prospects capable of
being delivered with the Company’s existing financial
and operational resources to increase scale and
optimise returns. In addition, we now have the expertise
and processes in place to mitigate risk and appropriately
prioritise the various opportunities we continue to consider.
This rigorous approach has resulted in the Company
de-selecting some options, a signal of the important
contribution of our Technical Committee’s mentorship
and guidance. The level of commercial and operational
input their experience brings is now enabling us to
shape our decision-making process by adding quality
reviews alongside technical risk assurance of the
options we are pursuing.
Whilst we are focused on expanding our portfolio we
will not put undue pressure on the Company’s cash
and operational resources. We are now positioned to
activate our refined strategy with a view to driving value.
Our ambition is to double production over the next few
years, and thereby generate sufficient free cash flow both
to fund future growth initiatives and deliver meaningful
cash returns for shareholders, and we believe that
we now have the structure in place to deliver this
challenging target.
Financial Performance
Following a difficult year in 2020, when commodity prices
dipped dramatically and Trinity’s average price received
was USD 37.7/bbl, we welcomed the market’s recovery
and the subsequent uplift in our realised price for 2021
to USD 60.4/bbl. The combined effects of this uplift and
our relentless pursuit of cost efficiencies delivered an
adjusted EBITDA of USD 19.8 million (2020: USD 12.1
million) and ending cash of USD 18.3 million after
meaningful capex invested of USD 13.9 million (2020:
USD 6.0 million)
Our hedging policy has historically been designed to
provide protection from low commodity prices and
to ameliorate the impact of realised prices in the USD
50-55/bbl range where SPT in Trinidad is most punitive.
Annual Report & Financial Statements 2021
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Glossary
Company Information
In the context of the recent extraordinary and
unpredictable uplift in commodity prices, magnified
by Russia’s invasion of Ukraine in March 2022, we are
not alone in finding that our hedges have blunted the
otherwise positive impact these higher prices would have
had on our operating cashflow. We expect the impact will
decrease in H2 2022, as a lower proportion of our existing
production is hedged and our onshore drilling programme
will bring new production onstream. Going forward, we
expect that growing our onshore production, further
driving down our operating break-even, and the expected
reform of the SPT regime will significantly reduce our
future hedging requirements.
HSSE
My first priority is the health and safety of our workforce
and contractors as well as minimising the environmental
impact associated with our operations. However, while
our leading indicators continue on a favourable trajectory,
we incurred three Lost Time Incidents (“LTIs”) during
2021. This has prompted us to place even greater
emphasis on HSE throughout the organisation, from the
Boardroom to the well head. We have created an HSE
Steering Committee, and have also appointed an HSSE
champion at Board level, Kaat Van Hecke, to oversee
this function and highlight its critical importance to us as
a company. This has begun to inject greater rigour into
our HSE oversight, with a prime focus on creating Trinity’s
Safety Rules to underpin our safe systems of work.
I am delighted to chair the HSE Steering Committee and
the energy and enthusiasm of those involved is helping
to drive improvements in the effectiveness of our HSE
function. This will further strengthen our operations,
motivate our team and demonstrate to our partners and
regulatory stakeholders our competency as an operator.
Operations in 2021
Reducing Volatility
During 2021, having taken a commercial decision not
to recommence drilling activity, we opted to underpin
our base production via a programme of seven
recompletions, 96 workovers and increasing the volume
under surveillance via SCADA to ~50% of total production.
The impact of these activities, allowing us to increase
the predictability of our production profile and mitigate
natural reservoir decline for the second consecutive
year, has been significant. Despite the absence of drilling,
production for the year reached the upper quartile of
our guidance (2,900-3100 bopd), averaging 3,069 bopd,
slightly lower than 2020’s 3,232 bopd.
In particular, our strategic decision to invest in technology
to automate and optimise our wells has proved to be
highly effective. The operation of 31 Tier 1 onshore wells,
over half of all Trinity’s production, is now automated,
helping to ensure steady, low-cost production whilst
minimising non-productive downtime. As a result, 2021
saw Trinity deliver its sixth consecutive year of sub-USD
30.0/bbl operating break-even, a real achievement in
such challenging times and an effective buffer against
times of low market prices. Shareholders will see a small
upward shift in our breakeven to low USD30’s in 2022
as we increase the intellectual resource to achieve
our medium term vision of scaling up Trinity, but our
relentless focus on optimising production and reducing
cost continues.
“The challenges of 2021 tested,
and yet again proved, the efficacy
of our business model which is
designed to ensure that your
Company can withstand shocks
and uncertainties and grow value
throughout oil price cycles.”
Trinity is already one of T&T’s top five crude oil
producers, giving us a deep historical knowledge
of the region’s hydrocarbon basins and strong
working relationships with our partners and regulatory
stakeholder. The benefit of this unique skillset came to
the fore during 2021 when our Field Development Plan
(“FDP”) for Galeota attained full Ministry approval within
just three months, an unusually short timeframe and
testament to the quality of our technical rationale.
This was aided by the timely acquisition of the full
suite of Certificates of Environmental Clearances for
Galeota’s Echo project from the Environmental
Management Authority.
In line with our strategy to refine and prioritise the range
of growth options at our disposal, our sub-surface team,
supported by world class external consultants, continued
their study of the 37 km2 of 3D seismic acquired during
2021 from Heritage Petroleum Company Limited
(“Heritage”). This activity was significantly complemented
by gaining access to the entire 287 km2 3D seismic data
made available via our participation in the NWD process.
The Technical Team continues to work hard to accelerate
its interpretation and integration of this data to enable
Trinity to develop a regional geological framework with
a view to identifying new play concepts, deeper, largely
undrilled reservoirs, and the best locations for drilling
into the key productive Forest and Upper Cruze
horizons, being the dominant producing reservoirs
onshore Southern Trinidad.
Our principal objective is to improve our drilling returns
by developing a mix of lower risk, conventional wells,
with technically more challenging but potentially higher
return, high angle, horizontal and deeper wells. These
more complex wells have the potential to increase the
ratio of barrels recovered to the capital invested, and
thereby provide stronger economics.
Growth through acquisition and collaboration
The Company is in robust financial health, and is
conservatively financed compared with many of our
peers, where operating break-evens are higher and
finances more constrained. We are therefore well
placed to take advantage of commercial opportunities
as and when they arise. A prime example of this was
our acquisition of the PS-4 Block Lease Operatorship
10
Trinity Exploration & Production plc
Chief Executive Officer’s Review of 2021 (continued)
Sub-Licence, onshore Trinidad, which was finalised
in December 2021. We moved quickly to secure this
synergistic asset, adjacent to our core WD5/6 and
WD2 producing assets, funding this acquisition out
of existing cash resources.
To progress some of the exciting opportunities in
the T&T region Trinity continues to develop excellent
working relationships with potential partners, both
Heritage (the state-owned oil company) and larger
international operators.
Reviewing opportunities for growth, we consistently apply
rigorous technical and financial metrics to balance risk
with reward. In this context, having carefully appraised
the NWD exploration play in Trinidad’s Southern Basin
with partner Capricorn Energy PLC, the Board decided
not to participate further with this process as neither
we nor our partner Capricorn Energy were comfortable
with the technical and operational risks associated with
the deeper Cretaceous leads that were identified.
Galeota
Our Galeota prospect offers a broad range of
opportunities to add value for Trinity
•
•
•
•
The Trintes field, currently producing at 1,107 bopd,
in which the significant 2P reserve potential has
not been fully exploited
The Echo Prospect, which has an approved FDP,
with potential peak production of 7,000 bopd
The Foxtrot and Golf appraisal prospects with
combined peak production of 7,000 bopd
Significant tax losses of circa US$164 million
A crucial milestone
In July 2021 our negotiations with the Ministry of Energy
and Energy Industries (“MEEI”) and state oil company
Heritage were rewarded with the award of new and
improved commercial terms including
•
•
•
•
A new 25-year licence commencing 14 July 2021,
covering an area of 19,280 acres
A significant reduction in minimum work obligations
and performance guarantees
A new Crude Oil Sales Agreement (“COSA”) provides
greater pricing clarity
An improved Joint Operating Agreement (“JOA”)
more aligned with international standards
One of the outcomes of this development is that
Management’s estimate of the net 2P plus 2C reserves
increased to 50.16 mmbbls (previously 27.60 mmbbls).
An additional benefit is the conversion of Heritage’s
35% working interest to an Overriding Royalty (“ORR”)
whereby the Company now benefits from holding a 100%
Working Interest over the entire block, enabling Trinity
to apply the bulk of its tax losses across the entire
Galeota Licence area.
These improved terms provide Trinity and prospective
funding partners with more attractive commercial terms
and the requisite visibility to bring on new low carbon
development projects such as Echo, incentivising
maximum resource extraction at a time of high oil
prices and a transition towards lower carbon
intensity energy supplied.
Annual Report & Financial Statements 2021
The Galeota farm-down process got underway in
December 2021, hosted by Stellar Energy Advisers, and
whilst initial feedback has been encouraging, participants
were unable to fully assess the economic opportunities at
Galeota without clarity on expected SPT reform. On this
basis the Company has decided to pause the Galeota farm
down process pending SPT reform. This will enable the
Company to seek the best value proposition for Galeota.
In keeping with our prudent commercial strategy, Trinity
is working hard to achieve the most capital efficient
outcome, balancing acceptable and proportionate levels
of investment with a desire to maintain a significant share
in the project and thus our ability to deliver significant
upside for shareholders.
Sub Licence Renewals
We were delighted that Heritage reconfirmed their trust
in Trinity’s skills and commitment by extending five of the
Company’s six Lease Operatorship Agreements (“LOAs”)
for an additional 10 years, effective 1 January 2021, on
improved commercial terms. This will allow Trinity to plan
and commit to future work programmes across its onshore
assets with greater confidence.
New Exploration Licences
In response to the recent announcement made by the
T&T Government of its intention to conduct new onshore,
shallow water and deep offshore bidding rounds, Trinity
has registered non-binding interest in six onshore blocks.
Details of the shallow water blocks have not yet been
released. We anticipate that further details will become
available following announcements relating to fiscal
reform, which we consider to be essential to the
success of the bid rounds.
Fiscal Reform
We remain optimistic about the prospects for imminent,
and necessary, reform of T&T’s fiscal regime, specifically
SPT which significantly discourages investment and
stifles activity in the sector. This is, in our view, essential
if Trinidad is to attract the necessary investment to
maximise the value of its world class hydrocarbon deposits
within the Net Zero time frame. We continue to work
with the MEEI and wider Government with the goal of
delivering a positive outcome.
Our ESG Activities
In 2021 a structured and focused approach has been
initiated towards our ESG Programme as we position
Trinity on a trajectory to deliver a sustainable future
for your Company. The measurement and reporting of
environmental performance is an emerging science and
Trinity is taking the important steps to understand what is
required and to ensure that what we measure and report
is transparent, provable and, most importantly contributes
positively to sustainable operations in years to come.
In Q4 2021 we appointed an expert external advisory team
to help us refine our ESG strategy and develop a clear
process by which ESG becomes embedded across the
business. They have hosted several well-attended
11
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Company Information
workshops including both office and field-based staff,
tailor-made to explain the regulation framework in the
context of our own operations and provide ongoing
guidance on the necessary changes to our work methods
to ensure that the data we report is reliable. Internally,
an ESG Committee was established and a new senior
post of Executive Manager, Innovation was created
along with an Innovation Team.
With regard to the Social element of ESG, our HR and
Business Administration Teams have been pro-active
in enhancing our healthcare provision, devising wellness
programmes and ramping up our community engagement
to provide much needed support for school children and
families. In collaboration with the University of West Indies
(“UWI”) a scholarship fund in our recently deceased Bruce
Dingwall’s name has been established.
Our Chairman has already alluded to changes made to
our Board to upgrade our governance model and we
are delighted to have welcomed two new members,
one of whom, Kaat Van Hecke, brings specific expertise
and focus on HSSE matters.
Renewables
Momentum in energy efficiency and transition to
renewable energy is picking up. We believe that
in the medium term there may be renewable power
opportunities with the potential to be accretive to
shareholder value. For that reason, Trinity is building
a strong network of partners to ensure that our
Company is part of the vanguard leading T&T’s
commercialisation of emerging renewable technology.
We are delighted to continue to develop these important
relationships, helping to explore and develop new projects
with the National Gas Company (“NGC”) and the UWI.
The scope of their mission is to enable energy transition
not only in T&T, but potentially in the wider Caribbean
and Latin America. We have no doubt that a number
of innovative projects will come out of this important
collaboration which is already bearing fruit with:
•
•
Commencement of T&T’s inaugural Solar irradiance
study adjacent to Trinity’s Galeota field office, with
plans for a further Wind Resource Assessment
Installation of a solar power system for the WD5/6
field office
In summary, 2022 marks the start of a planned growth
phase for Trinity; a robust operating platform, a refreshed
Board, further complemented by the formation of a
world-class technical advisory committee, a refined
strategy and a healthy balance sheet all put Trinity
in an ideal position to accelerate growth and generate
meaningful returns for shareholders.
Jeremy Bridglalsingh
Chief Executive Officer
23 May 2022
12
Trinity Exploration & Production plc
Business strategy & model
Why Invest in Trinity?
We are a forward-thinking company, harnessing the benefits
of new technologies to drive efficiency and responsibly
deliver energy. Trinity has a strong investment case, based
upon resilient, low-cost production; near term, deliverable,
opportunities to achieve scale; and a medium-term hopper of
both organic and inorganic growth opportunities. On behalf
of our shareholders, we are actively targeting significant
growth in production and free cash flow, allowing us to
pursue new growth opportunities and deliver cash returns
to shareholders. Our strategy and our business model
are designed to deliver this core objective.
Annual Report & Financial Statements 2021
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Company Information
Our Business Strategy
Our objective is for Trinity to be a leading independent
energy producer, capable of delivering meaningful and
sustainable growth in shareholder value whilst working
closely and respectfully with all stakeholders in a safe,
ethical and transparent manner.
Our Business Model
Our business model is designed to enable
Trinity to deliver our strategy whilst working
closely and respectfully with all stakeholders
in an ethical and transparent manner.
KEY PRINC IP LES O F
OUR BUSINESS MO DEL
We strive to ensure that our business can endure
uncertainties and grow value throughout oil price cycles
and changes to the macro-environment by operating
safely and responsibly, persevering and innovating
and exercising financial and capital efficiency.
EFFICIENCY &
INNOVATION
Deploy our capital to
efficiently monetise our
reserves and resources
OPERATE SAFELY
& RESPONSI BLY
Maintain the integrity of
our assets, operating safely,
responsibly and sustainably
FINANCIAL &
CAPITAL DISCIPLINE
Scale our operations,
thereby increasing
cash flows and returns
PRIORITISE HSSE
•
PRESERVE THE INTEGRITY
OF OUR ASSET BASE
•
PROTECT OUR PEOPLE,
OUR COMMUNITY AND THE
ENVIRONMENT
•
MAINTAIN STRONG RELATIONSHIPS
WITH THE GOVERNMENT
AND HERITAGE
•
CONTINUALLY EARN
THE SOCIAL AND LEGAL
RIGHT TO OPERATE
ACTIVE PORTFOLIO
MANAGEMENT AND CONTINUAL
COMMERCIAL INNOVATION
•
OPTIMISE COMMERCIAL TERMS
ON OUR EXISTING ASSETS
•
USE AUTOMATION AND
DATA ANALYTICS TO MAXIMISE
EFFICIENCY
•
INCREASED FOCUS
ON ESG REPORTING AND
TRANSITION TECHNOLOGIES
•
DEVELOP COMPLEMENTARY
STRATEGIC PARTNERSHIPS
COST MANAGEMENT
•
MAINTAIN A STRONG
BALANCE SHEET
•
DEPLOY CAPITAL
ON RISK-MITIGATED
GROWTH PROSPECTS
TO ACHIEVE SCALE
•
ENGAGE WITH
SHAREHOLDERS AND
OTHER POTENTIAL CAPITAL
PROVIDERS
•
DELIVER VALUE
TO SHAREHOLDERS
14
Trinity Exploration & Production plc
Operations Review
“2021 is a testament to our “One Team” ethos which showcased
our resilience and adaptability to safely achieve our production
targets, against the backdrop of the Covid-19 pandemic.
Our learnings when overcoming challenges and our increased
use of technologies across all of our assets will deepen our
competencies and confidence as we seek to grow Trinity
in 2022 and beyond.”
Rajesh Rajpaulsingh
Chief Operations Officer (COO)
In the face of a year dominated by lockdown and Covid 19
restrictions, a decision was made to desist from any
new drilling within our portfolio, meaning that Group
production for 2021 aligned with natural reservoir decline
of ~7%. As we weathered the pandemic we were forced
to adapt our operating plans to achieve the budgeted
level of production and with production growing by
4% from Q3 to Q4 we exited 2021 at 3,143 bopd. This
has provided us with a stable platform entering 2022.
“In 2022, the team intends to
explore further cost-effective
means of production maintenance
through the expansion of the active
well stock via RCPs, reactivations
and swabbing.
Annual Report & Financial Statements 2021
The graphic below demonstrates the results of our efforts
to maintain production in spite of the severe challenges
encountered during the year.
2021 vs 2020 Annual Production and 2021 Half Year & Quarterly Breakdown (bopd)
15
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Company Information
3500
3000
2500
2000
1500
1000
500
bopd
0
245
255
253
258
245
260
258
258
1188
1107
1122
1091
1108
1137
1100
1083
1793
1644
1657
1631
1697
1616
1566
1698
12m
2020
12m
2021
H1
2021
H2
2021
Q1
2021
Q2
2021
Q3
2021
Q4
2021
The 2021 daily production volume chart below illustrates
the production across each of the assets by location.
Reported Production 2021 (bopd)
4000
3500
3000
2500
2000
1500
1000
500
bopd
0
Jan
2021
Feb
2021
Mar
2021
Apr
2021
May
2021
Jun
2021
Jul
2021
Aug
2021
Sept
2021
Oct
2021
Nov
2021
Dec
2021
l Onshore
l East Coast
l West Coast
16
Trinity Exploration & Production plc
Operations Review (continued)
Onshore Assets
G U L F O F
P A R I A
Guaracara
Refinery
Tabaquite
WD 13/14
FZ 2
Atlantic LNG
PS4
WD 5/6
WD 2
Onshore Assets
2021 Workover Activity
Current onshore production is from Lease Operatorship
Blocks: WD-5/6, WD-2, FZ-2, WD-14, WD-13, PS-4 and
Farmout Block, Tabaquite.
2020 Avg Sales 2021 Avg Sales
Field (bopd) (bop d)
WD-5/6 1,076 1,050
WD-2 333 246
FZ-2 109 122
WD-14 121 110
WD-13 132 95
PS-4* 0 52
Tabaquite 21 17
Annual Average 1,793 1,644
Note PS-4* was acquired on 1 Dec 2021.
Average 2021 net sales from the onshore assets was
1,644 bopd (2020: 1,793 bopd), which accounted for 55%
of total annual average sales. The projections for the year
anticipated this decline since no drilling was planned.
The team’s multi-faceted approach to production delivery
included recompletions (“RCPs”), work-overs (“WOs”),
reactivations, sand exclusions, an expanded swab
portfolio and production optimisation initiatives to
maintain production delivery.
Trinity executed 7 RCPs Onshore during the year
(2020: 16) as well as 74 WOs (2020: 92) and 5 sand
control jobs (2020:2).
Field WO RCP SCN
WD-5/6 31 1 3
FZ-2 14 4 -
WD-2 13 1 -
WD-13 8 - 2
WD-14 7 1 -
PS-4 1 - -
TAB 0 - -
Total 74 7 5
Overall, we aim to minimise the need for well interventions,
and reduce the frequency of WOs, as we target an
increasingly predictable and sustainable production base.
Timely execution of WOs when they are required is an
essential component of our strategy, in returning base
wells to production as quickly as possible. Our sand
control measures focused on high frequency wells
impacted by formation entry. As described below, the
combination of surveillance and automation further
assisted in our ability to improve our response to our
Tier 1 ( > 25 bopd) wells on which they were installed
in WD-5/6.
Natural annual field decline of 7-10% can be significantly
mitigated via the execution of RCPs and, in spite of a slow
approval process (within Heritage and the Government)
due to Covid-19, our campaign delivered substantially
all of the intended production targeted from the
RCP programme.
17
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Company Information
East Coast Assets
Current East Coast production is generated from
the Alpha, Bravo and Delta platforms in the Trintes
Field which resides within the Galeota Block.
Average 2021 net sales from the East Coast were 1,107
bopd (2020: 1,188) accounting for 37% of the Group’s
total sales in line with 2020. To achieve this, the team
conducted 15 restorative WOs (2020: 20) including 1
well reactivation to underpin production (2020: 4 well
reactivations) and 2 electrical submersible pump (“ESP”)
WOs were conducted (2020: 1 ESP WO) with continuous
emphasis being placed on optimisation and stabilisation
of all wells via a data driven strategy utilising automation.
An enhanced chemical injection strategy was executed to
counteract increased solids deposition in the mature wells.
Surveillance Technician Rienzi Gayapersad remotely monitors our
automated onshore wells
Annual Report & Financial Statements 2021
In 2022, the team intends to explore further cost-
effective means of production maintenance through the
expansion of the active well stock via RCPs, reactivations
and swabbing.
Automation continues to enhance efficiency
Trinity’s use of automation to optimise our production
uptime took a significant step forward in 2021, with the
execution of the automation of 31 Top Tier wells that
covers 85% of the Block production in WD-5/6, which
has delivered some preliminary results:
•
•
•
•
11 WOs have been avoided during the period
due to remote surveillance by the SCADA
monitoring team
Real time data collection through the SCADA system
is facilitating faster responses to changing well
conditions and optimised real time production.
Speed ramp up and pump stroke optimization in
real time netted > 3000 bbls increased production.
Reduction in Man Hours required for production
and monitoring.
Carbon footprint has been reduced by having
less frequent wellsite visits and fewer WOs.
Further works are being progressed to building
internal competency and leveraging more cost-
effective automation that can be deployed on lower
producing wells.
East Coast Assets
TGAL 1 Discovery
Trinity’s COO, Rajesh Rajpaulsingh on site, inspecting an
automated well
Trintes
Galeota
Galeota Terminal
& Export Facility
18
Trinity Exploration & Production plc
Operations Review (continued)
Again, our ongoing approach of digitalising the Trintes
field to provide reliable and informative essential data
in relation to the wells, thereby pre-empting potential
issues and problems, allowed us to stabilise production.
The result is an ongoing reduction in the production
fluctuations in the field brought about by proactively
predicting possible failures and effectively developing
mitigation plans. These production focused operations
were coupled with the team’s ongoing efforts to maintain
the integrity of our mature offshore assets. This process
is ongoing and is expected to further improve the team’s
ability to execute essential workplans safely.
Galeota Asset Development (Trinity: 100% WI)
The TGAL discovery area (proposed Echo hub) lies in
the Galeota Licence and sits within a separate Fault Block
(mapped as Fault Block 6), an updip panel located to
the northeast of the Trintes Field, confirmed as being
oil bearing in six major stacked reservoir horizons by
the TGAL-1 exploration well with an internal best estimate
STOIIP of 187.5 mmstb. Trinity received FDP approval
for the Echo Development from the Ministry of Energy
and Energy Industries (“MEEI”) in November 2021.
The approved FDP proposed a conservative eight well
configuration. Both the MEEI and reserve auditor, NSAI,
have indicated that the current approved FDP Case
leaves considerable upside potential for recoverable
hydrocarbons with an increased number of well slots.
On this basis, Trinity has considered a variety of
Development Schematic
development cases to maximise the recoverable
hydrocarbons from the Echo Development. Trinity’s
preferred development case (Most Likely Case) consists
of an Echo twelve well configuration. This aligns with
MEEI’s FDP and NSAI 2021 CPR recommendations and
strategy to accelerate the development and production
of its remaining oil and gas reserves in the time available
during the energy transition.
CHARLIE
BRAVO
DELTA
ALPHA
ECHO
TGAL-1
Trintes SW1
Prospective:
STOIIP 26.0 mmstb
Trintes
2P: c.9.77 mmbbls
2C: c.1.20 mmstbc
TGAL
2C Development:
c.39.1 mmstb
Notes (1&2):
Unaudited as at YE 2021 and considered best technical estimates
TGAL NE2
Prospective:
STOIIP 69.0 mmstb
Indicative
Depth
S.I.
2500 ft
5000 ft
Annual Report & Financial Statements 2021
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Company Information
The Most Likely Case, a 12 well configuration may be
adopted and will not only target TGAL but also additional
proven oil and reservoir sands from the adjacent Trintes
fault blocks FB4 and FB5; targeting recoverable resources
of 25.2 mmbbls with peak annualised production of 6,977
bopd, approximately one year after first oil.
Works on various pre-FEED studies to improve the
topside and other aspects of the facilities design was
completed in 2021. In addition, subsurface model building
to support dynamic reservoir simulation for forecasting
production performance and cumulative estimated
ultimate recoverable (EUR) volumes were completed
in 2021. The Environmental Impact Assessment (“EIA”)
is a key item on the critical path to Final Investment
Decision (“FID”) which was submitted in February 2021
and represented a significant milestone. The Certificate
of Environmental Clearance was granted in February
2022. Other key milestones achieved in 2021 included the
conversion of the working interest in the Galeota block
from 65% to 100% and attaining FDP approval from MEEI
In Q4, the Company commenced a formal marketing
process for a farm-down of the GAD Project and has
appointed Stellar Energy Advisors as its advisor for
the divestment.
There is potential for the GAD Project, which
encompasses the Trintes Field's current production,
the Echo Field Development and the Foxtrot and Golf
appraisal areas, to significantly change the scale of
Trinity's operations. As previously announced, the
combined 2P reserves and 2C/2U resources from these
fields exceeds 50 mmbbls, with dynamic modelling
indicating peak annualised production of circa 7,000
bopd from Echo alone. An Independent Competent
Person's Report on these assets was completed in Q4
2021 by Netherland, Sewell & Associates, Inc., which
offers significant support to Trinity's own internal
volumetric assessment of the Galeota Block.
The Company has engaged with a range of potential
partners as part of the Galeota farm down process.
Whilst initial feedback has been encouraging, a number
of participants have informed the Company that they are
unable to fully assess the economics of the opportunity
at Galeota without clarity on the expected reforms to
Supplemental Petroleum Tax ("SPT"), which are currently
being considered by the Government of Trinidad and
Tobago ("GORTT") and which were initially expected
to have been confirmed sooner than now appears likely.
Pending SPT reform, which management still expects to
happen, the Company has decided to pause the Galeota
farm down process. This will enable the Company to seek
the best value proposition for Galeota when the GORTT's
fiscal reforms have been confirmed.
West Coast Assets
West coast production is generated from the Point
Ligoure-Guapo Bay - Brighton Marine (“PGB”) and
Brighton Marine (“BM”) fields.
Average 2021 net sales from the West coast was 255
bopd (2020: 245 bopd) which accounted for 8% of the
Group’s total annual average sales and a 4% increase
from 2020 average. This increase was achieved by
continuing infrastructural initiatives coupled with the
production enhancing project to arrest the decline
from the West Coast assets.
West Coast Assets
Brighton
Inner
Guaracara
Refinery
Brighton
Outer
Pt. Ligoure
Atlantic LNG
20
Trinity Exploration & Production plc
Operations Review (continued)
The team remains focused on exploring opportunities
to optimise production from all offshore platforms in this
asset. No RCPs (2020: 0) were conducted, however two
WOs were completed in the PGB asset for the period.
BM asset sales experienced a 17% increase to 155 bopd
(2020: 133 bopd). This was achieved by the team
implementing a number of rigless production enhancing
initiatives. No WOs or RCPs were conducted during this
period (2020: 2 RCPs and 1 WO).
The team remains focused on improving asset integrity
on its offshore platforms to create a safer working
environment and ensure production is maintained.
We continue to evaluate additional initiatives to extend
the operations horizon by increased WO, RCP and
swabbing activity.
Facilities Management and Infrastructure
In 2021, the Facilities team paid particular attention to
upgrading production and the welfare infrastructure
on its East Coast Trintes Field and addressed key
integrity challenges in relation to the West Coast Brighton
Marine Field. These marine installations require a higher
level of maintenance due to the harsher East/West
Coast offshore environment. The internal team was
supplemented by the recruitment of highly experienced
contractors, mechanics and electricians, to ensure
a higher level of operational reliability and uptime
on the assets at lower cost.
In 2021, the Team focused on structural and operational
reliability, as such, we progressed 36 projects of which
23 were completed and 13 rolled over in 2022.
One key activity is the construction of the new 10,000
bbls storge tank to service the Trintes field. This
experienced some delays as a result of inclement weather
and Covid 19 related issues. However, the works have
resumed, with an anticipated completion during Q3 2022.
This tank will bring additional storage capacity and
operational flexibility to the Trintes operations ensuring
tank certification compliance without any disruption
to production.
Facilities Management and Infrastructure spend in 2021
totaled USD 3.2mm.
Reserves and Resources
A comprehensive management review of all assets has
been concluded and has estimated Trinity current 2P
reserves to be 19.73 mmstb at the end of 2021, compared
to the year-end 2020 reserve estimate of 19.55 mmstb.
This represents a 0.9% year-on-year increase. The overall
increase in reserves of 0.18 mmstb results from a
combination of both negative and positive influences
on oil volumes across all assets. However, a Reserves
Replacement Ratio (RRR) of 100% was achieved in 2021
with production of 1.10 mmstb fully replaced together
with updated well numbers and decline curve analysis
on planned infill and producing wells Onshore and
Offshore the West and East Coast.
Brent Forward Price Deck applied to Reserves Economic
Limit Testing (“ELT”) as at 3 January 2022
WTI Forward Price Deck applied to Reserves Economic Limit Testing ("ELT") from Britannic Trading LLC
as at 3 January 2022
(USD/bbl)
2022
2023
2024
2025
2026
2027
2028
2029
Price
Strip
76.48
71.76
68.91
67.09
65.97
65.25
65.65
65.65
Annual Report & Financial Statements 2021
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Company Information
Management considers the reserves presented in the
table below represent the best estimate as at 31
December 2021 of the quantity of reserves that will
actually be recovered from our current assets. It
represents production which is commercially recoverable,
either to licence/relevant permitted extension end or
earlier via the application of the economic limit test. The
subsurface review has defined investment programmes
and constituent drilling targets to commercialise these
reserves as detailed by asset area shown in the table.
Unaudited 2021 2P Reserves
Net Oil Production
Asset
Onshore
East Coast
West Coast
Total
Note (*):
31 December
2020
mmstb
Production
mmstb
Revisions
mmstb
31 December
2021
mmstb
5.44
11.66
2.45
19.55
(0.60)
(0.40)
(0.09)
(1.09)
2.42
(1.48)
0.33
1.27
7.26
9.77
2.70
19.73
East Coast 2P reserves decreased due to a reclassification of three Trintes infill wells to horizontal well targets for Echo (-1.89MMstb) which was partially offset by
the impact of wells optimisation and maintenance and economic limit testing improvements (+0.4 MMstb).
Onshore and West Coast 2P reserve changes primarily reflect ongoing well optimisation across all assets to arrest decline from our base wells and, for the
Onshore, the acquisition of PS4 adding 2P reserves of 0.67MMstb.
The planned 2022 onshore drilling campaign, comprising
a combination of high angle and horizontal wells,
conventional wells and more materially, stratigraphically
untested deeper reservoirs within the fields have utilised
improved performance prediction methods (ie dynamic
simulation, inflow equations etc) and decline curve
analysis for assurance in forecast predictions.
Management’s Estimate of 2C Resources
as at 31 December 2021
Management’s best estimate of 2C resources as at
31 December 2021 is 47.22 mmstb (2020: 23.25 mmstb).
The positive movement of 23.97 mmstb in 2C resources
primarily reflects our increased working interest in
Galeota, now 100% compared to 65% at YE 2020
following the successful revision of the license terms.
Asset
Net Oil Production
Onshore
East Coast
West Coast
Total
31 December
2020
mmstb
4.01
15.94
3.30
23.25
Revisions
mmstb
(0.19)
24.45
(0.29)
23.97
31 December
2021
mmstb
3.82
40.39
3.01
47.22
Note (*):
•
East Coast:
-
-
•
•
Onshore:
-
-
West Coast:
-
-
-
Working interest in Galeota is now 100% compared to 65% used in YE 2020.
Year End 2020 ECHO FDP conservative 8 well development vs. Year End 2021 most likely Case of 12-well development inclusive of re-categorisation of
three Trintes infills now being carried as 2C at ECHO.
Additional contingent resources for the shallower TGAL G, H, and M Reservoirs, which are not targeted for initial TGAL (Echo) development, but forms
part of phased future development plans.
Base Production Optimisation Operations to recategorise some 2C to 2P.
Improved Well Decline Analysis on planned 2P infills to capture more 2C.
Recently concluded subsurface work across the Point Ligoure sub-licence asset has re-defined the subsurface structure resulting in a downward
revision of 2C resources.
Base Production Optimisation Operations to recategorise some 2C to 2P in particular execution of ABM151 RCP in Brighton.
Management’s Estimate of Reserves and Resources
as at 31 December 2021
Asset
Onshore
East Coast
West Coast
Total
2021
2P
Reserves
mmstb
7.26
9.77
2.70
19.73
2021
2C
Resources
mmstb
3.82
40.39
3.01
47.22
2021
2P Reserves
and 2C
Resources
mmstb
2020
2P Reserves
and 2C
Resources
mmstb
11.08
50.16
5.71
66.95
9.45
27.60
5.75
42.80
22
Trinity Exploration & Production plc
Technical Review
“Every day I have the privilege to work with Trinity’s team
of world class subsurface domain experts, all of whom are
committed to the company’s growth. The paradigm shift in
technical philosophies, methodologies and integration of
technology has now provided unparalleled insight into our
reservoirs, giving us the competitive advantage to deliver
sustained growth in reserves and resources.”
Dr. Ryan Ramsook
Executive Manager, Sub Surface
The vision of our founder Bruce Dingwall, CBE, and his
deep understanding of T&T’s unique geology, was the
spark that created Trinity Exploration & Production plc.
As such, subsurface is part of the Company’s DNA and
fundamental to our business success. Trinity has an
established and highly experienced multi-disciplinary
Subsurface Team whose work is now complemented
by the creation last year of the Technical Committee.
The Technical Committee includes world class domain
specialists; a geologist, geophysicist, petroleum engineer
and drilling engineer, with over one hundred and fifty years
of combined local, regional and international experience.
As we drive forward our growth strategy, the Committee
both supports the in-house Subsurface team and assists
the Board by bringing a global perspective to the appraisal
of new opportunities, applying additional rigour to our
review process and ensuring that proposed subsurface
projects meet the quality assurance levels required to
make appropriately risk-mitigated commercial decisions.
The in-house team utilises a mix of domain/disciplines,
software and practical applications to enable its subsurface
specialists to understand key aspects of exploration and
development geology, both at local and international
level; from operations and wellsite geology and sequence
stratigraphy to practical modelling and well design.
In recent years, this team has successfully developed
and executed a fourteen well infill drilling programme.
In the course of that programme, critical subsurface data
was acquired by drilling infill wells to penetrate through
deeper stratigraphic turbidite plays. This new intelligence
moved our methodology towards deeper reservoir
appraisal, rather than the historic drive for production
from mature, stacked reservoirs and post-drill analysis
and encouraged Trinity to acquire from Heritage 37 sq km
of 3D seismic covering Trinity’s existing onshore assets.
Integrating this seismic with our existing well data
has allowed the team to develop a broader regional
understanding, allowing Trinity to better understand
the regional stratigraphy and an appreciation of the value
of increasing the number of deeper, higher angle and
horizontal well designs in our drilling mix going forward.
This concept will provide further opportunities for growth
from our existing portfolio through the drill bit and we
look forward to our return to drilling later this year.
Annual Report & Financial Statements 2021
Changing the paradigm of oil recovery onshore through subsurface modeling
23
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Glossary
Company Information
Palo Seco Field Offset Producing Wells
Planned 607 Horizontal Well
Well 2
WELL 2
Well 2
WELL 3
WELL 1
Well 1
WELL 4
WELL 5
Low
Stacked
Deltaic
Reservoirs
Modeled
Permeability
High
Following the 2020 purchase and subsequent
interpretation of that portion of the onshore NWD 3D
seismic data covering Trinity’s LOA blocks, as part of
a consortium, Trinity undertook a detailed evaluation
of the wider NWD area via a Request For Proposal
(“RFP”) process by Heritage Petroleum Company Limited
(Heritage) in Q4 2021. The consortium also completed an
evaluation of the Jubilee Field in Q1-Q2 2021 in response
to the Heritage Expression Of Interest (“EOI”). Although
the consortium concluded that the identified prospectivity
does not support further participation in these processes,
the overall evaluation of the datasets greatly enhanced our
understanding of the regional geology and prospectivity.
This has now positioned the Trinity team to develop basin
wide geological models and the multi-disciplined technical
competency needed to unlock the further potential of
our current assets and from the upcoming bid rounds
being launched by the MEEI in respect of new onshore
and near offshore acreage, as well as further RFP
processes by Heritage.
We will continue to integrate the knowledge gained
from past drilling campaigns and data room evaluations
to further unlock the stratigraphic deeper potential of
our onshore portfolio. Several prospective Miocene
turbidite leads have been identified and are currently
being high-graded and ranked for appraisal in upcoming
drilling programmes.
24
Trinity Exploration & Production plc
Technical Review (continued)
Dr. Ramsook and team undertake a field study
shallow reservoirs of the planned Echo development fault
block; shallow reservoirs YE 2021 2C- 13.7mmstb vs YE
2020 2C- 0mmstb. This improved technical outlook was
further supported by an independent Competent Person
Report (“CPR”) undertaken in Q4 2021.
During Q4 2021, Trinity initiated a multi-disciplined
collaborative EOR feasibility study of all its onshore leases,
providing the probabilistic analysis required to take the
mature reservoirs of the Southern Basin to next phase
of production recovery. These feasibility studies will be
completed during late 2022.The application of EOR
methodologies and technologies onshore could potentially
allow our stripper wells and associated production facilities
in good mechanical condition to continue to be operated
beyond their primary production life, rather than shut-in
for long periods of time or abandoned.
Trinity has now appointed world class international
independent consultants and service providers to assist
in building and populating 3D static and dynamic reservoir
models. The paradigm shift of embracing a modelling
driven methodology has resulted in many projects being
executed with more probabilistic deliverables including
•
•
•
Enhanced Oil Recovery (“EOR”) feasibility
studies onshore,
exploration prospect generation and
risking across west and east coasts.
In addition, the application of this approach has further
de-risked and improved the static technical view of our
Galeota asset where application of recent technology
to seismic reprocessing and adoption of optimised well
designs has allowed for a more phased approach to
its development, allowing Trinity to further appraise
and maximise recovery through a revised and regulator-
approved FDP.
Increased contingent resources
This improved technical position along with improved
licence commercial terms (working interest increased
from 65% to 100%) has allowed Trinity to identify
more contingent resources across the Galeota License
(combined YE 2021 2C-40.39mmstb vs YE 2020 2C-
15.94mmstb) indicating development opportunities within
Annual Report & Financial Statements 2021
Stakeholder Engagement
Trinity has a broad range of stakeholders, including
institutional and individual investors, financial institutions,
employees, customers, suppliers and contractors, business
partners, local communities and regulators, each with its
own priorities and interests in what we do. We know that
understanding what is important to them enables us to
work more effectively as a business so our Board is
committed to regular engagement.
The Board recognises the need to balance the different and sometimes
contrasting interests of our stakeholder groups and we believe that the
Directors have acted in accordance with their duties as codified in law
and in the table below we provide examples of our stakeholder
engagement activity.
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Company Information
Stakeholder
Engagement
Who
Why
What
How we interact and respond
Stakeholder
Group
Shareholders
and Investors
Why it is
important to
engage
Key Issues /
Significant topics
raised
Responsible
Websites,
online
platforms1
Social
media2
AGMs,
Site Visits
and
Road-
shows
One
on one
meetings
and
interactive
sessions
Emails,
Newsletters,
Employee
Manual,
Policies
and
Memos
Surveys
The primary
communication tool
with our shareholders
is the Group’s website,
www.trinityexploration.com.
Specifically, in regards
to shareholders, both
retail investor events
and institutional investor
meetings take place
during the year to
provide updates and
receive feedback.
Operating, financial
and ESG performance.
Board
& EMT
l3 l3 l3 l3
l3
Growth strategy
and new business.
Major project initiatives
Strategic and
organisational
and changes.
Financial
Institution
Meetings coordinated as
required and ad-hoc.
Employees
Formal correspondence
issued as required.
Undertake quarterly
performance and ad hoc
feedback meetings
with employees.
Undertake monthly
departmental ‘focal
points’ meetings.
Operate an independent
whistleblowing service.
Company town halls and
pulse surveys increased
during Covid 19.
Customers
(Heritage)
Quarterly review meetings
are held with Heritage.
Routine and non routine
banking transaction
and general feedback
EMT
& Staff
Operating, financial
and ESG performance.
Board
& EMT
l3
l3
l3
l3
l3 l3
l3 l3
Growth strategy
and new business.
Major project initiatives
Strategic and
organisational
announcements
and changes.
Training & development
Remuneration.
HSSE training,
reviews and updates.
Team Building Sessions.
Safety performance.
Training.
Effluent results.
Production performance in
relation to MWOs/MPLs,
ESDs, swab wells, future
plans, Inspections of
facilities/wells.
EMT
& Staff
l3
l3 l3
l3
26
Trinity Exploration & Production plc
Stakeholder Engagement (continued)
Trinity’s leadership team meets regularly to discuss stakeholder engagement.
Who
Why
What
How we interact and respond
Stakeholder
Group
Why it is
important to
engage
Key Issues /
Significant topics
raised
Suppliers and
Contractors
Meetings coordinated
as required and ad-hoc.
Formal correspondence
issued to suppliers when
processes and procedures
are being revised and
standardised.
Working conditions.
Review and Assessments.
HSSE discussions on
issue and improvement.
Websites,
online
platforms1
l3
Responsible
EMT
& Staff
AGMs,
Site Visits
and
Road-
shows
One
on one
meetings
and
interactive
sessions
Social
media2
Emails,
Newsletters,
Employee
Manual,
Policies
and
Memos
Surveys
l3
l3
Partnerships
Meetings coordinated
as required and ad-hoc.
Strategic Review and
Assessments.
EMT
& Staff
Formal correspondence
issued as required.
General negotiations.
Discussion and working
groups.
l3
l3
l3 l3
l3
l3
Respect for local values
and traditions.
EMT
Community development
initiatives, including those
to stimulate economic
development.
Employment
and procurement
opportunities.
Communities
Government &
Regulators
Host formal and ad-hoc
public consultations in
order to understand
and discuss local
peoples’ concerns.
Support schools and
less fortunate families.
Operate grievance
mechanisms to address
community concerns.
Direct engagement
with local, regional and
national government
authorities regarding
operations,
environmental issues,
permitting and other
relevant topics.
Provide monthly
reports to MEEI.
Reports to EMA.
Meeting with BIR as
required for payments
and also discussions
on fiscal reform.
1
2
(lived and recorded interviews and corporate presentations)
(Twitter, LinkedIn)
EMT
& Staff
l3
l3 l3
l3
Compliance with
applicable laws
and regulations.
Employment
opportunities
and labour rights.
Health and safety.
Environmental
stewardship.
Licences and
permitting.
Taxation
and royalties.
Annual Report & Financial Statements 2021
Sustainability
27
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Company Information
“Good Environmental, Social and Governance (“ESG”)
practices are at the core of Trinity's forward planning as
we help to drive Trinidad & Tobago's energy resources
towards a secure, equitable and more sustainable future.”
Nirmala Maharaj
Chief of Staff & General Counsel
Environmental Social Governance
•
Robust Internal Governance Framework:
In 2021, Trinity formalised its ambitions to increase
transparency in ESG by establishing a multidisciplinary
working group of employees supported by an
experienced United Kingdom based consultant. The team
helped to define an ESG strategy and is in the process
of developing implementation plans to further enhance
transparency and data reporting over the coming years.
We are working to align this new ESG strategy to the
internationally recognised reporting frameworks GRI
(Global Reporting Initiative) and TCFD (Task Force
on Climate-Related Financial Disclosure) within the
next 2 years.
There were many highlights in 2021 as we continue to
develop and implement our ESG initiatives. These
include but are not limited to the following:
-
-
Board governance in place through a Director
being assigned to have ESG/HSSE oversight
Management Structure amended to include the
newly created positions of Executive Manager,
Health Safety Security Environment and Quality
and Executive Manager, Innovation
•
Robust HSSE Management Framework:
-
-
-
Active Governance Committees comprising of
an Executive Management Steering Committee
and a multidiscipline Tactical Committee
HSSE Mentor/Advisor who has over 45 years’
experience both locally and internationally in
the oil and gas industry retained to provide
additional support to an experienced HSSE
Team Lead
Achieved the Trinidad and Tobago Energy
Chamber’s Safe To Work recertification with
a score of 99% compliance
- Working towards ISO 45001:2018 compliance
28
Trinity Exploration & Production plc
Sustainability (continued)
•
•
Renewable Energy initiatives implemented to
accelerate reduction of carbon footprint:
-
-
Memorandum of Understanding with the
University of the West Indies (“UWI”) and
Trinity to study Renewable Energy in
Trinidad and Tobago
Solar Resource Assessment
Research grade Solar Resource Assessment
instruments installed at Galeota in February 2022.
First such installation in the Southern Caribbean
-
-
Solar Power Installation at the WD 5/6 location.
This location is now off the electricity grid
and being powered by renewable energy.
The potential exists to expand this initiative
to other assets and significantly lower the
fields’ carbon footprints
A drone mounted Laser Spectrometer is used
to quantify and identify methane emissions
(tanks, well sites, pipelines etc.) and provide high
resolution area imagery. Complete baseline
Emissions quantification underway in 2022
Trinity’s ESG Roadmap
-
An emissions monitoring program to reduce
the environmental impact of methane escaping
into the atmosphere to be developed
•
Automation underway:
•
•
-
Digitalization of fields to achieve reduced
production volatility, better operational
efficiencies and improve ESG credentials
– currently circa 50% of Trinity’s production
is automated
Covid-19 Business Continuity Planning Recognition
-
Recognised by American Chamber of Commerce
in 2021 for our Excellence in managing the
Covid 19 Business Continuity Planning
Security Leadership
-
Championed and implemented enhanced
security initiatives in conjunction with Heritage
Petroleum Company Limited, the national oil
company thus significantly reducing incidents
of theft and sabotage
Reporting
framework
disclosure
preparation
Continued
measurement
and
improvement
Define ESG
strategy with
purpose
Detailed emissions
calculations
and reduction
strategy
Materiality
assessment
through
stakeholder
feedback
Target setting
and
goal alignment
Initial materiality
assessment with
internal ESG
working group
Understand
ESG objectives
and priorities
2021
2022
2023 ONWARDS
Annual Report & Financial Statements 2021
Trinity’s ESG Materiality Assessment
E
R
O
M
MATERIAL
TOPICS
29
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Financial Accounts
Glossary
Company Information
BIODIVERSITY
WASTE & EMISSIONS
ECONOMIC IMPACTS
& EQUALITY
CLIMATE CHANGE ,
GHG EMISSIONS
ASSET INTEGR ITY ,
INCIDENT
MANAGEMENT
LOCAL COMMUNITIES
EMPLOYEE PRACTICES
OCCUPATIONAL
HEALTH & SA FET Y
S
R
E
D
L
O
H
E
K
A
T
S
N
O
T
C
A
P
M
I
IMPORTANT
TOPICS
PUBLIC POLICY
ANTI-CORRUPTION &
STRONG GOVERNANCE
LAND & RESOURCE
RIG HTS
CONFLICT & SECURITY
POST- PROJECT CLOSURE
& REHABILI TATIO N
LESS
MO RE
IMPACT ON TRINITY’S BUSINE SS
•
Responsible Corporate Citizen:
-
-
-
Sponsorship of awards and laptops for
excellence in education at the Secondary
Entrance Assessment Examinations
and Caribbean Secondary Examination
Certificate (O’Levels) to students from
the Mayaro/Guayaguayare communities
Sponsorship of school supplies to 500+
children and relief supplies to 100+ families
in the communities in which we operate
Major sponsor of the Andrea Project, a Non-
governmental Organisation using technological
solutions to avert incidents of crime, with a
focus on vulnerable women
ESG Journey
In 2021, an ESG Multidisciplinary team was constituted
to focus on developing and implementing a robust,
long-term ESG strategy to support delivery of Trinity's
business goals. Our 2022 goal is to develop a climate
roadmap, set the baseline for emissions, generate
impactful relevant targets and begin tracking our
performance against them. This new ESG strategy
is intended to align to the internationally recognised
reporting frameworks namely Global Reporting Initiative
(‘GRI’) and Task Force on Climate-Related Financial
Disclosures (‘TCFD’) within the next 2 years. These
frameworks will serve to guide the Company as we
advance our ESG journey.
A detailed emissions audit project spanning 2021 and
2022 is under way, to improve the accuracy of our Scope
1 & 2 emissions calculations. This will include sampling at
production and storage facilities. This project will inform
an emissions reduction strategy to address venting and
fugitive emissions.
Materiality Assessment & United Nations Sustainable
Development Goals (UNSDGs)
Trinity aims to be a leading operator in T&T with regards
to our stakeholders and the communities in which we
operate. During 2021, we kicked off an in-depth review
of our the Global Reporting Initiative 11: Oil and Gas
Sector 2021 Sector Standard (“GRI”). In recognition
of the importance of our relationships and the changing
environment in which we all work, Trinity plans in the
next two years to develop its ESG benchmark alignment
to include both the TCFD and GRI standards.
However, as Trinity is not yet aligned to the full GRI
standards, a simplified list of topics is considered in this
initial materiality assessment, resulting from a thorough
internal review including subject matter experts and
challenges from team leads across Trinity’s business
30
Trinity Exploration & Production plc
Sustainability (continued)
and our Executive Management Team. The outcome
of these considerations is illustrated in our Materiality
Matrix which employs the related United Nations
Sustainability Development Goals (“UNSGD”) that
are relevant to our business.
During 2022 and 2023, Trinity will be expanding this
workstream to engage with its stakeholders to test
and refine the Materiality Assessment presented
in this document.
To rank the material topics, each was considered with
respect to its impact on Trinity's stakeholders and then
in relation to its impact on the business. Topics that are
determined to be material have been linked and aligned
with the most relevant UNSDGs as outlined below. From
this strong, contextual base, the wider Trinity ESG
strategy is being built.
Post our ESG Materiality Assessment, our ESG Working
Group selected three core focus areas into which our
material topics fit and then linked them to relevant
UNSDGs. These core focus areas are: Energy
Transition, Community, Environmental Protection.
Key objectives and detailed metrics to measure our
progress were defined for each of the three core areas
An ESG Strategy with Purpose
of focus. The Group identified UN Goals 16 (Peace, Justice
and Strong Institutions) and 17 (Partnerships for the Goals)
as cross-cutting all three areas of focus and framing
how we strive to be a good business partner with all
stakeholders. Other UNSDGs as illustrated in the diagram
below were also deemed relevant to our various aspects
of our operations and cumulatively underpins our areas of
ESG focus. Such UNSDGs include Goal 3: Good Health and
Well-Being, Goal 4: Quality Education, Goal 6: Clean Water
and Sanitation, Goal 7: Affordable and Clean Energy, Goal
8: Decent Work and Economic Growth, Goal 13: Climate
Action, Goal 14: Life Below Water and Goal 15: Life on Land.
Our ESG strategy with the three core focus areas:
Emissions & Transition, Community, and Environment
are all interconnected and interdependent.
This focus adds further depth and purpose to both
our core values of Behaviour, Rigour, Purpose, and our
business model, which is designed to enable Trinity to
deliver our strategy whilst working closely and respectfully
with all stakeholders in an ethical and transparent manner.
Each of the three pillars of our business model -
Operating Safely & Responsibly, Persevering & Innovating,
and Financial & Capital Efficiency - have integral ESG
elements that help us to deliver our goals with purpose.
Emissions &
Transition
Community
Environmental
Protection
Effective positive relationships
with employees and
stakeholders
Zero tolerance and
zero incidents of
bribery and corruption
Quantify energy emissions
baseline through an
audited GHG inventory
Reduce methane venting
Improve energy efficiency
Increase renewable energy
powering facilities
Complete planned asset
maintenance schedule on ageing
infrastructure to achieve
zero spills/unplanned discharge
Support local content
and diversity
Participate in capacity building
of local communities to
enhance skills and contribute to
local job development
Top quartile health and safety
performance with zero serious
incidents during operations
Understand baseline
environmental conditions in
all areas of operation
Improvement in key
environmental parameters and
biodiversity in operational areas
Zero incidents of accidental
and untreated, waste and
emissions discharge into
the environment
Annual Report & Financial Statements 2021
31
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Financial Accounts
Glossary
Company Information
Core Values, Business Model Pillars and ESG Strategy
BEH AVIOUR • R IGOUR • P U RPOSE
EFFICIENCY &
INNOVATION
OPERATE SAFELY
& RESPONSIBLY
FINANCIAL &
CAPITAL DISCIPLINE
Innovation & Development
Improved ways of working
Low carbon energy opportunities
Open to change
Emissions Reduction
Measure, assess and monitor
Reduce venting & fugitive emissions
Utilise gas
Partnerships & Collaboration
Peer and Government projects
Community involvement
Transparency & Honesty
Work towards Scope 1, 2 & 3 emissions
Respectful stakeholder engagement
Transparent reporting
Health & Environment Focussed
Safe place to work
Emissions and waste management
Rejuvenation projects
Environment
Energy Transition & Innovation
Trinity’s Emission Reduction Plan
As a responsible operator, Trinity is committed
to implementing energy transition initiatives in our
operations, and to become more climate and
environmental action conscious
Addressing climate change through reducing our
emissions is identified as a material topic to our business
and stakeholders and is one we are taking very seriously.
Many of Trinity's assets include mature, brownfield sites,
some with wells that have been producing for more than
50 years. This presents multiple challenges in terms of
ensuring asset integrity is maintained, thereby preventing
safety and environmental incidents, and optimising
production rates.
The age and in-field facilities of many of our assets
also presents a challenge in accurately calculating our
emissions. We have commenced a detailed sampling
programme from a selection of wells in each of our fields
to measure the volume of gas produced. As detailed in
the following diagram this data will be collected, analysed
and reported on during 2022 – 2024 and used in
emissions calculations that will more accurately
characterise our emissions footprint.
In our Emissions Quantification, Trinity is considering the
use of an aerial drone-mounted Laser Spectrometer to
quantify and identify methane emissions (tanks, well sites,
pipelines). The intent is to complete baseline Emissions
quantification in 2022: fluid samples, tank monitoring,
transport & logistics, energy assessments etc. We can
then implement impactful reduction strategies and
contribute meaningfully to the United Nations (“UN”)
Sustainable Development Goal 13 of Climate Action: Take
urgent action to combat climate change and its impacts.
Transitioning to a Lower Carbon Future
Our plans to evolve into a more efficient and cleaner
business saw further operational automation initiatives
rolled out in 2021. Of particular note, key onshore and
offshore wells were automated to drive efficiency,
improve safety, and reduce energy intensity.
Approximately 50% of Trinity’s current production is
automated as per the following:
•
A variety of technologies are used depending on
the production requirements
32
Trinity Exploration & Production plc
Sustainability (continued)
Trinity’s Emission Reduction Plan
UNDERS TANDI NG THE FULL RANG E OF EMISSIONS
AND HAVING A PL AN TO RE D U CE IS KE Y TO TH E W ID ER E S G S T RATE GY
202 2
2023
2024
Full assessment of
all emissions
Measurement of
fluid properties for
representative calculations
Full assessment of
Scope 3
emissions
Update to Scope 1 & 2
emissions
Calculation of %
methane emitted
and locations
Audit emissions
data
REPORT
Review methane
reduction options
Methane reduction
activities in place
Ongoing reporting
of all emissions
Emissions reduction
success
REPORT
Methane reduction
activities ongoing
-
Partnering with the NGC and the UWI to study
Wind Resources in the Southern area of Trinidad.
A bespoke metrological tower with measuring
instruments will be procured for installation at
Galeota once the land and environmental
approvals are received
Biodiversity and Waste Management
Conservation and restoration of the onshore and offshore
environments in which we operate through management
of our waste is material to our business. We are defining
plans for going beyond our regulatory compliance
obligations for waste management and environmental
protection and restoration as part of our ESG strategy
to contribute to UN Sustainable Development Goals 14:
Life Below Water and 15: Life on Land.
Water Courses
As a small island nation, parts of Trinidad & Tobago are
already experiencing the effects of water stress. Trinity
recognises the importance of maintaining a safe and
secure water supply and identify this topic as material to
both its business and its stakeholders. We are defining
initiatives to both mitigate pollution and waste, and
restore and preserve our local water resources.
•
•
Remote Monitoring Center surveils the production
and employs automated control with a SCADA
system (Supervisory Control And Data Acquisition)
Trinity has in-house personnel with expertise within
the Innovation Team that deploys and services all
of its automation initiatives
Through formation of our Innovation Group in Q4 2021,
we will accelerate our work on applied analytics, transition
technologies and automation across the wider portfolio
during 2022 to further work towards our ESG objectives.
Such work has already commenced and include but is not
limited to the following:
•
•
•
•
•
Energy Audits have commenced across the assets
Initiatives commissioned targeting energy and
carbon footprint reduction; electricity, fuel,
operations processes
Renewable Energy; Solar and Wind:
-
-
Memorandum Of Understanding entered with
the University of the West Indies (“UWI” to study
Renewable Energy in T&T
Solar Resource Assessment
Research grade Solar Resource Assessment
instruments installed at Galeota in February
2022 which is the first of its kind in the
Southern Caribbean
First measurement of all three components of solar
energy; Direct Normal Radiation (“DNI”), Diffuse
Horizontal Irradiance [DHI] and Global Horizontal
Irradiance [GHI]
-
Solar Installation at the WD 5/6 location. This
location is now considered off the electrical grid
as it is powered by renewable energy
Annual Report & Financial Statements 2021
Social
Caring for our Employees and Communities
The Board advocates the highest standards of
care towards our employees (250 on staff) and the
communities in which we operate and is acutely conscious
that the nature of the Group’s business requires strong
measures to protect the people and environment that
may be vulnerable to harm. The UNSDG Goal 3: Good
Health and Well-Being, Goal 4: Quality Education and
Goal 8: Decent Work and Economic Growth were selected
by our ESG Working Group as the goals that represent
our focus on our people.
We were pleased to be able to support the communities
in which we operate with, amongst other things, the
following initiatives which were focused on education,
well being and gender-based violence:
•
•
Sponsorship of awards and laptops for excellence
in education at the SEA and CSEC levels in the
Mayaro/Guayaguayare communities
Sponsorship of school supplies to 500+ children
and relief hampers to 100+ families in the
communities in which we operate
• Major sponsor of the Andrea Project, a Non-
governmental Organisation using technological
solutions to avert incidents of crime, with a focus
on vulnerable women
Trinity is also proud of the healthcare provision and
wellness programmes available to our employees as
we recognise the importance of both physical and mental
well-being to enable our people to perform at their best.
Unrelenting Focus on HSSE
Operating Safely and Responsibly is one of the three
pillars of our Business Model. It was therefore important
to our ESG Working Group that UNSDG 3 : Good Health
and Well Being was integrated into our ESG Strategy.
HSSE performance updates have been made fully visible
within the business, are communicated every month to
the Board and continue to be the first item discussed
at Board and Management meetings.
Our HSSE Management System has been continuously
evolving with special focus on behaviour and
comprehensive reporting of all incidents and
accidents, moving our culture towards a ‘ZERO’
Incident work environment.
33
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Financial Accounts
Glossary
Company Information
Trinity continues to maintain its HSSE Management
System through our STOW certification which is
valid through to August 2022 when recertification
will be undertaken.
Trinity recorded 881,034-working hours in 2021 (2020:
878,025-working hours), a 0.3% increase, mainly due to
its 2021 work programme of RCPs and WOs. Notable
improvements in our HSSE reporting were achieved due
to our continued emphasis on a strong HSSE culture,
facilitated by an increase in Management’s visits to all
assets, increased feedback on lessons learnt and multiple
proactive initiatives implemented across all operations.
Trinity’s HSSE periodic performance directly correlates
to the strategies implemented across its assets and the
areas of focus for evaluation and monitoring to ensure
better outcomes. Various strategies and initiatives in
place to strengthen the already robust HSSE culture and
include leading and lagging indicators, some of which are:
•
•
•
•
•
Training
Leadership Visits
HSSE Planning and Auditing
Journey Management and GPS
Start Card & Near Miss Programme
Partnerships for the Goals
The Board places a high priority on transparent and
effective communication with all of Trinity's stakeholders
and as such including the principles of the overarching
UN Sustainable Development Goal 17 (Partnerships
for the Goals) in our ESG strategy was a natural step.
Strong business relationships are an important factor
for Trinity's long-term success and employees at all
levels within the Company are expected to uphold
ethical business behaviour and require comparable
business practices from all suppliers and customers
we do business with.
We recognise the importance of engaging with
all stakeholders including employees, investors,
communities, partners, suppliers, customers, media,
and the GORTT. We update and, where appropriate
seek feedback, from all key stakeholders via regular
meetings and communications throughout the year.
See pages 25 to 26 Stakeholder Engagement
34
Trinity Exploration & Production plc
Sustainability (continued)
An important step in further developing our ESG strategy
in 2022 will include involving stakeholders in discussions
on material topics to refine the initial materiality
assessment conducted by our ESG working group. This
will help us gain a better understanding of our business
impacts on our stakeholders and enable us to refine our
ESG strategy accordingly.
Governance
Strong corporate governance is the foundation of Trinity's
business, reflected in our core values of Behaviour, Rigour
and Purpose. We have therefore aligned our ESG strategy
to UNSDG Development Goal 16 (Peace, Justice and
Strong Institutions) in recognition of its importance
across all business activities.
In addition to a focus on training, monitoring, risk
management and due diligence, Trinity has various
internal policies and standards in place that guide how
we realise our Governance goals including policies on
Anti Bribery and Corruption, Share Dealing,
Whistleblowing, Cyber Security, Gender, Diversity
& Inclusion and our Code of Business Conduct.
Whistleblowing
Trinity has a Whistleblowing Policy and Procedure in
place that provides all Trinity employees the opportunity
and means to independently and anonymously report
conduct which relates to suspected wrongdoing or
dangers at work. Any whistleblowing report can be
made orally or in writing to an immediate supervisor,
the Compliance Officer or to the Chairman of the
Audit Committee.
Governance in Action
At an operational level, the Chief of Staff & General
Counsel is responsible for compliance and, with the
support of the Board, implements compliance-related
activities and procedures.
The Board is kept appraised of important topics
throughout the year and in 2022 it will expand its agenda
to ensure regular discussion on specific ESG topics to
ensure a deeper level of understanding and engagement
that will help to drive the overall ESG strategy.
Policies for honest, fair and professional business
ESG Data Measurement & Progress
ESG Performance
We have an expectation of honest, fair and professional
behaviour and there is zero tolerance for bribery and
unethical behaviour by anyone associated with the
Group. Annual Anti-corruption & Anti-Bribery training is
compulsory for all staff, the Anti-Bribery statement and
policy is contained in the Group’s Employee Manual, and
forms part of supplier due diligence for new contracts.
Major breach of business, ethical, or compliance
standards is defined as a key business risk (see Risk
Profile Matrix on page 44). To mitigate this risk, Trinity
is subject to or has adopted numerous requirements and
standards including the UK Bribery Act, UK AIM Market
Rules, UK QCA Code, Disclosure and Transparency Rules,
and Know Your Client (“KYC”) procedures.
Trinity recognises that ESG is important to our
stakeholders and we understand it is essential to
measure how we are performing as an entity in
comparison to established standards and benchmarks.
This ensures that the delivery of our financial and
production objectives will be enhanced by strong
environmental, social and governance performance.
As part of our plans for implementing our ESG strategy,
we are working towards expanding the data we are
collecting throughout 2022 and 2023 to ensure we
understand our impact on those focus areas that are
material to Trinity's business and stakeholders.
Annual Report & Financial Statements 2021
Financial Review
35
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Financial Accounts
Glossary
Company Information
“Strong financial performance underpinned by robust
operational cashflows. The recovery in crude oil prices,
combined with our continued financial discipline, meant
we were able to generate solid results and invest in short
to medium term growth initiatives.”
Denva Seepersad
Finance Director
KPI’s
The Group’s robust performance resulted in it being profitable at both an operating and total comprehensive income level
in 2021, despite the backdrop of the ongoing Covid-19 pandemic.
A summary of the year-on-year operational and financial highlights are set out below:
Average realised oil price1
Average net sales2
Revenues
Cash balance
IFRS Results
Operating Profit before SPT & PT
Total Comprehensive income/(loss) for the year
Earnings Per Share - Diluted
FY 2021
FY 2020
Change %
USD/bbl
bopd
USD million
USD million
USD million
USD million
USD cents
60.4
3,006
66.2
18.3
10.0
7.7
18.0
37.7
3,226
44.1
20.2
3.0
(2.8)
(7.0)
60
(7)
50
(9)
233
375
357
36
Trinity Exploration & Production plc
Financial Review (continued)
APM Results
Adjusted EBITDA3
Adjusted EBITDA4
Adjusted EBITDA margin5
Adjusted EBITDA after Current Taxes6
Adjusted EBITDA after Current Taxes Per Share - Diluted
Consolidated operating break-even7
Net cash plus working capital surplus8
Notes:
USD million
USD/bbl
%
USD million
US cents
USD/bbl
USD million
19.8
18.0
29.9
14.8
35.0
29.2
20.8
12.1
10.3
27.4
10.6
25.0
20.1
21.4
64
75
2.5
40
39
45
(3)
1.
2.
3.
4.
5.
6.
7.
8.
Average realised price (USD/bbl): Actual price received for crude oil sales per barrel (“bbl”).
Average net sales (bopd): Production sold in barrels per day in a given year.
Adjusted EBITDA (USD MM): Operating Profit before Taxes for the period, adjusted for non-cash DD&A, SOE, ILFA, FX gain/(loss) and Fair Value Gains/Losses
on Derivative Financial Instruments less Covid-19 expenses.
Adjusted EBITDA (USD/bbl): Adjusted EBITDA/Annual sales.
Adjusted EBITDA margin (%): Adjusted EBITDA/Revenues.
Adjusted EBITDA after Current Taxes: Adjusted EBITDA less Supplemental Petroleum Taxes ("SPT"), Property Taxes ("PT"), Petroleum Profits Tax ("PPT") and
Unemployment Levy ("UL").
Consolidated operating break-even: The realised price/bbl where the Adjusted EBITDA/bbl for the Group is equal to zero.
Net cash plus working capital surplus: Current Assets less Current Liabilities (other than Derivative financial asset / liability and Provision for other liabilities).
Note (*): See Note 26 to Consolidated Financial Statements – Adjusted EBITDA for further details on pages 126 to 127.
Adjusted EBITDA Calculation
Adjusted EBITDA is an Alternative Perfo rmance Measure Guidelines (“APM”) used by the Group to measure business
performance. The Group presents Adjusted EBITDA metrics as they are used by Management to assess the Group's
underlying operational and financial performance.
Operating Profit Before SPT, PT, Covid-19 expenses, Impairment
and Exceptional Items (IFRS Result)
DD&A
SOE
ILFA
FX loss/(gain)
FV Derivative Instruments
Covid-19 expenses
Adjusted EBITDA (APM Result)
Current Taxes:
SPT and PT
PPT and UL
Adjusted EBITDA after Current Taxes (APM Result)
Refer to Glossary for abbreviations.
2021
USD MM
2020
USD MM
Change %
10.0
7.4
0.6
(0.7)
0.0
3.2
(0.7)
19.8
(3.6)
(1.4)
14.8
3.0
8.2
1.0
0.2
(0.0)
(0.3)
-
12.1
(0.4)
(1.1)
10.6
238
(9)
(35)
(399)
0
1,284
100
64
839
20
40
Annual Report & Financial Statements 2021
37
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Financial Accounts
Glossary
Company Information
2021 Trading Summary
A five year historical summary of realised price, sales, operating break-even, Royalties, Production Costs (“Opex”) and
General & Administrative (“G&A”) expenditure metrics is set out below.
Details
Realised Price USD/bbl
USD/bbl
Sales
Onshore
West Coast
East Coast
Consolidated
Metrics
Royalties/bbl – Onshore
Royalties/bbl – West Coast
Royalties/bbl – East Coast
Royalties/bbl – Consolidated
Opex/bbl – Onshore
Opex/bbl – West Coast
Opex/bbl – East Coast
G&A/bbl – Consolidated2
Operating Break-Even3
Onshore
West Coast
East Coast
Consolidated4
Notes
bopd
bopd
bopd
bopd
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
USD/bbl
20171
48.6
1,347
212
961
2,519
18.5
7.5
11.7
22.2
11.1
22.1
18.9
4.4
16.6
26.6
24.9
28.4
20181
59.8
1,563
198
1,110
2,871
24.2
10.0
14.5
19.1
11.7
22.1
20.1
5.0
16.1
26.8
25.9
29.0
2019
58.1
1,616
185
1,208
3,007
22.3
10.0
14.1
18.3
12.1
26.9
17.1
5.1
16.4
32.4
21.9
26.4
2020
37.7
1,793
245
1,188
3,226
11.5
6.1
8.3
9.9
12.2
20.3
16.5
4.3
16.5
24.6
21.0
20.1
2021
60.4
1,644
255
1,107
3,006
22.6
11.1
13.0
18.1
14.4
26.2
18.3
6.3
19.0
32.2
23.2
29.2
1.
2.
3.
4.
Metrics for 2018 and prior are pre-IFRS 16 adoption effective 1 January 2019 which impacted the Operating Break-Even Levels and Opex/bbl & G&A/bbl Metrics
for historical comparative purposes. Full details of the impact were set out in the 2019 annual report and accounts.
G&A/bbl – Consolidated: Excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.
Operating break-even: The realised price where Adjusted EBITDA for the respective asset or the entire Group (Consolidated) is equal to zero.
Consolidated operating break-even: Includes G&A but excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.
38
Trinity Exploration & Production plc
Financial Review (continued)
Increased capex investment programme to drive
growth in the short to medium term:
USD 13.9 million (2020: USD 5.3 million) invested acquiring
a new onshore lease operatorship (PS 4, onshore),
acquiring 3D Seismic data covering Trinity’s onshore
acreage, exploration and evaluation spend on the
Galeota Asset Development, continuing investment
in the Group’s Infrastructure, Subsurface, Drilling
planning and execution of 11 RCPs.
Capex invested comprised:
•
•
•
•
•
•
•
•
•
USD 3.8 million acquisition of PS-4
Lease Operatorship
USD 3.2 million Exploration and Evaluation (“E&E”)
assets relating to the Galeota Asset Development
USD 3.2 million Infrastructure Capex
USD 1.1 million acquisition of 3D Seismic Data
USD 1.1 million Subsurface time-writing costs
USD 0.8 million 11 RCPs
USD 0.4 million in computer software and research
and development
USD 0.2 million renewal of Galeota block licences
USD 0.1 million Drilling planning (no New
Wells drilled).
Refer to Notes to Financial Statements: Note 13 Property,
Plant and Equipment – Additions (USD 10.3 million) on
page 114 and Note 15 – Intangible Assets – E&E Additions
(USD 3.6 million) inclusive of accruals on page 116.
Continued financial strength:
The Group’s cash balances at year end reduced
marginally by 9% to USD 18.3 million (2019: USD
20.2 million), primarily reflecting a strong operating
performance offset increased taxes and derivative
expenses and a material increase in capital spending.
In aggregate, despite these significant cash outflows,
the Group’s net cash plus working capital surplus
stood at USD 20.8 million, a modest 3% decrease
(2020: USD 21.4 million).
Review of Financial Statements
Trinity and its subsidiaries (“the Group”) consolidated
financial information has been prepared on a going
concern basis, in accordance with international
accounting standards as adopted in the United Kingdom.
This consolidated financial information has been prepared
under the historical cost convention, modified for fair
values under IFRS. The Group’s accounting policies and
details of accounting judgements and critical accounting
estimates are disclosed within Notes 1 to 3 of the
Financial Statements on pages 92 to 108.
Throughout this report reference is made to adjusted
results and measures. The Board believe that the selected
adjusted measures allow Management and other
stakeholders to better compare the normalised
performance of the Group between the current and
prior year, without the effects of one-off or non-
operational items, and better reflects the underlying
cash earnings achieved in the year. In exercising this
judgment, the Board have taken appropriate regard
of International Accounting Standards (“IAS”) 1
“Presentation of financial statements”.
In particular, the APM measure of Adjusted EBITDA
excludes the impact of Depreciation, Depletion &
Amortisation (“DD&A”), as well as the non-cash impact
of Share Option Expense (“SOE”), Impairment losses
on financial assets (“ILFA”), FX gain/loss and Fair Value
Gains/Losses on Derivative Financial Instruments. Each
of these are summarised on the face of the Consolidated
Income Statement as well as being described in Note 1
to the consolidated financial statements.
Summary of Results for the Year
Revenue increased due to the material higher average
realised oil price in 2021:
The positive impact of a 60% increase in average oil price
realisations to USD 60.4/bbl (2020: USD 37.7/bbl), was
partially offset by a 7% decrease in average annual
sales to 3,006 bopd (2020: 3,226 bopd), resulting in
a 50% increase in revenues to USD 66.2 million
(2020: USD 44.1 million).
Continued financial discipline on costs and preserving
strong operating margins:
The Group continued to deliver strong operating margins
despite an increase in costs incurred in dealing with the
pandemic. The Adjusted EBITDA margin increased to 30%
(2020: 27%), with consolidated operating break-even
maintained at below USD 30 (2021: USD 29.2/bbl, 2020:
USD 20.1/bbl) demonstrating the Group’s ability to be
profitable across a broad range of oil prices. The 64%
increase in Adjusted EBITDA to USD 19.8 million (2020:
USD 12.1 million) is a direct result of the increased realised
oil price and strong operational performance.
Annual Report & Financial Statements 2021
39
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Statement of Comprehensive Income
SPT & PT
2021 Financial Highlights
Average realisation of USD 60.4/bbl (2020: USD 37.7/bbl)
Operating Revenues
Operating revenues up 50% to USD 66.2 million (2020:
USD 44.1 million).
Operating expenses
Operating expenses increased by 37% in 2021 to USD
(56.2) million reflecting a return to a cost structure similar
to that which prevailed in 2019 (2020: USD (41.1) million)
and comprised:
Operating Expenses (excluding non-cash items):
USD (45.7) million (2020: (31.9) million):
•
Royalties of USD (19.9) million (2020: USD (11.7)
million), this increase being driven mainly due to
higher average realised oil price.
• Opex of USD (17.6) million (2020: USD (16.5) million)
mainly due to a recovery in crude oil prices from lows
in 2020 which had a commensurate impact on supply
chain prices as well as increased workover and
swabbing activity in the year.
•
•
G&A expenses of USD (7.0) million (2020: USD
(5.1) million) mainly due to an increase in new hires,
employee bonuses, a one off director payment to
the estate of Bruce Dingwall, an increase in
professional services provided for the 2021
reserves audit and increased levies.
Derivative expense of USD (1.2) million (2020:
Derivative income of USD 1.3 million) being the
cash impact of derivative instruments.
Non-Cash Operating Expenses: USD (10.5) million
(2020: USD (9.1) million):
•
•
•
•
DD&A of USD (7.4) million (2020: USD (8.2) million).
Fair Value of Derivatives: Expense of USD (3.2) million
(2020: Derivative income of USD 0.3 million) being
the FV impact of derivative instruments.
SOE of USD (0.6) million (2020: USD (1.0) million).
ILFA reversal/(charge) USD 0.7 million (2020:
USD (0.3) million).
Operating Profit Before Supplemental Petroleum Taxes
("SPT") and Property Tax ("PT), Covid-19 expenses,
Impairment and Exceptional Items
The operating profit before SPT, PT, Covid-19 expenses,
impairment and exceptional items for the year amounted
to USD 10.0 million (2020: USD 3.0 million) and was
mainly due to higher operating revenues resulting from
the higher oil prices.
SPT & PT were net USD (3.6) million (2020: USD
(0.4) million) and comprised:
•
•
SPT of USD (5.1) million (2020: USD 0.2 million)
mainly due to the higher realised oil prices in relation
to the Group’s offshore operations in 2021. There
was no SPT payable in respect of the Group’s
onshore operations during the year.
Reversal of PT charge of USD 1.5 million (2020: USD
(0.5) million). The Property Tax Act and subsequent
Amendment to the Act requires the Board of Inland
Revenue to issue a Notice of Assessment on or
before the 31 March in each year. As none have
been received for the years 2018 to 2020, it is highly
unlikely the tax will be required to be paid for these
years and there is also no method to determine a
reliable estimate for the liability. As such, the Company
has made a reversal of the liability for periods 2018-
2020 and not recognised any liability for 2021.
Operating Profit before Covid expenses, Impairment
and Exceptional items
The Group’s reported operating profit before Covid-19
expenses, impairment and exceptional items was USD
6.5 million (2020: USD 2.6 million). Adjusting for non-cash
expenses, the Group’s Adjusted EBITDA after Current
Taxes was USD 14.8 million (2020: USD 10.6 million)
(further details below).
Covid-19 expenses
Covid-19 expenses incurred by the Group for 2021 was
USD (0.7) million. This was triggered when the Covid-19
impact to the country was at its highest and the Company
sought to protect its workforce by early detection
through Covid testing USD (0.3) million, Offshore
employee isolation prior to offshore rostering USD
(0.3) million and heightened sanitisation efforts across
the assets USD (0.1) million. Covid-19 expense of USD
(0.1) million was previously recognised in 2020 in General
and Administration expense relating to sanitation.
See Note 7 to Consolidated Financial Statements –
Exceptional items and Covid-19 expenses for further
details on page 110.
Impairments charge
Impairment charges taken were USD (1.3) million
(2020: USD (1.2) million) relating to the Impairment
of property, plant, and equipment USD (0.1) million
and Inventory (1.2) million.
See Note 3(d) to Consolidated Financial Statements -
Impairment of Property, Plant and Equipment for
further details on page 106.
Exceptional items
Exceptional items were USD (0.1) million (2020:
USD (0.04) million) mainly related to fees for
corporate restructuring advice.
See Note 7 to Consolidated Financial Statements -
Exceptional items and Covid-19 expenses for further
details on page 110.
40
Trinity Exploration & Production plc
Financial Review (continued)
Finance Income
Finance income is solely related to bank interest income
received on short term investments with financial
institutions of USD 0.1 million (2020: 0.1 million).
Finance Costs
Finance costs amounted to USD (1.5) million (2020:
USD (1.4) million) and comprised the:
•
•
•
Unwinding of the decommissioning liability USD
(1.2) million (2020: USD (1.2) million).
Bank overdraft USD (0.2) million (2020: (0.1) million).
Interest on Leases USD (0.1) million (2020:
(0.1) million).
See Note 9 to Consolidated Financial Statements –
Finance Costs for further details on page 111.
Income Taxation
Income Taxation Credit for 2021 of USD 4.7 million (2020:
USD (2.9) million expense), comprise the following:
•
Increase in Deferred Tax Assets (“DTA”) recognised
on available tax losses of USD 5.5 million credit
resulting from higher oil prices (2020: Reduction
in DTA of USD 3.4 million expense).
•
•
•
Decrease in Deferred Tax Liabilities (“DTL”)
USD 0.6 million due to accelerated accounting
impairments/depreciation (2020: USD 1.6 million
decrease).
Unemployment Levy (“UL”) USD (0.4) million
(2020: USD (0.3) million).
Petroleum Profit Tax (“PPT”) charge USD (1.0)
million (2020: (0.8) million).
See Note 10 to Consolidated Financial Statements –
Income Taxation for further details on page 111.
Total Comprehensive Income/(Loss)
Total Comprehensive Income for the period was
USD 7.7 million (2020: USD (2.8) million loss).
Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by
the Group to measure business performance. It is
calculated as Operating Profit before SPT & PT, Covid-19
expenses, Impairment and Exceptional Items for the
year, adjusted for non-cash DD&A, SOE, ILFA, FX
and FV of Derivative Instruments.
The Group presents Adjusted EBITDA at USD 19.8 million
and Adjusted EBITDA after Current Taxes at USD 14.8
million as it is used by Management and judged to be
a better measure of underlying performance.
Adjusted EBITDA
80
70
60
50
40
30
20
10
0
USD MM
66.2
(45.7)
(10.5)
9.8
19.8
(5.0)
14.8
Revenue
Cash
Operating
Expenses
Non-Cash
Operating
Expenses
10.0
Operating
Profit
Before
SPT & PT
Adjustments:
Non-Cash
Expenses
(DD&A, SOE,
Other Expenses,
ILFA & FX) and
Covid-19
expenses
Adjusted
EBITDA
Currrent
taxes
Adjusted
EBITDA
After Current
Taxes
Annual Report & Financial Statements 2021
Statement of Cash Flows
41
l Strategic Report
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Financial Accounts
Glossary
Company Information
35
30
25
20
15
10
5
0
USD MM
12.6
(13.9)
20.2
(0.6)
18.3
12.0
Opening Cash
Balance
Operating
Activities
Investing
Activities
Financing
Activities
Closing Cash
Balance
Reconciliation between Adjusted EBITDA after Current Taxes and Cash Inflow from Operating Activities
16
14.8
(1.9)
1.4
(1.7)
12
8
4
12.6
12.0
0
USD MM
Adjusted EBITDA
after current taxes
Changes in
Working Capital
Income
Tax Incurred
Income
Tax Paid
Cash flow from
Operating Activities
42
Trinity Exploration & Production plc
Financial Review (continued)
Cash inflow from operating activities
Operating Cash Flow (“OCF”) was USD 12.6 million
(2020: USD 10.3 million):
• Operating activities 2021 generated an operating
cash flow before working capital and income taxes
of USD 16.1 million (2020: USD 11.9 million).
•
•
Changes in working capital resulted in a net decrease
of USD (1.8) million (2020: USD 0.6 million decrease),
primarily as a result of the increase in trade
receivables compared to the 2020 year end.
Income taxes PPT and UL paid USD (1.7) million
(2020: USD (1.0) million paid) resulting from
higher oil price.
Cash (outflow) from investing activities
Cash outflow from investing activities was
USD (13.9) million (2020: USD (6.0) million):
•
•
Acquisition of PS 4, onshore 3D seismic, and
property, plant and equipment for the year totalling
USD (10.0) million (2020: USD (5.0) million).
Expenditure on exploration and evaluation assets
and other intangible assets USD (3.6) million (2020:
USD (1.0) million) as the Group continued to invest
in Galeota asset.
Net Cash Plus Working Capital Surplus
All figures in USD million
A:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total Current Assets
B:
Liabilities
Trade and other payables
Bank overdraft
Lease liability
Taxation payable
Total Current Liabilities
(A-B): Net Cash plus working capital surplus
•
Performance bond increase in renewal of
Onshore Lease Operatorship Assets USD
(0.3) million (2020: Nil).
Cash (outflow)/inflow from financing activities
Cash outflow from financing activities was USD
(0.6) million (2020: USD 2.2 million inflow):
•
•
•
•
Principal paid on lease liability USD (0.4) million
(2020: (0.4) million).
Interest paid on lease liability USD (0.1) million
(2020: (0.1) million).
Finance cost of USD (0.1) million (2020: (0.0) million).
No further drawdown on of CIBC working capital
Facility (2020: USD 2.7 million drawdown).
Closing Cash Balance
Trinity's cash balance at 31 December 2021 was
USD 18.3 million (31 December 2020: USD 20.2 million).
FY 2021
USD MM
Audited
FY 2020
USD MM
Audited
FY 2019
USD MM
Audited
18.3
10.8
3.8
32.9
8.8
2.7
0.6
0.0
12.1
20.8
20.2
7.2
5.3
32.7
7.8
2.7
0.6
0.2
11.3
21.4
13.8
9.4
5.2
28.4
10.4
—
0.6
0.1
11.1
17.3
Note: Net cash plus working capital surplus: Current Assets less Current Liabilities (other than Derivative financial asset/liability and Provision for other liabilities).
Annual Report & Financial Statements 2021
43
l Strategic Report
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Financial Accounts
Glossary
Company Information
Events since Year End
1. Hedging
The Company implemented crude oil derivatives over the Group’s monthly production in 2021 and 2022.
The derivative protection currently in effect for 2022 is as follows:
Type of Derivatives Index
Sell
Put
Buy
Put
Sell
Call
Buy Effective Expiry Execution
Call Production Date Date Date
Premium
USD MM
USD/bbl USD/bbl USD/bbl USD/bbl Barrels
Monthly
3-Way Cost Collar ICE Brent
50.00 60.00 66.90
- 10,000 1 Jan 22 30 Jun 22 04 Mar 21
3-Way Cost Collar ICE Brent
50.00 60.00 74.40
- 12,500 1 Jan 22 31 Dec 22 02 Jun 21
4-Way Cost Collar ICE Brent
59.00 68.00 72.00 82.00 15,000 1 Jan 22 30 Jun 22 05 Jul 21
3-Way Cost Collar ICE Brent
40.00 50.00 80.50
- 15,000 1 Jan 22 31 Dec 22 27 Aug 21
Put Spread Option ICE Brent
40.00 50.00
-
- 15,000 1 Jul 22 31 Dec 22 14 Jan 22
0.15
2. On 24 February 2022, Russian forces invaded Ukraine, causing wide-ranging economic sanctions to be applied
against the Russian regime by the US, EU and other major economies. The event caused both Brent and WTI oil
prices to soar, peaking well above USD 100 per bbl in March 2022. The increased oil prices has positively impacted
the Group’s crude oil revenue but negatively impacted derivative expenses. Overall, whilst there has been no
significant adverse impact to the Group, management continues to closely monitor the event’s impact as it unfolds.
3.
In 2021 Trinity engaged with a range of potential partners as part of the Galeota farm down process. The Company
on 3 May 2022 indicated, whilst initial feedback has been encouraging, a number of participants have informed the
Company that they are unable to fully assess the economics of the opportunity at Galeota without clarity on the
expected reforms to Supplemental Petroleum Tax (“SPT”), which are currently being considered by the Government
of Trinidad and Tobago (“GORTT”) and which were initially expected to have been confirmed sooner than now
appears likely. Pending SPT reform, which management still expects to happen, the Company has decided to pause
the Galeota farm down process. This will enable the Company to seek the best value proposition for Galeota when
the GORTT's fiscal reforms have been confirmed.
In the interim, the Company will continue to refine its plans for Galeota. In particular, it will advance preparations
for exploiting the 9.77mmstb of 2P reserves remaining in the Trintes field.
44
Trinity Exploration & Production plc
Risk Management and Internal Controls
Your Board is committed to effective risk management
and is supported by a pro-active organisational culture
and a framework of effective internal controls.
Aside from the generic risks faced by all businesses, as a
participant in the upstream oil and gas industry, the Group
encounters and has to manage several business specific
risks and uncertainties. Such risks and uncertainties include
those listed below. These risks should not however be
taken as a complete and comprehensive statement of
all potential risks and uncertainties that the Group faces.
Additional risks and uncertainties that are not presently
known to the Board, or which they currently deem
immaterial, may also have an adverse effect on the Group’s
operating results, financial condition and prospects.
Risk Profile Matrix
The risk summary and explanatory table below represents
our current assessment of the potential impact by area
and change from 2020 for each of the principal risks.
Change Strategic
Risk from Objective
Profile What is the risk? KPI's affected 2020 Impacted Responsibility Page
A HSSE & Covid 19 Loss Time Accidents h e Chief of Staff 45
Reportable Environmental & General Counsel
Incidents
B Climate Change (Emissions) Production = ru Board 45 to 46
& Energy Transmission
Impact
Liquidity
C Production and Production = u CEO, COO and 46
Reserves Risk Executive Manager
Sub Surface
Liquidity
D Development Risk Production = t CEO & COO 46 to 47
E Counterparty/Contractor Production = e CEO & FD 47
Exposure Cash from Operations
Liquidity
F Commercial Risk Production x ru Board 47
- Oil Price Risk
Cash from Operations
Liquidity
G Customer Cash from Operations = t FD 47
Concentration Risk
Liquidity
H Competition Risk and Liquidity h rt EMT 47 to 48
Cost Inflation
Operating Cash Flow
I Regulatory/Fiscal Risk Reputational = e EMT 48
J Major breach of business, Cash from Operations = eru EMT 48
ethical, or compliance
standards
Liquidity
K Cash Flow & Financing Risk Cash from Operations = tu CEO & FD 48 to 49
Liquidity
L Operational Risks Production = ert COO 49
e Retain Integrity.
r Efficiency & Sustainability.
t Monetise our Resources.
u Scale & Relevance.
Annual Report & Financial Statements 2021
Risk Details
A HSSE
Management of HSSE risk exposure is of paramount
importance to the organisation. As a participant in the
Onshore and Offshore development and production of
oil, the Group is exposed to material risk in the event
of a major safety incident, operational accident, weather
related/natural disasters, pandemics, social unrest, any
failure to comply with approved policies/ processes or
other external cause. Should such risks materialise, the
consequences could be loss of life, injuries, environmental
damage, damage to property, disruption to activities,
reputational damage and financial loss.
These HSSE risks are managed through the Group’s
dedicated HSSE personnel and the Group’s risk
management and internal controls alongside those of the
third parties such as contractors and other operators the
Group may partner with. The Group has insurance in place
to cover such exposure up to recommended industry
limits but should an incident occur of a scale in excess of
these recommended limits then the Group would be fully
exposed to the financial consequences. A comprehensive
HSSE update is provided to the Directors at every Board
meeting, being one of the first items on the Agenda. In
addition to this the Board is updated via monthly Board
calls on HSSE statistics. During 2021, the Board appointed
an HSSE Champion to oversee this function and to further
highlight its criticality to the Company. This has been
accompanied by the creation of an HSE Steering
Committee comprising some of the Executive
Management Team and chaired by the CEO,
which is supported by a HSE Tactical Team.
COVID-19
Trinity’s objective is to provide a safe and healthy place
of work for all staff members and to meet all our duties
and obligations to stakeholders. It is Trinity’s intention
to protect our employees from ill health at our offices
and operations. The Group continues to ensure that all
requisite business continuity and contingency plans
are implemented, in order to flatten transmission curves
and provide appropriate guidance to all staff.
Trinity in 2021 adapted to a hybrid in-office and Work
from Home (“WFH”) arrangements for administrative staff,
curbed all international travel as guided by Government
regulations and ensured all local safety regulations and
protocols were being adhered to at a minimum. These
measures have been effective, to date, and has not had
a significant adverse impact on the Group’s operations.
The situation continues to be monitored carefully by
Management and a dedicated interdisciplinary team
and measures are adjusted as guided by Government
regulations and the macro Covid 19 environment.
B
Climate Change (Emissions) & Energy Transmission
Impact
Our methods of adapting to climate change can be
addressed by considering two main areas:
1.
Hydro-meteorological events: Trinidad is the
southernmost country in the Caribbean Region which
is prone to hydro-meteorological events including
changing precipitation patterns, tropical waves
45
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escalating to more intense weather events such
as tropical storms and (very rarely) hurricanes which
can create storm surges and flooding (which are
themselves potential indicators of a changing tropical
climate). Offshore on the East Coast, we have
infrastructure that faces the Atlantic Ocean and, as
such, have exposure with regards to personnel housed
offshore and the potential for infrastructural damage
and follow-on operational impacts. The safety of
employees is of paramount importance to the Group.
In June 2017, Trinity was affected by Tropical
Storm Bret and the Company implemented its robust
Hurricane Evacuation Plan to have the employees
evacuated and the Trintes Field shut in. This was all
done effectively, safely and according to the Plan.
In terms of future development plans for the Galeota
Asset Development, SCADA implementation will
reduce the need for manned operations offshore
which will create a more cost effective safe and
efficient infrastructure, enabling Trinity to better
withstand changing weather patterns.
2. Geological phenomena: The Central Range fault
zone is closely associated with the El Pilar fault zone
which geologically separates the Caribbean and
South American tectonic plates. These fault zones
and associated smaller fault zones makes Trinidad
prone to dynamic geological phenomena including
earthquakes which can result in soil liquefaction, mud
volcanoes and mud flows and asphalt seepage which
can impact our Onshore, East and West Coast assets.
Over the last four years, heightened geological
activity has been noted in terms of earthquakes
with dormant mud volcanoes becoming active
and liquefaction taking place in Southern Trinidad.
Trinity has Emergency Response Plans in place to
deal with these types of events should they occur
in our fields or in our offices. Trinity has also
partnered with The University of the West Indies
(“UWI”) at St. Augustine Seismic Research Centre
to conduct sponsored studies adjacent to our
operated fields which can also aid in our
understanding of these natural phenomena,
build proactive response capacity and assess
possible impacts on field development planning.
There are many uncertainties in energy transition,
including the pace of the transition. New
technologies, stricter climate change policies
and new entrants may disrupt the energy industry.
Despite these uncertainties, Trinity believes that
the demand for lower emission oil will remain strong
for quite some time whilst supply will become
increasingly challenged as the Majors divert capital
expenditure towards diversifying their revenue
streams. That being said, Trinity is aligning its
business to the energy transition challenge by
making its existing operations less carbon intensive
and also pursuing wider energy initiatives addressing
both inputs and outputs from its energy supply
plan (i.e. lowering energy usage, renewable power
supplies and transition fuels). Furthermore, Trinity
believes that nothing prepares the business better
for uncertainty than responsiveness and innovation,
allowing Trinity to adapt to a changing energy world.
46
Trinity Exploration & Production plc
Risk Management and Internal Controls (continued)
Our methods to mitigate climate change (emissions)
and the energy transition are an extension of our
ESG approach previously mentioned:
1. Water disposal and recycling methods: During
normal production and drilling programmes there
is a certain amount of water produced which
must be firstly analysed and assessed for
components such as soluble and non-soluble
oil/organics, suspended solids, dissolved solids,
and various chemicals. Once the effluent water
can be recycled it can be used for activities
such as WO operations. Trinity is also reviewing
options for enhancing water treatments and
applicable disposal systems which would have
less impact to the ecosystems once released.
The latter also forms part of Trinity’s Improved
Oil Recovery (“IOR”) Projects such as
waterflooding reservoirs to increase oil recovery.
This method can also effectively and safely
dispose of the produced water from the fields.
2. Gas recycling: Gas is a by-product of oil
production. Trinity is looking at ways of
harnessing that energy. On our West Coast
assets this is important as gas can be re-injected
to facilitate a more efficient method to lift our
oil and better maintain pressure in our wells.
3. Trinity is looking into methods of harnessing
gas from our other assets as a primary source
of energy to sell or use internally to power
our fields.
4. Trinity is also looking into renewable energy
solutions/sources of energy for its existing and
potential future assets. In this regard, Trinity has
employed a solar system to power its WD5/6
field office, and remove it from the grid.
5. Trinity is assessing our current total emissions
and seeking methods to reduce them.
6.
Energy Assessment Audits are also being
employed to target energy usage across our
assets with a goal to reduce our electrical
power usage.
C
Production and Reserves Risk
The Group aims to manage natural production decline
via WOs, reactivations and swabbing while growing
production via RCPs and infill drilling. There is potential
risk that some of these measures may not deliver on
prognosis and therefore production performance can
be below expectations for a variety of reasons including
geological uncertainty, reservoir and well performance.
The Group produces from c.374 wells within multiple
fields both onshore and offshore and so is not reliant on
any one well or field. However, certain wells and fields do
contribute disproportionately to overall Group production.
If mechanical or technical problems, force majeure
(earthquakes, storms or other events) or problems affect
the production on one or more of these key wells or
fields, facilities or the downstream infrastructure, it may
have direct and significant impact on a substantial portion
of the Group’s production. Long-term scheduled or
unscheduled shutdowns of production may have a
material impact on the business, as the Group will
lose production income whilst also bearing its share
of any continuing fixed operating expenditure along
with associated remedial or repair works which may
be unquantifiable at the outset and/or subject to
cost overruns.
The estimation of proved oil and gas reserves involves
subjective judgements and determinations based on
available geological, technical, contractual and economic
information. Estimates could change because of new
information from production or drilling activities, or
changes in economic factors, including changes in the
price of oil and changes in the regulatory policies of host
governments, or other events. Estimates could also be
altered by acquisitions and divestments, new discoveries,
and extensions of existing fields as well as the application
of improved recovery techniques. Published proved oil
and gas reserves estimates could also be subject to
correction due to errors in the application of published
rules and changes in guidance. Downward adjustments
could indicate lower future production volumes and
could also lead to impairment of assets. This could have
a material adverse effect on our earnings, cash flows
and financial condition.
1.
2.
3.
4.
The Group continues to seek to balance these risks
by maintaining and building a portfolio of assets
that carry a range of differing technical and
commercial risks.
The Group ensures it has a wide suite of measures
to minimise natural decline and grow production
by having a dedicated technical team to continually
review wells, optimise targets and generate and
high-grade new drilling targets. The work of the
technical team is reviewed by a Board led Technical
Committee including external industry specialists.
Production risks are mitigated by production
being spread over 374 currently producing wells
throughout three distinct locations (Onshore T&T,
Offshore East Coast T&T and Offshore West Coast
T&T). Our wells are categorised by tiers which is
linked to planned response depending well criticality
on production delivery. These risks are further
mitigated by utilising applicable artificial lift
methodologies for production coming from
multiple reservoirs.
Effective management systems in place governing
geoscience, engineering (reservoir, petroleum and
completions) and production operations activities.
These include rigorous production forecasting and
reporting, field and well performance monitoring
and internal reserves auditing.
5. Risks to production levels from the Covid 19
pandemic are being mitigated through appropriate
business continuity plans.
D Development Risk
The Group is participating in certain development
projects, most notably the TGAL discovery offshore
development (the proposed Echo Platform development).
Whilst considerable work has been performed to date,
Annual Report & Financial Statements 2021
47
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Company Information
the Echo Platform development has not yet reached Final
Investment Decision (FID) stage and is unlikely to do so
unless and until commitments from one or more external
funding partners have been secured. The Group’s
ongoing development projects may, once they have
reached the FID stage, involve advanced engineering
work, extensive procurement activities and complex
construction work to be carried out under various
contract packages at different locations, both offshore
and onshore. Furthermore, the Group (together with its
licence partners), might be required to carry out drilling
operations, install, test and commission offshore
installations and obtain governmental approval which
make them susceptible to delays or cost increases. The
current or future projected target dates for production
commencement may be delayed and significant cost
overruns incurred due to delays, changes in development
scope, technical challenges, actual reserves being less
than estimated, project mismanagement, equipment
failure, natural disasters, political, economic, taxation,
legal, regulatory uncertainties, terrorism and protests,
which again may materially adversely affect the Group’s
future business, operating results, financial condition and
cash flow. Ultimately, the Group may be unable to meet its
ongoing share of project expenditures and be forced to
withdraw and/or default on its committed obligations,
which would have a material adverse effect on the Group.
The Group is seeking to limit its exposure to any one
aspect of development risk by taking projects forward
in a measured and sequential manner, with FEED
studies where possible outsourced to larger international
contractors. The limited number of projects expected
to be undertaken at any one time ought to reduce the
probability of a significant development risk materialising.
For larger development projects, and in keeping with
oil industry practices, the Group would seek one or
more partners with whom to share the risk and reward
of the project.
E
Counterparty/Contractor Exposure
Many aspects of operations and projects in the oil
industry are undertaken by third party contractors and
facilitated by suppliers. We rely on these counterparties
to deliver on time, within budget and to a sufficient quality
in a safe and ethical manner. Failure by counterparties to
deliver on their commitments on time and within budget
creates a risk of delay and/or overspend on any given
project. The Covid 19 pandemic has further exacerbated
the risk of counterparty failure to deliver on time and on
budget and the risk of counterparty default/failure.
In order to mitigate this risk the Group splits development
expenditures into competitive packages for products and
services from a carefully selected set of suppliers. Where
appropriate the Group will also enter into fixed cost turn-
key supply arrangements. As the Group continues to
navigate this period of uncertainty, Management are
confident that our demonstration of agility, adaptability and
alignment have placed Trinity in an advantageous position
as it relates to managing counterparty/contractor risk.
F
Commercial Risk - Oil Price Risk
The market price of oil is affected by global supply and
demand, can be very volatile and has the potential to be
at a level below operating break-even of the Group for
a protracted period. A fall in the price may not only
reduce short-term cash flow required to meet the
Group’s commitments as they fall due, but also reduce
the economic value and funding capacity of the Group’s
projects potentially rendering them uneconomic. There is
particular risk given the long-term nature of development
projects and associated contracts or acquisitions based
on assumed future oil prices. In the event that oil prices
remain low over the long term, the value in use of certain
assets might need to be revised and there could be a
negative on the Group’s net asset value, profitability
and compliance with financial ratios. Conversely, while
an increase in the price of oil can have a positive impact
of the Group’s revenue, it may also increase the hedging
expenses, eroding profitability.
Where and when appropriate the Group puts in place
hedging arrangements to partially mitigate the risk of
a fall in oil prices. However, such arrangements only
cover the short-term, leaving the Group exposed to
any longer-term protracted period of low oil prices. The
Group therefore seeks to maintain a low operating break-
even to provide a natural operational hedge to mitigate
against prolonged periods of low oil prices. This ensures
Trinity’s investment opportunities are robust to most
plausible downside oil price scenarios.
G Customer Concentration Risk
Whilst oil is an internationally traded commodity, Trinity
currently sells 100% of its oil production to Heritage
under evergreen Crude Oil Sales Agreements, which
give rise to customer concentration risk. As is the case
for other T&T E&P companies, Trinity is contractually
obligated to sell all production under its LOAs and
FOA (Onshore) to Heritage but has the right to market
production from its E&P licences (Galeota, Brighton
Marine and PGB) to third parties.
Trinity takes comfort that Heritage, while a producer of
its own oil, is also an aggregator of significant additional
volumes and Trinity’s production therefore forms part
of their overall crude marketing strategy. The possibility
that Heritage is prevented from purchasing Trinity’s
production for a short period has been considered both
operationally and financially. While the impact of a
prolonged period where Heritage is unable to purchase
Trinity’s production would be significantly challenging,
this scenario is seen as having a very low probability
of occurring.
H Competition Risk and Cost Inflation
There remains strong competition within the petroleum
industry for the acquisition of good quality hydrocarbon
assets. The Group competes with other oil and gas
companies, many of which have greater financial
48
Trinity Exploration & Production plc
Risk Management and Internal Controls (continued)
resources than the Group, for the acquisition of such
properties, licences and other interests as well as for
the recruitment and retention of skilled personnel.
The challenge to Management is to secure assets
and recruit and retain key staff without having to
pay excessive premiums.
In the current market many capital and operating
costs have increased and, given the rapid increase in
hydrocarbon prices, we can expect an increased level
of cost inflation which may increase the cash required
to support economically viable projects.
Furthermore, due to the Russia Ukraine conflict, the
Group may experience challenges with supply chain
disruptions including higher freight costs and delays
in receiving shipments.
In formulating bids to acquire assets, the Group utilises
experienced senior professionals within the Group to
ensure that any bids are submitted at a competitive price
that reflects the potential risked asset value and
can generate appropriate returns for the Group’s
shareholders. Prior to any asset being evaluated,
Management will review the target to ensure it fits
within robust economic parameters and overall
strategic direction of the Group.
To benefit from new opportunities, and in keeping with
oil industry practices, the Group partners with other oil
companies as part of the process for evaluating permits
from the competent authorities.
This also allows it to share the associated costs.
I
Regulatory/Fiscal Risk
The Group enters into commitments assuming a relatively
stable fiscal regime and any material change represents
a risk to the Group’s ability to fund its operations
and projects.
The Group operates in a jurisdiction with sophisticated
tax authorities capable of assessing the adverse impact
of any change in legislation before it is enacted.
The revised threshold for Supplemental Petroleum Tax
("SPT") for small onshore producers was implemented
via The Finance Act No. 30 of 2020 came into effect
on 1 January 2021. As a result, the threshold at which
SPT would be due for individual producers producing less
than 2,000 barrels of crude oil per day increased from
USD 50.0 /bbl to USD 75.0/bbl for the financial years
2021 and 2022. Trinity therefore expects to be exempt
from SPT across all of its onshore licences below USD
75.0/bbl, which has a significant positive impact on 2021
and 2022 cash flows.
In November 2021, the Government of Trinidad and
Tobago announced that it intended to undertake
a comprehensive review of the oil and gas taxation
regime to ensure that Trinidad and Tobago remains an
internationally competitive hydrocarbon province. Whilst
Management are encouraged by this, there can be no
certainty that the Government will enact any changes to
the oil and gas taxation regime, and so Trinity’s onshore
and offshore production may be subject to SPT above
USD 50.0 / bbl in 2023 and beyond.
J Major breach of business, ethical, or
compliance standards
The Group is subject to and has adopted numerous
requirements and standards including the UK Bribery Act,
UK AIM Market Rules, UK QCA Code, and the Disclosure
and Transparency Rules, among others. Additionally,
some of our stakeholders, such as financial institutions,
may require us to comply with other requirements or ask
us to provide information on our business, operations,
employees and shareholders as part of Know Your Client
(“KYC”) procedures.
Failing to comply with the applicable regulations and
requirements, such as failure to implement adequate
systems to prevent bribery and corruption or money
laundering, could result in prosecution, fines or penalties
imposed on the Group or its officers and even suspension
of operations or listing. Inability to clear KYC procedures
to the satisfaction of the third parties may result in refusal
to engage in business relationships with the Group.
The Group seeks to mitigate these risks through a number
of measures and processes.
The Chief of Staff & General Counsel is responsible
for compliance and, with the support of the Board,
implements compliance-related activities and
procedures. Such activities focus on training, monitoring,
risk management, due diligence and regular review
of policies and procedures.
We prohibit bribery and corruption in any form by all
employees and by those working for and/or connected
with the business. Employees are expected to report
actual, attempted or suspected bribery or other issues
related to compliance to the Compliance Officer and
their line managers.
In dealing with third parties, our policy is to maximise
transparency and provide all information available to
address KYC-related procedures and requests.
K
Cash Flow & Financing Risk
The ability to finance firm commitments, participate in the
Group’s developments (most notably the Galeota Asset
Development) and generally develop the Group’s
business depends upon:
1. Cash flow from the Group’s producing assets: cash
flow is dependent upon a combination of factors
including field performance (both reservoir and
facilities), oil prices, fiscal regime and operating
costs, much of which are substantially beyond the
control of the Group.
2. Financing from the equity capital markets, debt
finance, farm downs and other means. A number
of the Group’s development commitments and infill
opportunities are long term in nature and there is no
49
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•
Trinity is operating the East Coast asset under one
exploration and production licence which has a
maximum term of 25 years effective 14 July 2021.
There are certain Minimum Work Obligations to
be observed.
It is not unusual for an Operator to manage assets under
an expired exploration and production license in Trinidad
and Tobago. The Group is holding over as Operator with
the full knowledge of the co Licencee Heritage and the
MEEI and routinely seeks to mitigate any risks by ensuring
that the co Licencee Heritage and the main government
regulator MEEI are kept updated and informed
throughout the period.
Annual Report & Financial Statements 2021
assurance that the Group will be successful in
generating or obtaining the required financing to
undertake these initiatives. In those circumstances
some license interests may be relinquished, sold at
an undervaluation and/or the scope of operations
reduced or ultimately the Group may default on its
obligations. In the event that sufficient funds are not
available to finance the business, it would have a
material adverse effect on the Group’s financial
condition and its ability to conduct operations.
3.
Recoverability and timing of outstanding VAT refunds
from the Board of Inland Revenue (“ BIR”).
The Group seeks to mitigate these risks through
a number of measures including:
1. maintain a diverse portfolio of oil and gas
producing interests;
2.
3.
4.
rigorous financial discipline and maintaining a
strong balance sheet and cost control culture;
regular review of short-term and longer-term
cash flow forecasts by Management;
the Board reviewing and approving the financial
strategy of the Group; and
5. maintaining strong relations with its
shareholders, banks and the BIR.
BIR VAT Refunds Update
There has been no official announcement on VAT bonds
in 2022. VAT refund payments continue to be processed
by the BIR from 2021 onwards. In 2022 the Group
received VAT refunds of USD 0.9 million and generated
VAT refunds of USD 0.7 million. As at 30 April 2022,
the VAT refunds outstanding from the BIR amounts
to USD 4.5 million.
L Operational Risks
Trinity operates Lease Operatorship Agreements (“LOA”),
Joint Operating Agreements and a Farmout Agreement
over its Onshore, East and West coast Assets.
• Onshore has six LOAs and one Farmout Agreement
with Heritage. Of the six LOA’s, five were renewed
effective 1 January 2021 for a ten-year period with
one LOA given a two-year extension until 31
December 2022. Each of these LOAs have a certain
Minimum Work Obligations programme. Although the
Tabaquite Farmout has expired Trinity is currently
operating the asset under an agreed holding over
arrangement pending the formal extension.
•
Trinity is operating the West Coast assets under two
exploration and production licenses covering the
Point Ligoure Guapo Bay Brighton Marine Block
(PGB) and Guapo Bay Brighton Marine Block. The
PGB license has expired and Trinity is currently
operating the assets under an agreed holding
over arrangement pending the formal extension.
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Trinity Exploration & Production plc
Our Governance
Directors’ Statement under Section 172(1)
of the CA 2006
Section 172 (1) of the CA 2006 obliges the Board to
promote the success of the Group for the benefit of the
Group’s members as a whole. The section specifies that
the Board must act in good faith when promoting the
success of the Group and in doing so have regard
(amongst other things) to:
•
•
•
•
•
•
the likely consequences of any decision in
the long term,
the interests of the Group’s employees,
the need to foster the Group’s business relationship
with suppliers, customers and others,
the impact of the Group’s operations on the
community and the environment,
the desirability of the Group maintaining a reputation
for high standards of business conduct, and
the need to act fairly between members of
the Group.
The Board is collectively responsible for the decisions
made towards the long-term success of the Group
and how the strategic, operational and risk
management decisions have been implemented
throughout the business.
Engagement
The Board recognises that the employees are one of
the Group’s key resources, enabling delivery of the
Group’s vision and goals.
2021 has been a challenging year globally due to the
Covid 19 pandemic, requiring the Group to put robust
measures in place to minimise the impact on the business.
The Board has supported its workforce throughout the
year, seeking to help keep all employees, contractors and
others who engage with the Group safe during this period
of uncertainty. The Board reviewed the position regularly
throughout the year, receiving updates from Management
as to the steps being taken to ensure safety within the
workforce, both within the offices and out in the field.
Annual pay and benefit reviews are carried out to
determine whether all levels of employees are aligned to
the benchmarks in the industry relevant to our size and
type of business and to retain and encourage skills vital
for the business. The Remuneration Committee oversees
and makes recommendations regarding executive
remuneration and long-term share awards. During 2021
awards were issued under the Company’s long term
incentive plan to certain individuals within the executive
management team and awards issued in 2017 and 2019
vested. The awards are to encourage and incentivise
senior members within the organisation and are based
on total shareholder return to align their interests with
shareholders. The Board encourages Management to
foster positive employee engagement and to provide
necessary training in order to use their skills in the relevant
areas in the business. The Remuneration Committee
works to ensure that staff are appropriately rewarded to
maintain engagement and commitment, and during 2021
undertook a review of the remuneration of both Executive
and Non-Executive Directors, and members of the EMT,
with the assistance of an external consultant.
The Board acknowledges that a strong business
relationship with suppliers and customers is an
important factor for the Group’s long term success.
Whilst day to day business operations regarding suppliers
and customers are delegated to the EMT, the Board
sets directions and evaluates policies with regard to
new business ventures and investing in research and
development. The Board upholds ethical behaviour
across the business and encourages the EMT to require
comparable business practices from all suppliers and
customers doing business with the Group. During
2021 and through into 2022 there has been regular
engagement with key suppliers to ensure the ongoing
safety and performance of the business as the Group
implemented measures to ensure the protection of staff,
including those working from home.
We update, and where appropriate seek feedback
from, all key stakeholders via regular meetings and
communications throughout the year. Specifically, in
regards to shareholders, both retail investor events and
institutional investor meetings are held during the year
to provide updates and receive feedback. We value
the feedback we receive from our stakeholders and
we take every opportunity to ensure that where
possible their wishes are duly considered.
Policies and process
The Board reviews on a monthly basis the HSSE
measures implemented by the Group and the EMT’s
recommendations for better practices. Additionally, in
2022 Kaat Van Hecke, non-executive director, has been
designated as the Board representative responsible for
oversight of the HSSE function. Employees’ opinions
and suggestions are considered and valued, particularly
with regards to HSSE matters through the START card
system. Employees are informed of the results and are
encouraged to feel engaged. The T&T employees are
given the opportunity to participate in regular Town Hall
Meetings, an open forum moderated by members of
the EMT which takes place on a quarterly basis (and
ad hoc as required). Throughout 2021, where at times
engagement with staff in person was not possible,
contact was maintained through virtual means,
including virtual Town Hall meetings.
The importance of making all staff feel safe in their
environment is maintained and a Whistleblowing Policy
is in place to enable staff to confidentially raise any
concerns freely and to discuss any issues that arise.
Strong financial controls are in place and are well
documented. Staff are annually provided with refresher
courses to ensure that the issues of bribery and
corruption remain at front of mind.
The Audit Committee Chairman has assumed the
role of Whistleblowing Officer.
Information
The Board places equal importance on institutional
and individual shareholders and recognises the
significance of transparent and effective communications
with shareholders.
Annual Report & Financial Statements 2021
51
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Company Information
As an AIM listed company there is a need to provide fair
and balanced information in a way that is understandable
to all stakeholders and particularly our shareholders.
The primary communication tool with our shareholders is
through Regulatory News Service (“RNS”), on regulatory
matters and matters of material substance. The Group’s
website also provides information for stakeholders.
Changes to the composition of the Board and Board
Committees, changes to major shareholder information
and disclosure updates required under the Quoted
Companies Alliance Corporate Governance Code 2018
(the “QCA Code”), are promptly published on the website
to enable shareholders to be kept abreast of the Group’s
affairs. The Group’s Annual Report and Notice of Annual
General Meetings (“AGMs”) are made available to all
shareholders, and Interim Reports and other investor
presentations for the last six years can also be
downloaded from our website.
The Board acknowledges that effective two-way
communication with shareholders encourages mutual
understanding and better connection with them. The
benefits include improved transparency of information
on the business and its performance, appropriate
consideration of all shareholders’ views, as well
as instilling trust and confidence to allow informed
investment decisions to be made by the Board. The
Group has a Corporate Development Manager who
monitors and coordinates investor relations programmes.
Training
Although the Group is incorporated in the UK and
governed by the CA 2006, the Group’s business
operations are carried out in T&T which requires the
Group to conform to statutory and regulatory provisions
of both the UK and T&T. The Group has adopted the
QCA Code and the Board recognises the need to
maintain a high standard of corporate governance as
well as to comply with the AIM Rules to safeguard the
interests of the Group’s stakeholders. Anti-corruption
and Anti-bribery training are compulsory for all staff and
contractors and the Anti-bribery statement and policy
is contained in the Group’s Employee Manual, as well
as being published on the Group’s website. The Group’s
expectation of honest, fair and professional behaviour is
reflected by this and there is zero tolerance for bribery
and unethical behaviour by anyone related to the Group.
2021 and on-going performance: The global pandemic
continued to impact the economy in 2021 and it continues
to be a challenging time for many businesses. Disruptions
to supply chains, and increasing inflation, have been
further exacerbated by Russia’s invasion of Ukraine in
February 2022, although these factors have also led to
a dramatic increase in the price of oil and gas. The Group
has worked hard to ensure the stability of the business
throughout this period, maintaining production levels,
renewing and extending its licences and progressing
projects to further the growth of the business.
Community and environment
Principal decisions during 2021
The Board advocates the highest standards of care
towards the communities in which it operates and is
acutely conscious that the nature of the Group’s business
requires strong measures to be put in place to protect the
environment. At its monthly meetings, the Board reviews
an HSSE Report from Management and considers the
impact of the Group’s operations on the environment
and the neighbouring community.
Our Corporate Social Responsibility (“CSR”) philosophy
is based on our core watchwords which stems from
our vision to achieve our business goals of:
Behaviour:
Demonstrate professionalism, respect and fairness;
conducting business in a socially responsible and
ethical manner.
Rigour:
Key decisions made by the Board were in relation to:
•
•
•
•
•
•
•
A new and improved license for the Galeota asset
and conversion to 100% working interest,
Extending four of the Company’s five LOAs for an
additional 10 years,
Acquisition of the PS-4 Block,
Entering Bid rounds - non-binding interest in six
onshore blocks
Appointing an expert external advisory team to help
us refine our ESG strategy
Commencement of Solar irradiance study adjacent to
Trinity’s Galeota field office
Significantly strengthening the Board, and the
recently established Technical Committee
Initiate thought before action by promoting sustainability
and proactively protecting the environment.
Further details can be found in Chief Executive Officer’s
Review of 2021, pages 8 to 11.
Purpose:
On behalf of Board
Fit for delivering our goals by engaging with, learning
from, respecting and supporting the communities and
cultures within which the Group operates.
Any CSR initiatives being undertaken need to be aligned
with our underlying philosophy, must be relevant and
sustainable to audiences/target areas which are to be
impacted by what we do and simultaneously be mutually
beneficial to our operations.
Nicholas Clayton
Non-Executive Chairman
23 May 2022
52
Trinity Exploration & Production plc
Corporate Governance Statement
On behalf of the Board, I am pleased to present the
Corporate Governance Report for the year ended
31 December 2021. We at Trinity believe that strong
corporate governance is critical to achieving our strategic
goals and creating value for our shareholders. As
Non-Executive Chairman of the Group I have a keen
interest in ensuring that an effective and focused Board
leads the business and builds upon its successes to date.
Following the requirement by AIM that all AIM listed
companies comply with a recognised corporate
governance code, the decision was made by the Board
that the Group would adopt the QCA Code. The Board
believes the QCA Code to be the most appropriate
recognised corporate governance code for the Group.
During the year under review, the Board continued to
uphold the principles of the Code and ensured that the
Group complied with the QCA Code in all aspects of the
business. Details of the principles of the Code and how
the Group applies them are detailed within this report
and also on the Group’s website.
The Board is committed to ensuring good corporate
governance, at Board level and throughout the business.
During 2021 the Company made significant changes
to the composition of the Board, which included my
appointment as Non-Executive Chairman and Jeremy
Bridglalsingh stepping up to the role of CEO. In addition,
the Company has strengthened its independent non-
executive presence by the appointment of Derek Hudson
in September 2021 and Kaat Van Hecke in March 2022.
These changes have helped strengthen corporate
governance within the business yet further.
As Non-Executive Chairman it is my duty to ensure
that good standards of governance are delivered and
fed down throughout the organisation. The Board, as a
whole, looks to instil a positive culture across the Group,
delivering strong values and behaviours. The importance
of delivering the Group’s objectives in a manner
consistent with our values is at the forefront of the
Board’s thinking, as is ensuring that this culture is fed
down through the EMT and throughout the business.
The principal risks facing the business, as set out on
pages 44 to 49 of the Annual Report are considered
by the Board, recognising that strong governance across
the organisation is essential to manage the risks and
challenges that the Group faces.
2021 was a challenging year, characterised by increased
volatility in commodity prices and rising inflation
combined with the continuing impact of the global
pandemic. The Group was further impacted by the
sudden and unexpected death of its founder and
Executive Chairman, Bruce Dingwall, CBE. The Group has
performed well throughout, safely maintaining operations
and production. The solid framework that Management
has built over the last few years has helped the business
continue to develop during a period of considerable
uncertainty. The Board has continued to work effectively
through this challenging period, increasing the number
of ad hoc engagements to ensure that the strategy
can continue to be delivered and goals met, whilst
ensuring the risks are monitored and a culture of support
and safety is provided to all stakeholders, including
employees, suppliers and the wider environment in
which the business operates. To emphasise the criticality
of the HSSE and ESG functions with the Company, the
Board appointed Kaat Van Hecke as the Board Champion
to directly oversee the governance in these areas.
As the Group builds the next phase of development for
the business, as Non-Executive Chairman, I will work with
the Board to cement the existing values that are in place
and ensure that good corporate governance and strong
principles continue to be present throughout the
organisation, for the benefit of all stakeholders.
Nicholas Clayton
Non-Executive Chairman
23 May 2022
Annual Report & Financial Statements 2021
QCA Principles
53
Strategic Report
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Glossary
Company Information
The Board recognises its
responsibility for the proper
management of the Group and is
committed to maintaining a high
standard of corporate governance,
commensurate with the size and
nature of the Group and the
interests of its shareholders.
The Corporate Governance Code does not apply to
companies admitted to trading on AIM and there is no
formal alternative for AIM companies. However, the
Quoted Companies Alliance has published the QCA Code,
which includes a standard of minimum best practice
for AIM companies and recommendations for reporting
corporate governance matters. The Board have adopted
the QCA Code which they consider appropriate given the
size and resources of the Group.
The QCA has ten principles which the Group is required
to adhere to and in relation to which the Group is required
to make certain disclosures within its report and accounts
and on its website, www.trinityexploration.com.
This section outlines the ten QCA principles and identifies
how Trinity adheres to each in detail:
1.
Establish a strategy and business model which
promotes long-term value for shareholders
Trinity’s strategy is focused on positioning the Group to
create long-term shareholder value by developing and
growing the resources base of our T&T based assets,
whilst maintaining rigorous attention to cost control,
capital deployment and value creation.
The Board keeps abreast of the key challenges
associated with protecting the Group from unnecessary
risk and securing its long-term future. We achieve this
through regular reviews and meetings with all
stakeholders, and the ongoing identification, evaluation
and mitigation of risks. This is crucial to keeping the level
of risk associated to activities within the Group to an
acceptable level.
Our Business Model and Strategy is outlined on pages
12 to 13 of the Strategic Report and details of the key
risks for the business and how these are mitigated can
be found on pages 44 to 49.
2. Seek to understand and meet shareholder
needs and expectations
The Group welcomes the opportunity to maintain an
ongoing open dialogue with its shareholders, to ensure
that it is able to understand and meet shareholder needs
and expectations.
General inquiries can be submitted directly to the
Group or our PR advisors (Walbrook PR) by either
calling +1 868 612 0067 or emailing info@trinioil.com or
trinityexploration@walbrookpr.com. The Executive
Directors and the Group’s PR advisors seek to respond
to shareholder queries directly (whilst remaining
cognisant of the UK Market Abuse Regulations’
restrictions on inside information and the requirements
of the AIM Rules for Companies). Non-deal roadshows
are arranged throughout the year to meet with existing
and potential new shareholders to maintain, as much as
possible, an ongoing dialogue. Despite Covid 19, this level
of engagement has been maintained throughout 2021,
using virtual platforms to engage with stakeholders.
Nicholas Clayton, (formerly our Senior Independent
Non-Executive Director,) was appointed Non-Executive
Chairman in August 2021. Nicholas is also available
to discuss any issues or concerns that shareholders
or other stakeholders may have regarding the Group’s
performance and its governance arrangements.
Arrangements can be made to get in direct contact
with Nicholas by calling +44 0131 240 3860.
Our AGM is an annual opportunity for all shareholders
to meet with the Non-Executive Chairman and other
members of the Board, including the Chief Executive
and the Non-Executive Directors. The meeting is open
to all shareholders, giving them a forum for two-way
communication and the opportunity to raise issues
during the formal business or more informally following
the meeting.
At the AGM, separate resolutions are proposed on each
substantial issue. For each proposed resolution, proxy
forms are issued which provide voting shareholders with
an opportunity to vote in advance of the AGM if they are
unable to vote in person. Our registrar, Link Group, count
the proxy votes which are properly recorded and the
results of the AGM are announced through a Regulatory
News Service (“RNS”).
The Board is keen to ensure that the voting decisions
of shareholders are reviewed and monitored and that
approvals sought at the Group’s AGM are, as much as
possible, within the recommended guidelines of the QCA
Code. In the event that a significant proportion of votes
was ever cast against a resolution, the Group would, on
a timely basis, provide an explanation of what actions it
intends to take to understand the reasons behind that
vote result, and where appropriate, any different action
it has taken, or will take, as a result of the vote.
3. Take into account wider stakeholder and social
responsibilities and their implications for long
term success
The Board recognises that the long-term success of the
Group is dependent upon the efforts of its Management
and employees, and those of our contractors, suppliers,
partners, regulators and the position of the Group within
the communities we operate.
The Group is committed to being honest and fair in
all its dealings with its employees, partners, contractors,
suppliers and other key stakeholders and encourages
the same in return. The Group expects its employees,
partners, contractors and suppliers to adhere to
business principles which are aligned to its own.
Delivery of our business model is underpinned by
our core values of Behaviour, Rigour and Purpose:
54
Trinity Exploration & Production plc
QCA Principles (continued)
Behaviour:
that mirrors professionalism, respect and
fairness by conducting business in a
socially responsible and ethical manner;
Rigour:
Purpose:
initiate thought before action by promoting
sustainability and proactively protecting
the environment; and
fit for delivering our business goals by
engaging with, learning from, respecting
and supporting the communities and
cultures within which we operate.
We value the feedback we receive from our stakeholders
and we take every opportunity to ensure that where
possible their wishes are duly considered. Quarterly
(or ad hoc as required) T&T Town Hall Meetings are held
with employees and attended by members of the EMT
and any visiting Board members. Employees are given
an opportunity to participate in an open forum and their
opinions and suggestions are considered and valued,
particularly with regards to HSSE matters through the
START Card system. Despite the challenges of the
Covid 19 pandemic, engagement has been maintained
with employees to ensure not only the on-going success
of the business but the welfare of our staff and their
families, both mentally and physically.
The Board advocates engagement with, and support for,
the communities in which the business operates and are
mindful of the nature of the business and the need to
ensure strong HSE measures are in place to protect the
environment. The CSR philosophy of the Group is fed
down from the Board throughout the organisation.
During 2021 the Group engaged with the local community,
providing food supplies to vulnerable households. The
business supports local schools in the Galeota community,
providing supplies and sponsoring the Local Schools
Rewards and Recognition Programme.
4. Embed effective risk management, considering
both opportunities and threats, throughout
the organisation
The Board understands that the Group’s financial
standing and reputation may be impacted by various
risks, not all of which are within its control. It believes
that the principal risk categories for the business
are: corporate/strategic; operational (exploration,
development and operating); financial; political/
regulatory; HSSE and management/ organisational.
The risk management framework and processes adopted
by the Board involves the identification, assessment,
mitigation, monitoring and reporting of all key risks
on a regular basis to minimise the impact of such risks.
An element of risk is inherent to the Group’s activities
of oil and gas exploration and development and as
such the Board has established formal arrangements
for determining the extent of exposure to the risk.
The Board is responsible for regularly reviewing
and considering the key risks and uncertainties facing
the business. Newly identified risks are noted and
communicated throughout the organisation. The principal
risk areas for the business and the respective mitigating
actions are listed in the key risks on pages 44 to 49. The
risks of the business are considered both by the Audit
Committee and the Board as a whole. Certain aspects of
the business risks are considered by the Board at each
formal Board meeting, including HSSE and operational
risks. When considering new projects the risks and
opportunities both operationally and financially are
considered by the Board and discussed at the relevant
meeting. These discussions would usually include
participation by members of the EMT who are involved
with the project. The impact of Covid-19 on the business
and the support being given across the business to
employees, contractors and the wider environment in
which the Group operates has been discussed by the
Board at every meeting during 2021 and into 2022.
5. Maintain the Board as a well-functioning,
balanced team led by the chair
The QCA Code requires that the boards of AIM companies
have an appropriate balance between Executive and
Non-Executive Directors of which at least two should be
independent. The Board is currently six strong, and has
a balance between Executive, Non-Executive Directors
and Independent Non-Executive Directors.
The Board believes that all of the Non- Executive
Directors are independent in character and judgement
and have the range of experience and calibre to bring
independence on issues of strategy, performance,
resources and standards of conduct which are vital to
the success of the Group. However, one of the Non-
Executive Directors (Angus Winther) is not deemed
to be independent under the QCA Code given his
significant interest in the Group’s shares.
Following the appointment of Nicholas Clayton as Non-
Executive Chairman the Company does not at present
have a Senior Independent Non-Executive Director. The
Board does not deem this necessary given the transition
from an Executive Chairman to a Non-Executive Chairman.
The Board, led by the Non-Executive Chairman, has the
necessary skills and knowledge to discharge their duties
and responsibilities effectively, setting clear expectations
and ensuring stringent measures for corporate
governance standards are met particularly in relation
to executive remuneration, accountability and audit.
The Board meets as regularly as necessary. It has
established an Audit Committee and a Remuneration
Committee, particulars of which appear hereafter.
Appointments to the Board are made by the Board
as a whole and so the Group has not created a
Nomination Committee.
Executive Directors are expected to devote substantially
all of their committed working time to the duties of the
Company. It is expected that the Non-Executive Directors
dedicate at least one day a month to the Company,
although it is recognised that this may increase from
time to time as the business demands.
Generally, the level of Board engagement has increased
over the past year with the unexpecting passing of the
previous Executive Chairman, Bruce Dingwall, CBE. The
Board continued to hold monthly board calls throughout
2021, to enable the Non-Executive Directors to be more
involved in core decision making between formal board
meetings which involve approving quarterly updates,
interim and annual financial accounts, budget and
remuneration reviews.
Annual Report & Financial Statements 2021
55
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
6. Ensure that among them the Board has
the necessary up to date experience, skills
and capabilities
The Board currently comprises the Non-Executive
Chairman, four Non-Executive Directors and one
Executive Director, the Chief Executive Officer. The Board
has significant industry, financial, public markets and
governance experience, possessing the necessary mix
of experience, skills, personal qualities and capabilities
to deliver the strategy of the Group for the benefit of
the shareholders over the medium to long-term.
The Group is mindful of the issue of gender balance,
and during 2022 a female Director, Kaat Van Hecke was
appointed to the Board. The Group also has a female
Chief of Staff & General Counsel, Nirmala Maharaj, as
well as a female Corporate Development Manager,
Tracy Ann Mackenzie, in the EMT and embraces
equality across the work place.
The Board is also mindful of the need for considering
succession planning. Biography details of the Board
of Directors are outlined on pages 58 and 59.
7. Evaluate Board performance on clear and relevant
objectives, seeking continuous improvement
Internal evaluation of the Board, its Committees and
individual Directors is important and will develop as the
Group grows in the future. The expectation is that, going
forward, Board reviews will be undertaken on an annual
basis to determine its effectiveness and performance as
the Directors’ continued independence. A formal Board
review has not been carried out in the year ended
31 December 2021. However, recent changes to the
Board in 2021 and 2022 have been made to strengthen
the composition of the Board.
Whilst the Board has not undertaken any formal training,
this is something that will be considered as the business
grows and the Board is further established. The Directors
have a wide knowledge of the business and requirements
of Directors’ fiduciary duties. The Directors receive
briefings and updates from the Group’s advisors
(Legal, Auditors, NOMAD and Broker) and the Company
Secretary on developments and initiatives as they deem
appropriate. All Directors receive regular boardroom
briefings from Trinity’s Legal Advisors (Pinsent Masons
LLP) and the Group’s Auditors brief the Audit Committee
on accounting and regulatory developments impacting
the Group. Individual Directors may also engage external
advisors at the expense of the Group upon approval by
the Board in appropriate circumstances, although no such
engagement was necessary during 2021.
8. Promote a corporate culture that is based
on ethical values and behaviours
The Directors are committed to promoting positive ethical
values and behaviours across the Group as a whole. The
Directors are mindful of the industry that the business
operates in and take all issues of ethical values and
behaviours very seriously. The Board is very aware
that the tone and culture set by it will greatly impact
all aspects of the Group’s performance. The Board
recognises that its decisions regarding strategy and risk
will impact the corporate culture of the Group as a whole
and that this will impact the long term performance of
the Group. The importance of delivering success whilst
maintaining a safe environment is continually stressed
by the Board and the EMT.
Maintaining sound ethical values and behaviour is crucial
to the ability of the Group to successfully achieve its
corporate objectives. The Board places great importance
on this and seeks to ensure that this flows throughout the
organisation. The Group’s Employee Manual is in place,
which is provided to staff as part of their induction and
can be accessed at all times. Staff are made aware that
they must adhere to the standards set out in the Group’s
Employee Manual at all times and are encouraged to
ask questions and seek clarification on any uncertainties.
The Board’s assessment of the culture within the Group
at the present time is one where there is respect for
all individuals, open dialogue is actively encouraged
and there is commitment to best practice and
continuous improvement.
Annual Anti-corruption & Anti-Bribery training is
compulsory for all staff and contractors and the
Anti-bribery statement and policy is contained in the
Group’s Employee Manual as well as on the Group’s
website. The Group’s expectation of honest, fair and
professional behaviour is reflected by this and there is
zero tolerance for bribery and unethical behaviour by
anyone relating to the Group.
A Whistleblowing policy is also in place which enables
staff to confidentially raise any concerns. The Group
considers it essential that all staff should be made to feel
safe in their environment and therefore has the means
available to freely discuss any issues that arise. Strong
financial controls are in place and are well documented.
Staff are annually provided with refresher courses to
ensure that the issues of bribery and corruption remain
at the forefront of peoples’ mind. The Chair of the Audit
Committee has assumed the role of Whistleblowing
Officer. Arrangements can be made to get in direct
contact with Angus Winther via calling +44 131 240 3860.
A Delegation of Authority (“DOA”) is in place which
details the authorisation process and accountability in
the organisation detailing the financial, corporate and
operational controls that are in place.
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The Board retains full and effective control over the
business and operations of the Group. The Board’s regular
schedule provides for four board meetings per annum.
The Board also has monthly and ad-hoc calls to keep
informed of business operations and macro-environmental
concerns impacting the business. The Board and its
Committees receive appropriate and timely information
prior to each meeting; a formal agenda is produced for
each meeting and Board and Committee papers are
typically distributed one week before meetings take place.
Any Director may challenge the EMT’s proposals and
decisions are taken democratically after discussions. Any
Director who feels that any concern remains unresolved
56
Trinity Exploration & Production plc
QCA Principles (continued)
after discussions may ask for that concern to be noted in
the minutes of the meeting, which are then circulated to
the Board. Any specific actions arising from such meetings
are agreed by the Board or relevant Committee and then
followed up by the EMT.
The Non-Executive Chairman has overall responsibility
for corporate governance and the promotion of high
standards throughout the Group. He leads and chairs the
Board, ensures that committees are properly structured
and operate within the appropriate terms of reference.
He also leads in the development of strategies and
setting objectives and oversees communication between
the Group and its shareholders.
The Non-Executive Chairman is an important interlocutor
between shareholders and the Board. The Non-Executive
Chairman also acts as a sounding board for the CEO and
an intermediary for other Directors. He is responsible for
holding regular informal meetings with other Directors.
The Executive Director is responsible for implementing
and delivering the strategy and operational decisions
agreed by the Board, making operational and financial
decisions required in the day-to-day operation of the
Group, providing executive leadership to the wider
staff team, championing the Group’s core values
and promoting talent management.
The Non-Executive Directors contribute independent
thinking and judgement through the application of their
external experience and knowledge, scrutinise the
performance of EMT, provide constructive challenge
to the Executive Director and ensure that the Group
is operating within the governance and risk framework
approved by the Board.
As noted above the Board holds regular meetings
at which financial, operational and other reports are
considered and where appropriate voted upon. The
Board is responsible for the Group’s strategy and
key financial and compliance issues.
There are certain matters that are reserved for the
Board, which include:
1.
2.
3.
4.
5.
approval of the Group’s strategic aims
and objectives;
approval of the Group’s annual operating and
Capex budgets and any material changes to them;
review of Group performance and approving any
necessary corrective action that is to be taken;
extension of the Group’s activities into new business
or geographical areas;
any decision to cease to operate all or any part of
the Group’s business;
6. major changes to the Group’s corporate structure
and management and control structure;
7.
8.
9.
any changes to the Group’s listing;
changes to governance and key business policies;
ensure maintenance of a sound system of internal
control and risk management;
10. approval of half yearly and annual report, accounts
and preliminary announcements of final year results;
11.
review material contracts and contracts not in the
ordinary course of business; and
12. setting EMT pay and conditions, annual bonuses
and awards under the Long Term Incentive
Plans (“LTIPs”).
The Board has approved the adoption of the QCA Code
as its governance framework against which this statement
has been prepared and will monitor the suitability of this
Code on an annual basis and revise its governance
framework as appropriate as the Group evolves.
The Board has a Remuneration Committee, Audit
Committee and Technical Committee, further details
relating to which are set out below. The Board has made
the decision not to have an HSSE Committee, but has
recently appointed Kaat Van Hecke to be responsible
for HSSE. HSSE is considered to be of the upmost
importance to the Board and throughout the organisation.
An HSSE report is provided and a verbal update given at
every Board meeting, being one of the first items on the
agenda. At present the Directors feel that HSSE matters
being discussed by the Board in its entirety is of benefit.
At some stage, especially if the operations of the
business grow significantly, the decision may be made
to establish an HSSE Committee.
The Remuneration Committee
The Remuneration Committee is responsible for
determining and recommending to the Board the
remuneration of the Executive Director and other members
of the EMT. It is also responsible for the design of all share
incentive plans and the determination of individual awards
to the Executive Director and other members of the EMT
and the performance targets to be used.
The Remuneration Committee currently comprises of
Nicholas Clayton (Chair until 1 July 2022) Kaat Van Hecke
(Chair from 1 July 2022), Derek Hudson and Angus
Winther. The Committee generally meets four times a year.
The Audit Committee
The main functions of the Audit Committee include
monitoring the integrity of the Group’s financial
statements and reviewing the effectiveness of the
Group’s internal controls and risk management systems.
The Audit Committee makes recommendations to the
Board in relation to the appointment of the Group’s
auditors, overseeing the approval of their remuneration
and terms of engagement and assessing annually their
independence, objectivity and effectiveness. It also
ensures that the Group is compliant with its relevant
regulatory requirements.
The Audit Committee currently comprises of Angus
Winther (Chair), Kaat Van Hecke and James Menzies.
The Audit Committee generally meets three times a year.
The Technical Committee
The Board established a Technical Committee in January
2022 in order to ensure the technical effort in the
Company is being utilised and directed effectively
and that the resources are of the appropriate quality
and supported in the optimal way.
Annual Report & Financial Statements 2021
57
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Company Information
The Technical Committee currently comprises two Non-
executive directors; James Menzies (Chair) and Derek
Hudson, and three other independent experts Allison
Dupigny-Auguste; Alistair Sharp; and, Andrew Carmichael,
who bring complementary and relevant expertise to the
Committee’s deliberations. The Technical Committee
is expected to meet at least four times a year (and on
an ad hoc basis as required).
10. Communicate how the Group is governed and is
performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Board places a high priority on transparent and effective
communications with shareholders and all other stakeholders.
As an AIM listed company there is a need to provide fair and
balanced information in a way that is understandable to
all stakeholders. The Board recognises the importance of
engaging with all stakeholders including investors, partners,
suppliers, media, communities and the GORTT. We update,
and where appropriate seek feedback from, all key
stakeholders via regular meetings and communications
throughout the year. Refer to Stakeholder Engagement
section on pages 25 to 26 for further information.
the sub-surface teams from idea generation to
evaluation and execution and provides the Board with
confirmation that technical work has been considered
and evaluated appropriately.
Non-Executive Chairman
The Non-Executive Chairman is responsible for leading
the Board and engaging with, and providing advice to,
the Chief Executive Officer as required. The Non-
Executive Chairman also engages with investors
and other stakeholders.
Chief Executive Officer
The Chief Executive Officer leads the EMT to deliver the
business goals and objectives as directed by the Board.
Executive Management Team
The EMT ensures the operational functions of the Group
are carried out safely / efficiently and provides Corporate,
Legal, HSSE and Financial inputs and recommendations
to the Chief Executive Officer who in turn relates
the proposed initiatives to the Board.
Corporate Governance Framework
Company Secretary
The Board
The Board is responsible for managing the Company,
formulating strategy, setting budgets, raising and deploying
capital, overseeing overall performance and discharging
legal and statutory obligations. The Board has established
Audit, Remuneration and Technical Committees to assist
it in discharging its responsibilities and to apply an
appropriate level of scrutiny over the related functions.
The Board delegates day-to-day responsibility for running
the Group to the EMT led by the Chief Executive Officer.
Audit Committee
The Audit Committee monitors the integrity of the
Group’s financial statements and reviews the
effectiveness of the Group’s internal controls and risk
management systems. The Audit Committee makes
recommendations to the Board in relation to the
appointment of the Group’s auditors, overseeing the
approval of their remuneration and terms of engagement
and assessing annually their independence, objectivity
and effectiveness. It also seeks to ensure that the Group
is compliant with its relevant regulatory requirements.
Remuneration Committee
The Remuneration Committee determines and makes
recommendations to the Board on the remuneration of
the Company’s Executive Director and other members of
the EMT. It is also responsible for the design of all share
incentive plans and the determination of individual awards
to the Executive Director and other Executive
Management and the performance targets to be used.
The Company Secretary works closely with the Board
and Board Committees to ensure that Board and
Committee members receive appropriate updates on
governance and compliance and provides guidance so
that good boardroom practices are preserved.
The Group’s Annual Report and Notice of AGMs are
published to all shareholders. The Interim Report and
other investor presentations are also available for the
last six years and can be downloaded from the Group’s
website. Quarterly updates are provided to the market.
Shareholders are also kept up to date through RNS on
regulatory matters and other matters of material substance.
The Group also communicates with shareholders and
potential investors through a variety of other methods
including investor presentations, analyst meetings, PR
media, emails and one- on-one and group meetings. The
Non-Executive Chairman liaises regularly with the Group’s
major shareholders and other relevant stakeholders and
ensures that their views are communicated to the Board.
Encouraging effective two-way communication with
shareholders encourages mutual understanding and
better connection with them. The benefits include
improved transparency of information on the business
and its performance, appropriate consideration of
all shareholders' views, as well as instilling trust and
confidence to allow informed investment decisions
to be made by the Board.
On behalf of Board
Technical Committee
Nicholas Clayton
Non-Executive Chairman
The Technical Committee interacts with the sub-surface
teams at a working level, offering mentorship. It follows
23 May 2022
58
Trinity Exploration & Production plc
Board of Directors
1
2
3
Executive Directors
Non-Executive Directors
1
Jeremy Bridglalsingh
Executive Director
(11 January 2017 to present)
Jeremy is a Trinidadian and is a qualified accountant
(Chartered Institute of Management Accountants
(“CIMA”), 2006) with a BSc. in Management Studies
from the University of the West Indies (2000). Prior
to joining Trinity in 2012, he worked in financial services
at PricewaterhouseCoopers (T&T) and Operis Group plc
(London), mainly in an advisory role on various
transactions across a number of jurisdictions.
In the past 9 years with Trinity, he held roles across
the Financial, ICT and Supply Chain disciplines before
assuming the role of CFO of Trinity in January 2016.
He combined that with the role of Managing Director
from March 2019 until he relinquished the CFO role in
September 2020, and was appointed CEO of Trinity
in August 2021.
Bruce Dingwall, CBE
Executive Director
(13 February 2013 to 3 August 2021)
2
Nicholas Clayton
Non-Executive Chairman
Non-Executive Director Remuneration
Committee Chairman
(28 November 2018 to present)
Nicholas is British and has provided strategic and
corporate finance advice to, and has been an Executive
and Non-Executive Director of, numerous public and
private oil and gas companies since 2007. Prior to that,
he held a series of senior oil and gas corporate finance
roles, including Global Co-Head of Oil and Gas Corporate
Finance for Canaccord Adams and Global Head of Oil
and Gas Corporate Finance for Dresdner Kleinwort
Wasserstein. He started his career with BP, before
moving into financial services where he specialised in
the oil and gas sector. He brings to the Board over
37 years of experience within the oil and gas sector
both as a practitioner, a director, and as an adviser.
He currently serves as a Non- Executive Director of
Alpha Petroleum Resources Limited and a Director
of Active Away Ltd. Nicholas is currently the Chairman
of Trinity’s Remuneration Committee.
3
James Menzies
Independent Non-Executive Director
Technical Committee Chairman
(23 June 2017 to present)
James is British and is also a qualified Geophysicist.
He brings to the Board a broad range of industrial and
corporate expertise as he has 32 years of experience
within the oil and gas industry both as a technical
practitioner and as a Senior Executive. James is the
former Chief Executive Officer of Coro Energy plc.
James founded Salamander Energy plc in 2004 and
was the Chief Executive Officer up until its takeover
by Ophir Energy that valued the business at USD
850.0 million. James is Chairman of the Technical
Committee and a member of Trinity’s Audit Committee.
Annual Report & Financial Statements 2021
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Company Information
4
5
6
4
Angus Winther
Non-Executive Director Audit Committee Chairman
6
Derek Hudson
Independent Non-Executive Director
(11 January 2017 to present)
(14 September 2021 to present)
Derek is a geologist by profession, having over 30 years
senior level experience in the oil and gas industry,
operating globally (Trinidad and Tobago, United States,
United Kingdom and East Africa) with multi-national
organisations and state enterprises. Derek is currently
Non-Executive Chairman of Scotiabank Trinidad and
Tobago Ltd, one of Trinidad and Tobago’s largest banks.
He worked for BG Group for over 20 years in senior
managerial positions in the UK North Sea and Trinidad,
prior to its combination with Royal Dutch Shell in 2016,
and subsequently served as Shell’s Vice President and
Country Chairman, Trinidad & Tobago from June 2016
until June 2019, where he was responsible for Shell’s
upstream and LNG business activities in country.
Subsequent to retiring from the role, Derek continued
to serve as a Business Adviser to Shell’s Trinidad
and Tobago business until June 2021.
Derek is a member of Trinity’s Remuneration Committee
and a member of the Technical Committee.
David Segel
Non-Executive Director
(11 January 2017 to 22 February 2022)
Angus is British and spent 27 years working in the
investment banking industry, primarily advising clients in
insurance and financial services. He co-founded Lexicon
Partners, a London based investment banking advisory
firm, in 2000 and was closely involved in the leadership
of that firm until it was acquired by Evercore in 2011.
He served as a senior adviser at Evercore until October
2016, when he left the firm to pursue other interests. He
is a Non-Executive Director of Hiscox Syndicates Limited
(a Lloyd’s managing agent), Benefact Group plc and its
subsidiary Ecclesiastical Insurance Office plc (a specialist
insurance group) and trustee of several charities. He has
a degree in Politics from Durham University. Angus is the
Chairman of Trinity’s Audit Committee and a member of
the Remuneration Committee.
5
Kaat Van Hecke
Independent Non-Executive Director
and Remuneration Committee Chair
(effective 1 July 2022)
(22 February 2022 to present)
Kaat is Belgian, has over 25 years’ experience in the
oil & gas industry and has a strong operations
background, having started her career as a Production
Engineer with ExxonMobil and Shell in Europe and Nigeria.
As the Operations Planning Manager at Sakhalin Energy –
in the far east of Russia – she played a key integration
role in the start-up of the 450,000 boepd company.
From 2013-2016 she served as the MD and Senior Vice
President Austria Upstream at OMV. Kaat is a member
of both the Audit and Remuneration Committees and
is responsible for the Board’s oversight of the
HSSE function.
60
Trinity Exploration & Production plc
Executive Management Team
1
4
2
5
3
6
1
Jeremy Bridglalsingh
Chief Executive Officer
4
Rajesh Rajpaulsingh
Chief Operations Officer
Jeremy joined Trinity in 2012. Chartered Management
Accountant for 15+ years with previous financial services
experience gained in the United Kingdom.
Rajesh joined Trinity in 2011. Previously worked at
Petrotrin and BPTT in various capacities and has 20 years
experience as a Petroleum Engineer. Petroleum Engineer
by background for 20 years.
2
Denva Seepersad
Finance Director
5
Dr. Ryan Ramsook
Executive Manager, Sub Surface
Denva started with Venture’s Trinidadian assets in 2005
as a Certified Chartered Accountant holding various
key finance roles including Financial Controller. He is a
Fellow Chartered Certified Accountant with 17+ years’
experience in the upstream oil sector in Trinidad.
Ryan joined Trinity in 2013, served as Geoscientist 2013-
2014 and Deputy Subsurface Manager from 2014-2015.
Re-joined Trinity in 2018 as Team Lead Subsurface
from 2018-2021. Dr. Ramsook is also a Senior Lecturer
at the University of the West Indies and Fellow of the
Geological Society (FGS) of London. He is a Geologist
by background with 16+ years’ experience.
3
Nirmala Maharaj
Chief of Staff & General Counsel
6
Ronald Solomon
Executive Manager, Innovation
Nirmala joined Trinity as the Legal Manager in 2012,
served as Legal and Corporate Services Manager from
2014 and Country Manager from October 2015 to March
2019. She is an Attorney-at-Law by background with
20+ years’ experience.
Ronald joined Trinity in 2021. Engineer by background.
17+ years’ experience in Oil & Gas operations and senior
management. Previously held senior leadership roles
for a major oilfield service company in Russia, Caspian
countries and Caribbean areas.
Annual Report & Financial Statements 2021
Board Activities
61
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Company Information
The Board is responsible for maintaining full and effective
control over the Group. The Board holds regular meetings
at which financial, operational and strategic goals are
considered and decided upon.
Directors’ attendance
Board- Board
Scheduled Ad Hoc Audit Remuneration
Meeting Meeting1 Committee Committee
Matters which are reserved for the Board include:
Director Requirement 13 5 3 5
•
•
•
Approval of the Group’s strategy and objectives;
Approval of the Group’s budgets, including operating
and capital expenditure budgets;
Growth of activities into new business areas
or geographical locations;
• Material changes to the Group’s structure
and management;
•
•
•
•
Changes to the Group’s listing, governance or
business processes;
Approval of the Group’s annual report and accounts
and interim report;
Setting EMT pay and conditions, annual bonuses
and awards under the LTIPs; and
Reviewing the effectiveness of the Board and
its Committees.
Time commitment
Board and Board Committee meeting dates are agreed
at the beginning of the year. The Board, Audit and
Remuneration Committees are chaired by Non-Executive
Directors who work closely with the Group Secretary
in preparing agendas for the meetings and ensuring
adequate advice and guidance is obtained in their
respective areas.
Whilst the Chief Executive Officer is expected to devote
substantially the whole of their working time to their
duties within the Group, the Non-Executive Directors
are expected to allocate sufficient time to the Group
to discharge their responsibilities.
It is expected that all Directors attend, and devote
adequate time to prepare for, all meetings of the Board
and any Board Committees of which they are members,
as well as the AGM. Since 2020, it is also expected that
the Directors visit the Group’s San Fernando Office,
located in Southern Trinidad, at least once a year,
meeting with administrative and technical personnel
via face to face meetings and as well as making site
visits to well/drilling locations.
The Directors’ attendance at scheduled and ad hoc
Board Meetings and Board Committees during 2021
is detailed in the table below:
Bruce Dingwall, CBE2
(Chairman) 8 0
Jeremy Bridglalsingh 13 5
Angus Winther 13 5 3 5
David Segel 13 5 3 5
James Menzies 5 11 5 3 5
Nick Clayton3 13 4 3 5
Derek Hudson4 3 1
Total meetings 13 5 3 5
Notes:
1.
2.
3.
4.
5.
Ad hoc meetings: Additional meetings called for a specific
matter generally of a more administrative nature not requiring
full Board attendance.
Mr Dingwall ceased as a director of the Company on 03.08.2021
Mr Clayton was appointed as Non-Executive Chair on 02.08.2021
Mr Hudson was appointed to the Board on 14.09.2021 (Mr Hudson
missed one scheduled Board meeting since his appointment due
to a conflicting commitment)
Mr Menzies missed two scheduled Board meetings due to
conflicted commitments
Relationship with Shareholders
The Board remains fully committed to maintaining
communication with the Group’s shareholders. There
is regular dialogue with major shareholders and meetings
following significant announcements.
The Group’s website www.trinityexploration.com contains
all announcements, press releases, major corporate
presentations and interim and year end results. The
Group publishes the annual report and accounts each
year which contains a strategic report, governance
section, financial statements and additional information.
The Annual Report is available on the Group’s website
and also available in paper format, on request.
The Board uses its AGMs to communicate with both
private and institutional investors. All Directors attend
the AGM and make it an opportunity to engage with
shareholders, answer queries during the formal business
of the AGM or to discuss more informally following the
meeting. The shareholders are encouraged to attend and
vote at AGMs or to appoint a proxy to represent them.
Immediately after the AGM, the decisions made on the
AGM resolutions are released to the market by RNS.
Whilst the last two AGM’s have had to be held virtually,
due to the Covid restrictions which were in place, the
Company looks forward to welcoming shareholders
to the AGM in 2022.
62
Trinity Exploration & Production plc
Audit Committee Report
Responsibilities of the Audit Committee
2021 Activities
The Committee reviews and makes recommendations
to the Board on:
•
•
•
•
•
•
•
•
compliance with accounting standards and legal
and regulatory requirements.
accounting issues that require a major element
of judgement or risk.
any change in accounting policies.
disclosures in the interim and annual report
and financial statements.
reviewing the effectiveness of the Group’s
financial and internal controls.
appointment of the Group’s external auditors.
any significant concerns raised by the external
auditor about the conduct or overall outcome
of the annual audit of the Group.
any matters that may significantly affect the
independence of the external auditor.
During the year, the Committee met three times and the
members’ attendance record at Committee meetings
during the financial year is set out under Board Activities
on page 61. Although not a member of the Audit
Committee, the Chief Executive Officer and Finance
Director are invited to attend meetings. The Group’s
external auditors are also invited to attend Committee
meetings, unless they have a conflict of interest.
An essential part of the integrity of the financial
statements is the Going Concern assessment and the key
assumptions, estimates and judgments made within the
financial statements. The Committee reviews the Going
Concern assessment and key assumptions, estimates and
judgments prior to publication of both the interim and
full year financial statements, as well as considering
significant issues throughout the year. In particular, this
includes reviewing subjective assumptions relating to the
Group’s activities, particularly those relating to complex
calculations including non-current asset impairments,
inventory impairments, provision for decommissioning
and deferred taxes, to enable an appropriate
determination of asset valuation, provisioning and the
accounting treatment thereof. The Committee reviewed
and was satisfied that the Going Concern assessment and
judgments exercised by management on subjective items
contained within the Report and Accounts are reasonable.
During 2021, the Group undertook a Capital
Reorganisation which was designed to increase the
distributable reserves of the Company, and thereby
support the Company’s ability to pay dividends and effect
share buybacks in the future. The Capital Reorganisation
involved the consolidation and sub-division of the
Company’s ordinary shares, and the cancellation of the
Company’s deferred shares and the share premium
account. Other steps, involving the Group’s subsidiaries,
were also undertaken to eliminate potential ‘dividend
blocks’ within the Group’s corporate structure. As a
consequence, the Company’s share capital now consists
of 38,879,431 ordinary shares, and as at 31 December
2021 the Company had USD 51.0 million of distributable
reserves and there are no material ‘dividend blocks’
remaining within the Group’s corporate structure. The
Audit Committee reviewed the steps being undertaken
pursuant to the Capital Reorganisation, and
recommended its implementation to the Board.
The Audit Committee also paid particular attention to
the disclosures which were required in relation to the
impact of Covid-19, oil price volatility and the accounting
treatment of the acquisition of the PS4 block.
63
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Company Information
Annual Report & Financial Statements 2021
External Auditors
Appointment of External Auditors
•
•
•
The Company appointed BDO to act as external
auditors for the Group for the financial year to
31 December 2020. The Group fee to BDO for
the financial year to 31 December 2021 is USD
0.3 million (2020: USD 0.3 million).
External auditors are re-appointed annually, subject
to a satisfactory review by the Audit Committee
of their performance, independence and service
proposal. The Audit Committee undertakes a
comprehensive review of the quality, effectiveness,
value and independence of the audit provided each
year, seeking the views of the wider Board, together
with relevant members of the EMT. Having completed
this review, the Audit Committee is recommending
BDO’s reappointment for the financial year to
31 December 2022.
Unless a change in external auditor is deemed
appropriate in the intervening period, the Audit
Committee considers putting the external audit
out to tender every five years, and will inform
the shareholders as to their decision.
Rotation of Audit Partners
The Group’s external auditors are required to rotate their
audit partners on a basis that allows them sufficient time
to be fully familiar with the business, so that they can
operate effectively and efficiently, but not be appointed
in the role for so long that it may give rise to a lack of
independence. This policy requires the lead audit partner
to rotate after a maximum period of five years, and all
other partners including the review partner to rotate after
a maximum period of seven years. Each of the Group’s
subsidiaries also apply the same rotation policy.
Internal Controls
The Audit Committee has considered the Group’s internal
control and risk management policies and systems,
their effectiveness and the requirements for an internal
audit function in the context of the Group’s overall risk
management system. The Committee is satisfied that
the Group does not currently require an internal audit
function. However, it will continue to periodically review
the potential need for an internal audit function. The
Committee is assured that the robust internal financial
controls, risk management and mitigation measures in
place are sufficient and effectively communicated.
Angus Winther
Chairman of the Audit Committee
23 May 2022
64
Trinity Exploration & Production plc
Remuneration Committee Report
Responsibilities of the Remuneration Committee
The Remuneration Committee is responsible for making
recommendations to the Board regarding the framework
for the remuneration of the Executive Directors and other
members of EMT. The Committee works within its terms
of reference, and its role includes:
•
•
•
•
•
Review, evaluate, determine and agree with the
Board, the Remuneration Policy for all Executive
Directors and, under guidance of the Executive
Directors, other members of EMT.
Ensure executive remuneration packages
are competitive.
Determine whether annual bonuses should
be payable and recommending levels for
individual executives.
Determine each year whether any awards/grants
should be made under the long-term incentive
schemes, the value of such awards and their
performance criteria.
Agree Directors’ service contracts and
notice periods.
The Remuneration Committee utilises a range of tools and
measures to frame its deliberations over all aspects of
executive remuneration at Trinity. These include, but are
not limited to, a review of executive remuneration in peer
companies and surveys of executive remuneration for
similar sized companies in other sectors. In addition, in
2021 the Committee engaged an external remuneration
consultant, FIT, to provide a benchmarking analysis of
Executive and Non-Executive Directors’ remuneration
levels using comparator groups. Given the changes in
the Company’s leadership, due to the unexpected
passing of Bruce Dingwall, CBE, the benchmarking
analysis provided useful guidance to the Committee
in deciding the remuneration for the Chief Executive
Officer and Non-Executive Chairman, and additionally in
determining the increase in Non-Executive Director fees.
The Remuneration Committee also enlisted the services
of FIT to assist in its deliberations on remuneration trends
and incentive scheme design. FIT is a member of the
Remuneration Consultants Group and, as such, voluntarily
operates under the Code of Conduct in relation to
executive remuneration consulting in the UK.
The salaries of the Executive Directors and other
members of the EMT were held constant in 2021,
reflecting the difficult operating environment. However,
executive salary increases have been implemented in
2022 to ensure that they remain competitive.
The framework for determining executive bonuses is
established by a challenging matrix of KPIs that are
designed to align the interests of executives with the
overall strategy of the Group. Typically, the scorecard
involves 15 to 20 KPIs covering a range of strategic
targets deemed critical to the business and falling
within the following areas:
•
Financial – including EBITDA per share and
Operating break-even targets;
• Operational – including annual production
targets and drilling objectives;
•
•
•
HSSE – targets for the avoidance of LTIs
and reportable environmental incidents;
Strategic – progression of major value
accretive initiatives; and
Corporate – includes investor relations
and shareholder structure targets.
The Executive Directors work with members of the
EMT to translate these KPIs into sets of secondary
objectives for each EMT member that drives their
individual performance evaluations and, ultimately,
cascade down to drive the performance of all
employees working within the Group.
The KPI matrix acts as a guide to setting bonuses
and directing the activities of executives towards the
achievement of the strategic direction established by
the Board. Implicitly, this reflects an overall assessment
by the Board of the risks involved in pursuing the strategy
of the Group. Executives understand, however, that the
Remuneration Committee will always exercise discretion
when finalising bonuses to take into account stock
market, oil market and general economic conditions
prevailing globally as well as in Trinidad and the UK,
at the time bonuses are agreed as well as the underlying
performance of the business. Based on the robust
performance of the business, bonuses for 2020 were
paid in June 2021 shortly after publication of the audited
accounts. In 2021 the business continued to demonstrate
resilient operating performance and, combined with a
recovery in oil prices, improved financial performance.
As a result, 2021 bonus awards were approved by
the Remuneration Committee, and are to be paid shortly
after publication of the 2021 audited accounts.
Our Auditors have audited aspects of this report as
it relates solely to the reported items within the
financial statements.
2021 Performance and Review
Corporate KPI’s:
•
Setting corporate KPI’s which are used to determine
the bonus awards of the Executive Directors. The
EMT’s bonus awards were set according to a mixture
of Corporate KPI’s and personal performance.
• Mid-year/Year-end review of corporate KPI’s.
Key pay outcomes:
•
Bruce Dingwall, CBE’s base salary for 1 January –
3 August 2021 was USD 214,667 (2020: USD 368,000).
65
Strategic Report
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Company Information
Corporate Governance disclosure:
•
Discussed UK Corporate Governance requirements
in respect of responsibilities of the Remuneration
Committee in recommending Executive Director
and EMT pay. The Group currently is not required
to adhere to the UK Corporate Governance Code.
However, the Committee recommended that best
practices are followed and continuously monitors
the guidelines.
Remuneration Policy:
•
Appointment of FIT, a remuneration consultant, to
assist the Committee with benchmarking Executive
Director and Non-executive Director pay, reviewing
the Company’s remuneration policy and with long
term incentive scheme design.
Chair of the Remuneration Committee:
•
I am pleased to confirm that the Board has appointed
Kaat Van Hecke to succeed me as Chair of the
Remuneration Committee with effect from 1 July
2022. The Board believed that an independent Non-
executive Director (other than the Chairman) should
be tasked with performing this important role, and
that Kaat’s appointment should take place after the
current remuneration cycle has concluded.
Nicholas Clayton
Remuneration Committee Chairman
23 May 2022
Annual Report & Financial Statements 2021
•
•
•
Jeremy Bridglalsingh’s base salary for 2021 was USD
273,750 (2020: USD 255,000). Prior to 3 August 2021
his base salary was USD 255,000 per annum, in line
with 2020. Following the passing of Bruce Dingwall,
CBE on 3 August 2021, and Jeremy Bridglalsingh’s
appointment as Chief Executive Officer, his basic
salary was increased to USD 300,000 per annum.
This salary has been held constant for 2022.
Nicholas Clayton was appointed Non-Executive
Chairman on 3 August 2021. His fees for this role
were established at equivalent USD 108,088 per
annum. Mr Clayton, as chair of the Remuneration
Committee, reclused himself from all discussions
relating to his appointment and fee for the role.
The benchmarking analysis prepared by FIT was
used to determine an increase in the basic fee for
Non-executive Directors from an equivalent USD
54,044 to USD 56,746 per annum, which has been
applied with effect from 1 October 2021. This is the
first increase in Non-executive Director fees to have
occurred since 2017, and are intended to ensure they
remain in line with comparator companies. Additional
fees are also paid for chairing Board Committees and
for additional consultancy services, beyond those
normally provided by a Non-executive Director.
The Non-executive Director fees were agreed by
Mr Clayton (as chair of the Remuneration Committee)
in consultation with Mr Bridglalsingh, with the other
members of the Remuneration Committee reclusing
themselves from all discussions relating to their fees.
LTIP awards:
•
Reviewed performance criteria and recommended
grant of 2021 LTIP awards. The Group granted
options of 325,000 ordinary shares on 13 August
2021 (representing 0.84% of the Company’s
then issued capital) in respect of performance
during 2020, including 75,000 options to
Jeremy Bridglalsingh.
• On 30 June 2021, 471,131 options vested from
awards granted on 25 August 2017 as a result of
the performance conditions being partially satisfied.
This included 95,742 options to Jeremy Bridglalsingh.
• On 1 January 2021, 167,018 options vested from
awards granted on 2 January 2019. This included
31,883 options to Jeremy Bridglalsingh.
Leaver awards:
•
Payments made to estate of the Executive Chairman.
Following the passing of Bruce Dingwall, CBE his
estate was paid USD 359,733 which included an
amount equal to 6 months’ notice (consistent with
what he would have been due had left the Company
voluntarily) and an imputed one off bonus equivalent
to 50% of salary (paid pro-rata) in respect of 2021.
The Remuneration Committee also agreed that Mr
Dingwall’s estate should retain the benefit of all LTIPs
issued to him during his tenure with the Company.
66
Trinity Exploration & Production plc
Directors’ Remuneration Report
Review and Approval Process
Remuneration Policy Table – Executive Directors
The Group prepares the Remuneration Report on
an annual basis and presents it to the Remuneration
Committee alongside the existing Remuneration Policy.
The Committee review and evaluate the content and
advise of any amendments or recommendations before
final approval is granted for publication. Our Auditors
have audited aspects of this report as it relates solely
to the reported items within the financial statements.
Bruce Dingwall, CBE, served as Executive Chairman
until 3 August 2021 and Jeremy Bridglalsingh served
as Executive Director throughout 2021. With the tragic
passing of Bruce Dingwall on 3 August 2021, Nicholas
Clayton assumed the role of Non-Executive Chairman
and Jeremy Bridglalsingh assumed the position of
Chief Executive Officer effective 13 August 2021.
The main components of the Remuneration Policy
and how they are linked to and support the Group’s
business strategy, are summarised below:
Element
Operation
Maximum opportunity
Performance assessment
Base salary
Reflects level of
responsibility and
achievement of
the individual.
Salaries are reviewed as required
by the Remuneration Committee
and adjustments are made
accordingly.
Any salary increases in
future years will be
determined by the
Remuneration Committee.
Not applicable.
When determining salaries for the
Executive Directors the Committee
takes into consideration:
• Market data (supported by
analysis provided by FIT, the
Company’s Remuneration
Consultants) ;
•
Local market employment
conditions; and
• Salary increases awarded to
other employees in the Group.
Salaries are benchmarked
periodically against comparable
roles at companies of a similar
size, complexity and which operate
primarily, but not exclusively, in the
exploration & production sector
and the AIM market.
Annual bonus
The annual bonus
aligns executive
rewards to strategic
KPIs agreed by the
Committee and are
intended to drive
the short term
performance of
the Group.
Executive Directors may
participate in an annual
performance driven bonus
scheme.
The performance period
is one financial year.
Pension
To provide
competitive levels of
retirement benefit.
Salary supplement in lieu
of pension contributions
for the Executive Directors.
Maximum: 100% of
base salary.
This can be exceeded in
exceptional circumstances
at the discretion of the
Committee. Bonuses may
also be paid wholly or in
part in shares or deferred
at the discretion of
the Committee.
There is no contractual
obligation to pay bonuses.
A KPI performance scorecard
is used as a guide by the
Committee, which can be
overridden based on a
broader assessment of
overall Group performance
and market conditions.
The measures are
determined by the
Committee, typically
at the commencement
of the financial year.
Up to 10% of base salary.
Not applicable.
Annual Report & Financial Statements 2021
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Company Information
Element
LTIP
The LTIP aligns
Executive Director,
and other EMT
member, interests
with those of
shareholders
and drives
superior long-term
performance.
Operation
Maximum opportunity
Performance assessment
In future, aggregate annual
awards made to Executive
Directors and other
members of the EMT will
normally be capped at 1% of
the issued share capital of
the Company, except where
one-off awards are made
to new members of the
EMT or new joiners.
Awards under the LTIP
are non-contractual.
Annual awards will normally
vest at the end of a three-
year period subject to
performance conditions.
Further details of the
performance conditions
of these awards can be
found in Note 24 in Notes
to Financial Statements.
Under the LTIP, Executive Directors
and other members of the EMT
may be provided with awards in
the form of conditional shares or
nil-cost options.
On 13 August 2021 it was
announced that the LTIP scheme
would be revised (the "Revised
LTIP") and that grants were made
to the Executive Director and other
EMT members in respect of the
Company's performance in the
year to 31 December 2020 (the
"2021 Annual LTIP Award). The
terms of the Revised LTIP apply in
respect of the 2021 Annual LTIP
Award and subsequent issues but
will not alter the terms of any
previous awards made under the
LTIP. Further details of which can
be found on pages 70 to 73.
Other benefits
To provide
competitive levels
of employment
benefits.
Shareholding Policy
To ensure that
Executive Directors’
interests are aligned
with those of
shareholders over a
longer time horizon.
The Committee may provide
a benefits package to EMT
members at its discretion.
Reviewed periodically to
ensure benefits remain
market competitive.
Benefit values vary year
on year depending on
premiums and the maximum
potential value is the cost
of the provision of
these benefits.
Not applicable
Requirement to build and maintain
a holding of shares equivalent in
value to a minimum of two times
their salary within a five year
period.
Not applicable.
Not applicable.
Non-Executive Director Remuneration Policy
Effective term Notice period
Chief Executive Officer Rolling with no fixed expiry date. Six months
Executive Directors’ service contracts
Objective
The Company’s policy on Directors’ service contracts
are indicated below:
To attract Non-Executive Directors with the requisite
skills and experience.
68
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
Operation
Annual Report on Remuneration
Fee levels are set at a level paid for comparable roles
at companies of a similar size, complexity and which
operate in the exploration & production sector. Fee levels
are reviewed annually.
One new appointment was made during 2021 and
revisions to non-executive director remuneration
were made during the year, effective 1 October 2021.
Fees are to be paid on a quarterly basis to Non-Executive
Directors with the exception of the Non-Executive
Chairman who is paid monthly. Whilst there is no
maximum individual fee level, fees are set at a level
considered appropriate to attract and retain the calibre
of individual required by the Group.
Fee increases may be made in line with the market
and to take into account the time commitment and duties
involved. Non-Executive Directors do not participate in
any variable remuneration element or any other benefits
arrangements.
All figures expressed in USD3
Base Salary
Taxable Benefits4
Annual Bonus and one off7
Pension
LTIP(s)5
Gain on exercise of Share Options6
Total
Notes:
This section of the Remuneration Report contains
details of how the Group’s Remuneration Policy was
implemented in 2021.
Our Auditors have audited aspects of this report
as it relates solely to the reported items within the
financial statements.
Executive Remuneration (Unaudited)
Bruce Dingwall, CBE, served as Executive Chairman
until his tragic passing on 3 August 2021 and Jeremy
Bridglalsingh served as Executive Director throughout the
year. Following Bruce Dingwall’s passing, Nicholas Clayton
assumed the role of Non-Executive Chairman and Jeremy
Bridglalsingh assumed the position of Chief Executive
Officer on 13 August 2021.
The table below sets out the single total figure of
remuneration and breakdown for each Executive Director
paid for the 2021 financial year. Comparative figures for
2020 have also been provided where applicable.
Bruce Dingwall, CBE1
Jeremy Bridglalsingh 2
31 Jan -
3 August 2021
214,667
21,467
359,733
—
171,636
—
2020
2021
2020
368,000
36,800
184,000
—
289,485
361,842
273,750
20,417
138,000
27,375
132,908
—
255,000
20,417
127,500
25,500
179,274
—
767,503
1,240,127
592,450
607,691
1.
2.
3.
4.
5.
6.
7.
Bruce Dingwall, CBE – Executive Chairman effective 13 November 2015 until his passing on 3 August 2021 (previously Executive Chairman appointed 14 February
2013 to 8 April 2015, Non-Executive Chairman 8 April 2015 to 13 November 2015).
Jeremy Bridglalsingh – Executive Director effective since 11 January 2017. Assumed the role of Chief Executive Officer on 13 August 2021 following the tragic
passing of Bruce Dingwall.
Foreign Exchange (“FX”) Conversions:
i.
ii.
GBP fees were converted to USD using an exchange rate of 1: 1.3511 for 2021 (2020: 1: 1.2794).
TTD fees were converted to USD using an exchange rate of 1: 6.7591 for 2021 (2020: 1: 6.7580).
Taxable benefits include: Chairman’s benefits allowance, which was 10% of salary, and vehicle allowance in favour of Executive Director.
LTIP: The LTIP comprises an important aspect of Trinity’s remuneration philosophy and allows Management to share in the Group’s success when the business
strategy is executed successfully (refer to LTIPs section on pages 70 to 73 for further information). The cost shown in the table represents the Share Option
Expense to the Company incurred in the year in relation to LTIP awards granted to the Executive Directors.
2020 Gain on exercise of Share Options ("SO")= (SO x Market Value at date of exercise less Exercise Price (0)). No share options were exercised in 2021. (2020:
Bruce Dingwall exercised 312,108 LTIPs at a Market Value of GBP 0.885. Gain value of GBP 276,215 was converted at 1.31.). The gain does not take account of
the Share Option Expense to the Company which will have been incurred (and therefore already included in the table) prior to the LTIP award vesting.
Annual Bonus and one off - Following the passing of Bruce Dingwall, CBE his estate was paid an amount equal to 6 months’ notice (consistent with what he
would have been due had left the Company voluntarily) and the Remuneration Committee also agreed to pay an imputed one off bonus equivalent to 50% of
salary (paid pro-rata) in respect of 2021. The Remuneration Committee also agreed that Mr Dingwall’s estate should retain the benefit of all LTIPs issued to him
during his tenure with the Company.
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Company Information
All figures expressed in USD equivalent
56,746
108,088
13,511
13,511
13,511
Total
2020
57,371
63,745
50,996
50,996
Annual Report & Financial Statements 2021
Non-Executive Directors Fees (Audited)
Non-Executive Director Fee
Chair of the Board
Audit Committee Chair
Remuneration Committee Chair
Technical Committee Chair
Nicholas Clayton2
Angus Winther3
David Segel
James Menzies 4
Derek Hudson
(since 14 September 2021)5
Total
Notes:
Director
Fees
2021 1
76,562
54,720
54,720
54,720
Director
Fees
2020
Committee and
Other Fees
2021
Committee and
Other Fees
2020
50,996
50,996
50,996
50,996
32,089
13,511
—
3,378
6,375
12,749
—
—
Total
2021
108,651
68,231
54,720
58,097
16,836
—
7,481
—
24,317
—
257,558
203,984
56,459
19,124
314,016
223,108
1.
2.
3.
4.
5.
6.
Non-Executive Director Fees were revised with effect from 3 August 2021 for Nicholas Clayton and with effect from 1 October 2021 for the other Non-Executive
Directors.
Nicholas Clayton –Non-Executive Director and appointed Remuneration Committee Chair on 28 November 2018. Appointed Non-executive Chair on 3 August
2021. Fees include Non-Executive Director, Non-Executive Chair and Chair of Remuneration Committee.
Angus Winther – Non-Executive Director effective 11 January 2017 and appointed Audit Committee Chair effective 23 June 2017. Fees include Non-Executive
Director and Audit Committee Chair Fees
James Menzies – Non-Executive Director effective 23 June 2017 and appointed Technical Committee Chair effective 1 January 2022. Fees include Non-Executive
Director and Technical Committee Chair.
Derek Hudson – Non-Executive Director effective 14 September 2021. Other fees include consultancy fees.
Non-Executive Director Fees are paid in GBP and were converted to USD using an exchange rate of 1: 1.3511 for 2021 (2020: 1: 1.2749)
Company Remuneration Spend (Audited)
The following table indicates the Group’s total remuneration for 2021:
Year-on-year change % of Total
Directors & Other Directors Directors Directors
Key Managers Employees Total & Key Other & Key & Key
Total1 Total2 Remuneration Managers Employees Managers Managers
2021 2020 2021 2020 2021 2020 2021 2021 2021 2020
1,669 1,714 8,001 5,873 9,670 7,587 -3% 36% 17% 23%
Notes:
1.
2.
3.
Refer to Note 30 Related Party Transactions – Key Management and Directors’ compensation in the Financial Statements on pages 129 to 130.
Refer to Note 34 Employee Costs on page 132.
All figures expressed in USD ‘000.
Statement of Executive Directors’ Shareholding (Unaudited)
The table below summarises the Executive Directors’ interests in shares at 31 December 2021:
Outstanding interests
Interests subject
Shareholding to conditions
Director
Current
Shareholding
(% salary)1
Beneficially
owned
shares2
Vested but
unexercised
LTIP awards3
Share
interests
– LTIP
Options/
Mirror
Scheme4
Total held at 31
December
2021
Jeremy Bridglalsingh
175%
52,836
306,516
478,670
2,000
828,224
Notes:
1.
2.
3.
4.
5.
The closing share price of GBP 126.5 (USD 170.9 equiv.) as at 31 December 2021 has been taken for the purpose of calculating the current shareholding as a
percentage of the salary at the last day of trading for the financial year.
Beneficial interests include shares held directly or indirectly by connected persons.
On 30 June 2020 and 30 June 2021, one off LTIP awards granted in 2017 vested in accordance with the terms of the LTIP scheme. In addition, the annual 2019
LTIP award vested on 1 January 2021. The options over 306,516 ordinary shares held by Jeremy Bridglalsingh remain unexercised but have been included in
the Current Shareholding % of Salary calculation to better illustrate his interests in the Company.
The share options vesting period has passed. These have not been exercised and will expire March 2023.
All GBP fees were converted to USD using an exchange rate of 1.3511.
70
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
Share based payments
Refer to Note 24 - Notes to Financial Statements.
Total Shareholder Return (“TSR”) 2017-2021 (Audited)
TSR factors in capital gains and dividends when measuring the total return generated per share for a Trinity shareholder.
2021
2020
2019
2018
2017
Average
Share price
Closing
Opening
Annual
TSR GBp
%
Cumulative
TSR since 2017
GBp
%
142
83
118
177
132
127
109
112
120
145
109
112
120
145
50(1)
17
(3)
(7)
(17)
291
255
219
225
241
291
The opening figure for 2017 is the placing price of 49.8 pence, rather than the share price of 19 pence prevailing on the
first trading day of 2017 (when the shares were still suspended).
Long term incentive Share Plans (“LTIPs”) (Unaudited)
The LTIP is designed to provide long-term incentives for Executive Directors and EMT members to deliver long-term
shareholder returns. Under the plan, participants are granted options which only vest if certain performance conditions
are met. Participation in the plan is at the Remuneration Committee’s discretion and no individual has a contractual right
to participate in the plan or to receive any guaranteed benefits.
In accordance with the announcement to the market on 25 August 2017, the current rules of the LTIP provide that the
aggregate number of ordinary shares issued or reserved for issuance under awards granted pursuant to the LTIP may not
exceed 15% of the Company’s issued share capital (including any shares held in treasury). Aggregate annual awards made
to Executive Directors and other members of the EMT will normally be capped at 1% of the issued share capital of the
Company, except where one-off awards are made to new members of the EMT or new joiners.
Movements in the number of LTIPs outstanding and their related weighted average exercise prices are as follows (Number
of options are restated post share consolidation):
At 1 January
Forfeited
Granted
Exercised
At 31 December
Average
exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
2021
2020
Number of
Options
3,156,299
(100,000)
325,000
-
3,381,299
Average
exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
Number of
Options
3,178,982
(172,059)
623,882
(474,506)
3,156,299
LTIPs outstanding as at 31 December 2021 have the following expiry date and exercise prices:
Grant-Vest
24/8/2017 – 30/6/2022
2/1/2019 – 1/1/2021
9/5/2019 – 2/1/2022
25/6/2020 – 2/1/2023
13/8/2021 – 1/1/2024
Expiry
date
Exercise
price
2021
2020
24/8/2027
1/1/2023
2/1/2024
2/1/2025
1/1/2027
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
2,103,032
252,510
319,171
381,586
325,000
2,103,032
252,510
319,171
481,586
-
Annual Report & Financial Statements 2021
2021 LTIPs
The following LTIP awards were granted to Executive
Directors during 2021:
Name/Position
Jeremy Bridglalsingh
Chief Executive Officer
Number of
ordinary shares
subject to the Option
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Company Information
However, an underpin term applies to the Relative TSR
Part which provides that, regardless of relative TSR
performance, no vesting may ordinarily accrue in respect
of the Relative TSR Part unless the Company's compound
annual growth rate of TSR over the performance period is
at least 10% per annum.
Vesting occurs on a straight-line basis between threshold
and maximum.
75,000
Performance
Vesting
On 13 August 2021, Options over a total of 325,000
ordinary shares were granted under the LTIP in
accordance with a revised LTIP scheme (the Revised
LTIP”) to members of the EMT in respect of the
performance of the Company in the financial year ended
31 December 2020. This included 75,000 options to CEO
Jeremy Bridglalsingh. The LTIP awards are designed
to provide long-term incentives for the EMT to deliver
long-term shareholder returns. Under the plan,
participants are granted options which only vest if
certain performance conditions are met. Participation
in the plan is at the Board’s discretion and no individual
has a contractual right to participate in the plan or to
receive any guaranteed benefits.
These LTIP awards will vest on 1 January 2024, subject
to meeting the performance criteria set and continued
employment in the Company. The Options are exercisable
at nil cost by the participants.
The performance targets set for awards made under the
2021 Annual LTIP Award will be measured considering
both the Company's absolute TSR performance and the
Company's relative TSR performance over a three-year
period, commencing 1 January 2021. TSR calculations will
be determined by reference to the three-month volume
weighted average price prior to the start and end of the
measurement period (with the starting average price
adjusted for the Share Consolidation). The three-month
volume weighted average price at the start of the
performance period for the 2021 Annual LTIP Award
was 88p (adjusted for the Share Consolidation).
The performance targets provide that:
•
•
No portion of a distinct one-half of the 2021 Annual
LTIP Award (the "Absolute TSR Part") may vest
unless the Company's compound annual growth rate
of TSR over the performance period is at least 10%
p.a., for which 30% of the Absolute TSR Part may
vest, rising on a straight line basis for full vesting of
the Absolute TSR Part if the Company's compound
annual growth rate of TSR over the performance
period equals or exceeds 25% p.a.
No portion of the other distinct one-half of the
2021 Annual LTIP Award (the "Relative TSR Part")
may vest unless the Company's TSR over the
performance period ranks at least median relative
to the TSR performance within a comparator group
of companies, for which 30% of the Relative TSR Part
may vest, rising on a straight line basis for full vesting
of the Relative TSR Part if the Company's TSR over
the performance period ranks upper quartile or
better relative to the TSR performance within a
comparator group.
Below the Median
None of the award will vest
Median (50th percentile)
Between Median and
Upper Quartile
Upper Quartile (75%)
Above the Upper Quartile
30% of the maximum award
will vest
Straight Line basis between
these points
100% of the maximum
award will vest.
100% of the maximum
award will vest
Sector:
FTSE AIM All Share Oil & Gas constituents
Size:
Market capitalisation of between GBP 20 million
and GBP 400 million
Further relevance filter:
Exploration & Production operations, excluding oil
equipment and service, pure-play exploration and
alternative energy companies.
These filters create a comparator group of 30 companies
which excludes larger companies that may be expected
to be on the main list and micro explorers that can show
extreme volatility and which can be numerous at various
points in the business cycle. For 2021, the market cap
range of GBP 20-400 million has been deemed
appropriate, but the Remuneration Committee will
review the appropriate range for each new LTIP grant.
2020 LTIPs
On 25 June 2020 Options over 381,586 ordinary shares
(representing 1% of the Group’s issued share capital) were
granted under the LTIP in accordance with the policy
announced to the market on 25 August 2017 and have
been made to certain individuals within the Company in
respect of the performance of the Company as at the
end of the financial year ended 31 December 2019. These
include the awards of 118,692 and 79,128 share options
to the Executive Chairman and Managing Director
respectively. In addition, on 30 October 2020 the
Remuneration Committee granted Options over 100,000
ordinary shares under the LTIP to a new member of the
EMT who joined the Group as Chief Financial Officer.
These Options were granted on the same terms as the
25 June 2020 award. The departure of the Chief Financial
Officer in June 2021 resulted in the 100,000 LTIPs issued
to him being forfeited. The remaining Options will vest on
72
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
2 January 2023, subject to meeting the performance
criteria set and continued employment in the Group.
The Options are exercisable at nil cost by the participants.
The 2020 LTIP Awards are subject to the achievement
of Relative Total Shareholder Return ("TSR") performance
targets measured over a three-year performance period
ending on 31 December 2022. The amounts shown above
represent the maximum possible opportunity. The share
price used to calculate the start of the TSR calculation in
respect of these awards is based on the 3 month average
TSR leading into 31 December 2019, being 96.8p.
2019 LTIPs
May 2019
On 9 May 2019 the Group issued awards under its LTIP.
These awards were made in accordance with the policy
announced to the market on 25 August 2017 in respect
of the performance of the Group for the financial year
ended 31 December 2018. The Group announced
the grant of Options over 383,282 ordinary shares
(representing approximately 1% of the Group’s issued
share capital) under the LTIP on 9 May 2019, including
awards to the Executive Directors; Bruce Dingwall, CBE
(99,168 ordinary shares) and Jeremy Bridglalsingh
(66,112 ordinary shares).
The May 2019 Options vested on 2 January 2022. Based
on the relative TSR performance of Trinity against the
designated comparator group of companies 318,009
Options (representing 82.97% of the award) vested on
this occasion, including 82,280 to the estate of Bruce
Dingwall and 54,853 to Jeremy Bridglalsingh. The share
price used to calculate the start of the TSR calculation in
respect of these awards was based on the three month
volume weighted average share price leading into 31
December 2018, which was 146.6p. The share price used
to calculate the end of the TSR calculation for these
awards was based on the 3 month volume weighted
average to 31 December 2021, being 138.4p.
January 2019
On 2 January 2019 the Group issued awards under its
LTIP. These awards were made in accordance with the
policy announced to the market on 25 August 2017 in
respect of the performance of the Group for the financial
year ended 31 December 2017. The Group announced
the grant of Options over 282,400 ordinary shares
(representing 0.735% of the Group’s then issued share
capital) under the LTIP on 2 January 2019, including
awards to the Executive Directors; Bruce Dingwall, CBE
(66,422 ordinary shares) and Jeremy Bridglalsingh
(47,824 ordinary shares).
The above Options vested on 1 January 2021. Based
on the relative TSR performance of Trinity against the
designated comparator group of companies 188,266
LTIPs (representing 66.67% of the award) vested on this
occasion. The share price used to calculate the start of the
TSR calculation in respect of these awards was based
on the three month average share price leading into 31
December 2017, which was 167.7p. The share price used to
calculate the end of the TSR calculation in respect of these
awards was based on the three month volume weighted
average to 31 December 2020, which was 108.5p.
2017 Grant of Initial Awards
On 25 August 2017 Trinity issued awards under its LTIP
to the Executive Directors and other key employees.
The Group wished to recognise the need to ensure that
Management was retained and incentivised to grow the
value of the business and generate shareholder returns
over its next phase of development following the funding
and share reorganisation in January 2017.
The Group believed that this one-off award gave
Management the opportunity to build up a meaningful
shareholding in Trinity which further aligns its interest with
shareholders and will help maintain the culture within
Trinity which encourages strong and sustained corporate
performance that drives absolute returns to shareholders
over the longer-term. As a result, the Group announced
the grant of Options over 2,541,600 ordinary shares
(representing 9% of the Group’s then issued share capital)
under the LTIP on 25 August 2017, including awards to
the Executive Directors; Bruce Dingwall, CBE (902,213
ordinary shares) and Jeremy Bridglalsingh (517,122
ordinary shares). In addition, a further 282,400 Options
were held back (to form a retention pool) to be issued
at the discretion of the Remuneration Committee,
for example in the case of hiring new Executives
or EMT members.
On 30 June 2020 the Remuneration Committee granted
Options over 142,296 ordinary shares under the LTIP
to a member of the EMT on the same terms as the
awards issued on 24 August 2017, having effectively
replaced 2017 LTIP awards issued to a previous member
of the EMT who had left the Group and whose awards
had consequently been forfeited. The remaining Options
held back (to form a retention pool) were cancelled on
2 July 2020.
The Options will vest in full on 30 June 2022, subject
to meeting performance targets relating to:
•
•
•
In respect of 70% of the award, the Group’s share
price growth from the 2017 placing price of 49.8
pence per share. If the three month Volume-
Weighted Average Price (“VWAP”) at the testing
date is 350 pence or more per share, this part of the
award will vest in full. If the VWAP at the testing date
is 49.8 pence per share or less, this part of the award
will not vest at all. If the VWAP at the testing date
is between 49.8 pence and 350 pence per share,
this part of the award will vest on a pro-rated
straight-line basis;
In respect of 20% of the award, full repayment of
the amount due to the BIR on or before 30
September 2019, in accordance with the terms of
the Creditors’ Proposal approved in 2017. The final
payment to the BIR under the Creditors’ Proposal
occurred in 2018; and
In respect of 10% of the award, redemption of all the
CLNs issued in January 2017 before the second
anniversary of their issue. The CLNs were redeemed
in 2018.
The Options vest in whole or in part on 30 June 2020,
30 June 2021 and 30 June 2022, to the extent that the
relevant performance conditions have been met. Subject
to meeting these conditions and continued employment
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Annual Report & Financial Statements 2021
in the Group, the Options are exercisable at nil cost
by the participants
The Options were tested on June 30 2020 against the
relevant performance conditions resulting in the following
outcome:
•
•
•
In respect of the Group’s share price growth, 118,402
LTIPs vested based on the 3 month VWAP of 67.5p
prevailing as at 30 June 2020.
As the BIR was repaid in full before 30 September
2019, 20% of the overall award, being 515,507 LTIPs,
vested in full.
As the CLNs were duly redeemed prior to the second
anniversary of their issue, 10% of the overall award,
being 257,754 LTIPs, vested in full.
Therefore, at the first testing date, a total of 891,663
LTIP's from the 2017 award vested.
The Options were tested again on 30 June 2021 against
the Group’s share price growth performance target
resulting in 471,131 LTIPs vesting based on the 3 month
VWAP of 148.9p prevailing at 30 June 2021.
The Options will be tested again on 30 June 2022 when
the final determination based on the share price growth
performance target will be made.
74
Trinity Exploration & Production plc
Directors’ Report
The Directors’ Annual Report on the affairs of the
Group, together with the Audited Consolidated Financial
Statements and Independent Auditors’ Report for
the year ended 31 December 2021 are as follows:
Principal Activities
Trinity is an independent oil producer whose principal
activities are the exploration, development, production
and sale of crude oil. Its core focus is T&T where the
Group operates assets onshore and offshore on both the
West and East Coasts. Trinity’s portfolio includes current
production, significant near-term production growth
opportunities from low risk developments, and multiple
exploration prospects with the potential to deliver
meaningful production and reserves growth. The Group
is also pursuing alternative energy projects, including
an assessment of solar and wind power options for
the Galeota asset development.
Strategic Report
The Group is required by the CA 2006 to include a
Strategic Report in its Annual Report. The information that
fulfils this requirement can be found from pages 1 to 49.
Going Concern
The Board have adopted the going concern basis in
preparing the Financial Statements.
In making their going concern assessment, the Board
have considered the Group’s current financial position,
budget and cash flow forecast for the next twelve
months. For the past twelve months the Group continued
to operate with no significant effects nor interruptions
from the presence of the Covid 19 pandemic. However,
the Board have continued to measure the potential
impact of the Covid 19 pandemic on the Group’s
operational capabilities, liquidity and financial position
over the next twelve-month period and beyond. The
going concern assessment has considered the current
operating environment and the potential impact of the
volatility of the oil price. Oil prices have trended in an
upward direction throughout 2021 and continued to
increase in 2022 well over USD 100 as at the date of
this annual report. Oil prices are forecast to remain at
elevated levels over the next 12 months, which will
continue to positively impact the Group’s operations.
The Group started 2022 with a strong operating and
financial position; 2021 average sales of 3,006 barrels
of oil per day (“bopd”), (2020 3,226 bopd), and net
cash of USD 15.6 million (2020: USD 17.5 million)
consisting of cash and short term investments of
USD 18.3 million (2020: USD 20.2 million) and an
overdraft facility of USD 2.7 million drawn (2020: USD
2.7 million) as at 31 December 2021. In making their
going concern assessment, the Board considered a
cash flow forecast based on expected future oil prices,
production volumes and discretionary expenditure
reductions including downside scenarios. The base
case forecast was prepared with consideration
of the following:
•
•
•
•
Future oil prices assumed to be in line with the
forward curve prevailing as at January 2022, with
an average realised oil price of USD 68.7/bbl in
the period to December 2022. The forward price
curve applied in the cash flow forecast starts at
USD 70.6/bbl in January 2022, fluctuating each
month down to USD 65.8/bbl in December 2022
through to USD 63.4/bbl in June 2023
Average forecast production for the year to
December 2022 of 3,173 bopd and for the six months
to June 2023 of 3,133 bopd with production being
maintained by RCPs, WOs and swabbing activities
and no new drilling;
No SPT incurred on the onshore assets in 2022, as
the SPT threshold for small onshore operators was
increased from USD 50 to USD 75.0/bbl for 2022;
Trinity continuing to progress various growth and
business development opportunities; and derivative
instruments in place to protect a portion of cashflows
against declining oil prices over the forecast period.
As at the current date, Management considers this is a
reasonable base scenario, reflecting the outlook of the
current production profile and costs. As oil prices have
trended upwards our base scenario will continue to be
strengthened. The cash flow forecast showed that the
Group will remain in a strong financial position for at least
the next twelve months, and as such being able to meet
its liabilities as they fall due.
Management has considered separate stressed
scenarios including:
•
•
the effect of reductions in oil prices as low as
USD 40.0/bbl being sustained across the forecast
period, noting that the base case pricing is in line
with market prices; and
the impact of temporary disruption from localised
Covid 19 cases reducing forecast production by 10%,
albeit operations have continued uninterrupted to
date and the nature of the operations reduces the
risk of such an eventuality.
All reasonably possible forecasts demonstrate that
the Group’s cash balances are maintained under such
scenarios and being sufficient to meet the Group’s
obligations as they fall due.
Based on the cash flow forecast, when combined with
mitigating actions that are within the Group’s control
and having considered the potential impact of Covid 19
pandemic, together with the Government of Trinidad
and Tobago’s (“GORTT’s”) response to date, the Board
currently believe the Group can maintain sufficient
liquidity and a healthy positive cash balance, and remain in
operational existence, for at least the next twelve months.
On 24 February 2022, Russian forces invaded Ukraine,
causing wide-ranging economic sanctions to be applied
against the Russian regime by the US, EU and other major
economies. The event caused both Brent and WTI oil
prices to soar, peaking well above USD 100 per bbl in
March 2022. The increased oil prices have impacted the
Group in several ways. These include, positively impacted
the Group’s crude oil revenue, negatively impacted
derivative expenses, increased inflationary impacts
Annual Report & Financial Statements 2021
75
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Glossary
Company Information
and some challenges with supply chain including higher
freight costs and delays in receiving shipments. Overall,
whilst there has been no significant adverse impact to the
Group, management continues to closely monitor the
event’s impact as it unfolds.
As a result, at the date of approval of the financial
statements, the Board have a reasonable expectation
that the Group has sufficient and adequate resources
to continue in existence for at least twelve months
post approval of these financial statements and is poised
for continued growth as market conditions continue to
improve. For this reason, the Board have concluded it is
appropriate to continue to adopt the going concern basis
of accounting in the preparation of the consolidated
and company financial statements.
Dividend Policy
No dividend payments or declaration was recommended
by the Directors.
share carries the right to one vote at general meetings
of the Company.
There are no specific restrictions on the size of a holding
nor on the transfer of shares, which are both governed by
the general provisions of the Articles of Association and
prevailing legislation. The Directors are not aware of any
agreements between holders of the Group’s shares that
may result in restrictions on the transfer of securities
or on voting rights. Details of employee share schemes
are set out in Note 24 to the Consolidated Financial
Statements on pages 122 to 125. No person has any
special rights of control over the Group’s share capital
and all issued shares are fully paid.
With regard to the appointment and replacement of
Directors, the Group is governed by its Articles of
Association, the Companies Act 2006 and related
legislation. The Articles of Association may be amended
by special resolution of the Shareholders. The powers
of Directors are described in the main Board’s terms
of reference, copies of which are available on request,
and the Corporate Governance Statement on page 52.
Capital Structure
As at 31 December 2021 the Company’s issued share
capital was 38,879,431 which comprised of 38,879,431
ordinary shares of USD 0.01 each. Each ordinary
Substantial Shareholdings
The Shareholders holding over 3% of the voting rights
as at 29 April 2022 were as follows:
Shareholder
The Shareholders holding over 3% of the voting rights as at 29 April 2022 were as follows:
David & Christina Living Trust
David & Monique Newlands
Gavin Matthew White
Angus Christian Winther
Interactive Investor ISA (Clients)*
Jan-Dirk Leuders**
Scott Casto**
Bruce Dingwall
Interactive Investor Clients
Hargreave Landsdown Private (Clients)*
HSBC Private Bank, London Clients
Notes:
Number of shares shown are post 2021 share consolidation
*Private Client Holdings
**Includes 111,460 shares held jointly between Scott Casto and Jan-Dirk Lueders through CMT Investments LLC
No of Shares
as at
29 April 2022
4,052,772
3,528,500
3,285,748
3,113,299
1,719,800
1,610,317
1,574,834
1,486,141
1,352,432
1,288,465
1,247,076
% of
issued Share
Capital as at
29 April 2022
10.42%
9.08%
8.45%
8.01%
4.42%
4.14%
4.05%
3.82%
3.48%
3.31%
3.21%
Directors
The Directors who served during the period and at the date of this Report are as follows:
Name Role Appointment Date
1 Bruce Dingwall, CBE Executive Chairman 13 November 2015 to 3 August 2021
2 Jeremy Bridglalsingh Executive Director and CEO 11 January 2017 to present
3 David Segel Non-Executive Director 11 January 2017 to 22 February 2022
4 Angus Winther Non-Executive Director 11 January 2017 to present
5 James Menzies Independent Non-Executive Director 23 June 2017 to present
6 Nicholas Clayton Senior Independent Non-Executive 28 November 2018 to present
Director and Non-Executive Chairman
7 Derek Hudson Non-Executive Director 14 September to present
8 Kaat Van Hecke Non-Executive Director 22 February 2022 to present
76
Trinity Exploration & Production plc
Directors’ Report (continued)
The Directors who held office at 31 December 2021 had the following interests in the ordinary shares in the capital of the
Group which amounted to 19% of the Group’s total issued share capital:
Jeremy Bridglalsingh
James Menzies
David Segel
Angus Winther
Nicholas Clayton
Total
Notes:
No. of
Consolidated
Ordinary Shares
– USD 0.01
2021
No. of
Consolidated
Ordinary Shares
– USD 0.01
2020
52,836
115,000
4,052,772
3,113,299
10,000
41,038
115,000
4,052,772
3,093,299
10,000
7,343,907
7,312,109
Shares figures shown for both 2020 and 2021 are post 2021 share consolidation
Directors’ share options/LTIPs
Likely Future Developments
Details of Directors’ share options/LTIPs are provided in
the Directors’ Remuneration Report on pages 66 to 73.
Future development plans have been addressed in the
Strategic Report on pages 1 to 51.
Directors’ Indemnities
Independent Auditors
The Group has made qualifying third party indemnity
provisions for the benefit of its Directors which were
made during the period and remain in force at the
date of this Report.
At the AGM held in June 2021, the Shareholders approved
the re-appointment of BDO as the auditors of the Group.
Each of the persons who is a Director at the date of
approval of this Annual Report confirms that;
•
•
so far as the Director is aware, there is no relevant
audit information of which the Group’s auditors are
unaware; and
the Director has taken all the steps that they
ought to have taken as a Director in order to make
themselves aware of any relevant audit information
and to establish that the Group’s auditors are aware
of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the
CA 2006.
Amanda Bateman
For and on behalf of AMBA Secretaries Limited
Group Secretary
23 May 2022
Political contributions
The Group has made no political contribution to any
source during both the current and preceding years.
HSSE
In 2021, Trinity achieved a solid HSSE performance
despite Covid 19. The Group continued to evolve its HSSE
strategies and standards through lessons learnt from
previous years and improve our base performance as the
Group increases operational activity.
The Share Dealing Code
The Group has adopted a code on dealings in securities
which the Board regards as appropriate for an AIM listed
company and is compliant with the Market Abuse
Regulations. The Group takes all reasonable steps to
ensure compliance by Directors, employees and agents
with the provisions of the AIM rules relating to dealings
in securities.
Financial Risk Management
Details on the Group’s exposure to risk on price, liquidity
and cash flows are addressed under Risk Management
and Internal Controls on pages 44 to 49.
Annual Report & Financial Statements 2021
Statement of Directors’ Responsibilities
77
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Company Information
In respect of the Financial Statements
The Directors are responsible for preparing the Annual
Report and the financial statements contained therein
in accordance with applicable laws and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the financial statements for the
Company and for the Group (together, the “Financial
Statements”) in accordance with UK adopted international
accounting standards. Under Company law the Directors
must not approve the Financial Statements unless they
are satisfied that they give a true and fair view of the
state of affairs of the Company and Group and of the
profit or loss of the Company and Group for that period.
In preparing the Financial Statements, the Directors are
required to:
The Directors are also responsible for safeguarding the
assets of the Company and Group and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s and Group’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and Group and enable them
to ensure that the Financial Statements comply with
the CA 2006.
The Directors of the Company are responsible for
the maintenance and integrity of the Group’s website.
Legislation in the UK governing the preparation and
dissemination of Financial Statements may differ from
legislation in other jurisdictions.
•
•
select suitable accounting policies and then apply
them consistently;
state whether applicable IFRS in conformity with
the Companies Act 2006 have been followed for
the Financial Statements, subject to any material
departures having been disclosed and explained
in those Financial Statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
•
prepare the Financial Statements on the going
concern basis unless it is inappropriate to
presume that the Company and Group will
continue in business.
On behalf of Board
Nicholas Clayton
Non-Executive Chairman
23 May 2022
78
Trinity Exploration & Production plc
Independent Auditor’s Report
to the members of Trinity Exploration & Production Plc
Opinion on the financial statements
Conclusions relating to going concern
In our opinion:
•
•
•
•
the financial statements give a true and fair view
of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2021 and
of the Group’s profit for the year then ended;
the Group financial statements have been properly
prepared in accordance with UK adopted
international accounting standards;
the Parent Company financial statements have been
properly prepared in accordance with UK adopted
international accounting standards and as applied
in accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Trinity
Exploration & Production Plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the year ended
31 December 2021 which comprise the consolidated
and company statements of financial position, the
consolidated statement of comprehensive income,
the consolidated and company statements of cash flows,
the consolidated and company statements of changes
in equity and notes to the financial statements, including
a summary of significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted
international accounting standards and, as regards
the Parent Company financial statements, as applied
in accordance with the provisions of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
In auditing the financial statements, we have concluded
that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s
ability to continue to adopt the going concern basis
of accounting included:
• We obtained the Director’s assessment of the
ongoing impact of Covid-19 and the current global
macro-economic conditions to date, together with
potential future risks and uncertainties, considering
the impact on the labour force, supply chain,
commodity market prices and access to finance.
We compared this against our own assessment of
risks and uncertainties based on our understanding
of the business and oil and gas sector information.
• We obtained the Director’s going concern
assessment and supporting base case cash flow
forecasts, challenging the key operating assumptions
based on 2021 and 2022 year to date actual results
for certain performance metrics, external data and
market commentary, where possible. See note 1
for the Director’s going concern considerations
and assumptions.
• We tested the integrity of the forecast models
and the Group’s wider impairment calculations and
assessed their consistency with approved budgets
and Field Development Plans, as applicable.
• We obtained the Director’s sensitivity analysis which
was performed to determine the point at which the
Group would exhaust cash reserves and considered
whether such scenarios, including significant
reductions in commodity prices and production
were possible. We also considered the validity of
deferring capital expenditure or other mitigating
factors identified by the Directors, such as measures
to reduce operating costs as part of our assessment.
• We reviewed the terms of all facilities in place as at
the date of sign off, confirming the consistency of
the forecasts with the facilities and assessing the
risk of any potential withdrawal of facilities or
default events.
• We reviewed the adequacy, completeness and
consistency of going concern disclosures in the
financial statements with the directors going
concern forecasts.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the
Directors with respect to going concern are described
in the relevant sections of this report.
Annual Report & Financial Statements 2021
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Company Information
Overview
Coverage 95% (2020: 94%) of Group profit before tax
100% (2020: 100%) of Group revenue
99% (2020: 99%) of Group total assets
Key audit matters 2021 2020
Going Concern* No Yes
Carrying Value of Oil and Gas assets Yes Yes
Carrying value of Exploration and
Evaluation assets Yes No
*Based on our risk assessment taking into consideration the Group’s
operational and financial performance throughout the year and forecast
performance, coupled with the higher oil prices, Going Concern was not
considered to be a key audit matter in the current year.
Materiality Group financial statements as a whole
£780,000 (2020: £440,000) based on 1.2% (2020: 1%) of revenue
An overview of the scope of our audit
Our involvement with component auditors
Our Group audit was scoped by obtaining an
understanding of the Group and its environment, including
the Group’s system of internal control, and assessing the
risks of material misstatement in the financial statements.
We also addressed the risk of management override of
internal controls, including assessing whether there was
evidence of bias by the Directors that may have
represented a risk of material misstatement.
We determined that there were three significant
components and all of these were subject to a full
scope audit (two in Trinidad & Tobago and the
Parent Company).
The audits of the Trinidad & Tobago significant
components were performed in Trinidad & Tobago by a
local BDO network member firm. The audits of the Parent
Company and the Group consolidation were performed in
the United Kingdom by the Group audit team. The Group
audit team performed additional procedures in respect of
certain of the significant risk areas that represented key
audit matters in addition to procedures performed by the
component auditor.
The remaining components of the Group were considered
non-significant and the financial information of these
components were principally subject to analytical review
procedures performed by the Group audit team and the
component auditor.
For the work performed by component auditors, we
determined the level of involvement needed in order
to be able to conclude whether sufficient appropriate
audit evidence has been obtained as a basis for our
opinion on the Group financial statements as a whole.
Our involvement with component auditors included
the following:
•
•
•
Detailed Group reporting instructions were sent to
the component auditor, which included the significant
areas to be covered by the audits (including areas
that were considered to be key audit matters as
detailed below) and set out the information to be
reported to the Group audit team.
The Group audit team was actively involved in the
direction of the audits performed by the component
auditor for Group reporting purposes, along with the
consideration of findings and determination of
conclusions drawn.
The Group audit team reviewed the component
auditor’s work papers remotely, attended planning
and clearance meetings for the significant
components and engaged with the component
auditor during their fieldwork and completion phases.
80
Trinity Exploration & Production plc
Independent Auditor’s Report (continued)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying Value of Oil and Gas assets
(refer to Note 1 & 13)
The Group’s total producing oil & gas
assets at 31 December 2021 were
USD45.2m (2020: USD34.2m). This class
of asset is the most significant to the
statement of financial position.
Management are required to assess
whether there are potential indicators of
impairment of the Group’s oil and gas
assets at each reporting date and, if
potential indicators of impairment are
identified, management are required
to perform a full assessment of the
recoverable value of the oil and gas
assets in accordance with the
requirements of the relevant
accounting standard.
There was significant turmoil to the market
demand for oil, caused by the Covid 19
pandemic and the wider macro-economic
climate (including the Ukraine conflict),
which significantly impacted pricing.
Management considered the above to be
an impairment indicator and therefore
prepared an impairment assessment in
relation to the Group’s producing assets
based on a Fair Value Less Costs of
Disposal (“FVLCD”) methodology.
Key assumptions inherent within
management’s analysis include:
•
Long term crude oil price;
• Reserves estimates;
• Production volume profiles;
• Cost profiles and escalation applied;
• Discount rates; and
• Tax.
Management have recorded a pre-tax
impairment charge of USD0.1 million (2020:
USD1.2 million) on its oil and gas producing
assets during the year.
The carrying value of producing oil & gas
assets is considered a key audit matter
as significant judgement and estimates
are applied by Management in the
determination thereof.
Our procedures included the following:
We obtained and examined management’s impairment indicator paper to
assess the appropriateness of their conclusion that a potential indicator of
impairment was present against observable market data, business plans and
budgets.
We assessed the appropriateness of Management’s determination of each
cash generating unit (CGU) in order to determine if the conclusions were in
accordance with the relevant accounting standard.
We obtained management’s discounted cash flow models (FVLCD) and
performed data integrity and mechanical checks on the models.
We determined whether the basis of preparation of the models were in
accordance with the applicable accounting standard, our expectations and
valuation methodology.
We compared the actual performance of the CGUs during 2021 to budgets
for the period in order to assess the quality of management’s forecasting.
We critically challenged the FVLCD model, focussing on the appropriateness
of estimates with reference to empirical data and external evidence with
specific emphasis on the following assumptions: oil prices, reserves and
production levels, operating and development costs, tax and discount rate.
We compared forecast oil prices to current pricing, empirical data and market
analysis.
We assessed the consistency of production profiles and capital expenditure
forecasts against the Group’s Field Development Plans, approved budgets,
external reserves engineer decline rates, and met with operational
management to inform our assessment and understanding of these plans
and budgets.
We have engaged an external auditor’s expert to check that the latest
Reserves and Resources Statement has been prepared on the correct basis.
We analysed the production profile on a field / well basis and compared the
trend analysis to capital expenditure forecasts to determine if there were
any anomalies. We also reviewed year to date production data and made
inquiries with Management regarding the status of current development.
With the use of our internal valuation experts we reperformed the WACC
calculation received from Management and assessed the reasonableness of
key inputs such as the market value of equity, market value of debt, cost of
equity (Ke), and cost of debt (Kd) against market related data. A sensitivity
analysis was also performed on the discount rate used.
We reviewed the disclosures in the financial statements (Note 1) regarding
key assumptions and sensitivity of the carrying value to reasonable changes
in such assumptions to check that were in accordance with the requirements
of the relevant accounting standard.
Key observations:
Based on the procedures performed, we found Management’s assessment
of the carrying value of producing oil and gas assets to be supported by the
underlying models and the judgements and estimates applied reasonable.
Annual Report & Financial Statements 2021
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Company Information
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying Value of Exploration &
Evaluation assets (refer to Note 1 & 15)
Included in the Group’s intangible assets at
31 December 2021 is $30.2m classified as
exploration and evaluation (“E&E”) assets
predominantly relating to capitalised
exploration costs in respect of the
Galeota Development.
For assets classed as E&E, Management
are required to perform an assessment
of whether there are any impairment
indicators in accordance with IFRS 6
Exploration for the Evaluation of
Mineral Resources.
When assessing indicators of impairment
over the E&E assets a number of factors
common to the oil and gas sector are
typically taken into consideration, including
the validity of the licenses held, the
budgeted expenditure on the asset and
any information available surrounding
the commerciality of the license areas
such that the asset may not be recovered
in full through development or sale.
Management do not consider there to
be any indicators of impairment.
Management have noted that the
Galeota asset is yet to secure financing
for development and as a result is yet
to be reclassified to a developing asset
within PPE.
Given the significant degree of judgment
involved in assessing E&E assets for
impairment indicators we considered
this a key audit matter for our audit.
Our procedures included the following:
We reviewed Management’s
indicator assessment and
considered whether there were any of the indicators of impairment present
in line with criteria set out under IFRS 6. We checked this assessment with
reference to results of exploration work performed in the year, future
planned expenditure and publicly available information.
impairment
We verified a sample of capitalised costs and assessed the nature of the
costs capitalised under the accounting policy to evaluate whether they meet
capitalisation criteria under IFRS 6.
We reviewed the licences to determine their existence and checked the
Group’s compliance with terms.
We reviewed the board minutes during the year and post year-end, as well
as the budget for future capital expenditure assessing Management’s
intention to continue the Galeota Development
We have reviewed the competent person’s report (CPR) report to determine
whether commercial viability can be demonstrated, and that sufficient
reserves and financial monetization is possible from the Galeota asset. We
assessed the CPR’s independence, competence, capabilities and objectivity
in producing the reserves report.
We challenged management on whether the Galeota asset should be
classified as a producing asset and that there are ongoing negotiations
regarding financing that are key to development through inspection of board
meeting minutes.
Key observations:
Based on the procedures performed, we found Management’s assessment
of indicators of impairment over the carrying value of exploration and
evaluation assets to be supportable and the judgements and estimates
applied reasonable.
We considered it appropriate given that the agreements and negotiations
for funding with a third party are still ongoing that the E&E asset was not
classified as in development.
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could influence the economic decisions of reasonable
users that are taken on the basis of the financial
statements.
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
82
Trinity Exploration & Production plc
Independent Auditor’s Report (continued)
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements
Parent company financial statements
2021
2020
2021
2020
Materiality
$780,000
$440,000
$270,000
$150,000
Basis for determining
materiality
1.2% of Total
Total revenue
1% of Total
Total revenue
1.3% of Total
assets, capped
at 35% of
Group materiality
1% of Total
assets, capped
at 35% of
Group materiality
Rationale for the benchmark applied The benchmark reflects the Group’s Total assets are considered to be the
primary focus on generating
sustainable growth in revenue
through increasing production volume. performance for the users of
ost important determinant of
the Parent Company’s financial
m
the financial statements.
Materiality was capped at 35% of
Group materiality given the assessment
of the components’ aggregation risk.
Performance materiality
$590,000
$330,000
$202,500
$112,500
Basis for determining Performance materiality was set at 75% of the above materiality level.
performance materiality This was determined taking into consideration the nature of activities, historic
audit adjustments and Management’s attitude towards proposed adjustments.
Component materiality
Other information
We set materiality for each component of the Group
based on a percentage of between 35% and 62.75%
of Group materiality dependent on the size and our
assessment of the risk of material misstatement of
that component. Component materiality ranged from
$270,000 to $770,000. In the audit of each component,
we further applied performance materiality levels of 75%
of the component materiality to our testing to ensure
that the risk of errors exceeding component materiality
was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £15,000 (2020:£8,000). We also agreed to report
differences below this threshold that, in our view,
warranted reporting on qualitative grounds.
The directors are responsible for the other information.
The other information comprises the information included
in the annual report and accounts other than the financial
statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other
information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider
whether the other information is materially inconsistent
with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise
to a material misstatement in the financial statements
themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Annual Report & Financial Statements 2021
83
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Directors’ report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent
Company and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the Directors’
report.
Matters on which we are required
to report by exception
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
the Parent Company financial statements are not in agreement with the
accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Responsibilities of Directors
As explained more fully in the statement of Directors’
responsibilities, the Directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless
the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities,
including fraud is detailed below:
We obtained an understanding of the legal and regulatory
framework applicable to the Group. We considered the
associated oil & gas, environmental and taxation laws
and regulations of Trinidad & Tobago to be the most
relevant to the audit given the geographical areas of
focus of the Group.
We assessed compliance with these laws and
regulations through:
•
•
Discussion with the management and those
charged with governance;
Testing the financial statement disclosures to
supporting documentation;
84
Trinity Exploration & Production plc
Independent Auditor’s Report (continued)
• Making enquiries of Management as to whether
there was any correspondence from regulators
in so far as the correspondence related to the
Financial Statements.
•
•
Reviewing minutes from board meetings of those
charged with governance to identify any instances of
non-compliance with laws and regulations; and
Involving tax specialists from our local BDO network
member firm in Trinidad & Tobago to evaluate
the Group’s compliance with relevant tax
legislation considered of most significance
to the Group’s operations.
We assessed the susceptibility of the financial statements
to material misstatement, including fraud and considered
areas of the financial statements subject to elevated
potential fraud risks. We considered the significant fraud
risk areas to be in relation to revenue recognition and
management override of controls.
Our procedures included:
•
•
•
•
•
•
•
Testing the appropriateness of journal entries made
through the year by applying specific criteria to
detect possible irregularities and fraud and agreeing
to supporting documentation;
Performing procedures targeted at the revenue
recognition risk, including testing specific revenue
entries around the year end, to supporting
documentation, to check that they had been
recorded in the correct period and obtaining
third party confirmations where applicable;
Performing a detailed review of the Group’s year-end
adjusting entries and investigating any that appear
unusual as to nature or amount and agreeing to
supporting documentation;
For significant and unusual transactions, particularly
those occurring at or near year-end, obtaining
evidence for the rationale of these transactions
and the sources of financial resources supporting
the transactions;
Assessing whether the judgements made in
accounting estimates were indicative of a potential
bias (refer to key audit matters above);
Extending inquiries to individuals outside of
management and the accounting department
to corroborate management’s ability and intent
to carry out plans that are relevant to developing
the estimate set out in the key audit matters
section above;
Directing the auditors of the significant components
to ensure an assessment was performed on
the extent of the components compliance with
the relevant local and regulatory framework.
We reviewed this work and held meetings with
relevant internal management and external third
parties to form our own opinion on the extent of
Group wide compliance;
•
Directing the component auditors in carrying out the
above testing in respect of management override of
controls and revenue recognition and reviewing their
working papers in this regard; and
• We communicated relevant identified laws and
regulations and potential fraud risks to all
engagement team members, who were all deemed
to have appropriate competence and capabilities,
to remain alert to any indications of fraud or
non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Parent
Company’s members those matters we are required to
state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members
as a body, for our audit work, for this report, or for the
opinions we have formed.
Matt Crane
(Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
London, United Kingdom
23 May 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Annual Report & Financial Statements 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
85
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
(Expressed in United States Dollars)
Revenues
Crude oil sales
Other income
Operating Expenses
Royalties
Production costs
Depreciation, Depletion & Amortisation (“DD&A”)
General & Administrative (“G&A”) expenses
Net reversal/ (Impairment losses) on financial assets (“ILFA”)
Share Option Expense (“SOE”)
Foreign exchange (“FX”) (loss)/gain
Derivative (expense)/income (realised)
Fair value (expense)/income derivative instruments (unrealised)
Operating Profit before Supplemental Petroleum Taxes (“SPT”)
& Property Taxes (“PT”)
SPT
PT net reversal/(charge)
Operating Profit before Covid 19 expenses, Impairment and Exceptional items
Covid-19 expenses
Impairment
Exceptional items
Operating Profit
Finance income
Finance costs
Profit Before Income Taxation
Income taxation credit/(charge)
Profit/(Loss) for the year
Other Comprehensive Income/(Expense)
Items that may be subsequently reclassified to profit or loss
Currency translation
Notes
2021
$’000
2020
$’000
66,257
1
44,074
4
66,258
44,078
(19,828)
(17,625)
(7,428)
(7,030)
754
(626)
(14)
(1,293)
(3,149)
(11,746)
(16,458)
(8,174)
(5,095)
(252)
(963)
7
1,302
266
(56,239)
(41,113)
10,019
(5,074)
1,516
6,461
(669)
(1,316)
(113)
4,363
94
(1,475)
2,982
4,744
7,726
2,965
153
(532)
2,586
–
(1,218)
43
1,411
108
(1,416)
103
(2,938)
(2,835)
–
(1)
13-15
6
6
7
8
7
9
9
10
Total Comprehensive Income/(Loss) for the year
7,726
(2,836)
Earnings per share (expressed in dollars per share)
Basic*
Diluted*
11
11
0.20
0.18
(0.07)
(0.07)
* See note 23 regarding restatements as a result of the share capital reorganisation.
86
Trinity Exploration & Production plc
Consolidated Statement of Financial Position
at 31 December 2021
(Expressed in United States Dollars)
ASSETS
Non-current Assets
Property, plant and equipment
Right-of-Use (“ROU”) assets
Intangible assets
Abandonment fund
Performance bond
Deferred Tax Assets (“DTA”)
Current Assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Capital and Reserves Attributable to Equity Holders
Capital and Reserves Attributable to Equity Holders
Share capital
Share premium
Share based payment reserve
Merger reserves
Reverse acquisition reserve
Translation reserve
Retained earnings/ (accumulated losses)
Total Equity
Non-current Liabilities
Lease liability
Deferred Tax Liabilities (“DTL”)
Provision for other liabilities
Current Liabilities
Trade and other payables
Bank overdraft
Lease liability
Provision for other liabilities
Derivative financial liabilities
Taxation payable
Total Liabilities
Total Equity and Liabilities
Notes
2021
$’000
2020
$’000
13
14
15
16
17
18
19
20
21
22
23
23
24
25
25
14
18
27
28
29
14
27
21
31
49,507
616
30,759
4,021
473
11,530
37,756
1,014
27,349
3,490
253
5,997
96,906
75,859
3,820
10,747
–
18,312
5,267
7,239
266
20,237
32,879
33,009
129,785
108,868
389
–
3,784
–
(89,268)
(1,650)
143,666
97,692
139,879
14,764
75,467
(89,268)
(1,650)
(188,332)
56,921
48,552
97
2,025
55,690
465
2,611
45,405
57,812
48,481
8,814
2,700
609
46
2,883
–
15,052
7,803
2,700
614
516
–
202
11,835
72,864
60,316
129,785
108,868
The financial statements on pages 85 to 133 were authorised for issue by the Board of Directors on 23 May 2022 and
were signed on its behalf by:
Jeremy Bridglalsingh
Director
23 May 2022
Annual Report & Financial Statements 2021
Company Statement of Financial Position
at 31 December 2021
(Expressed in United States Dollars)
ASSETS
Non-current Assets
Investment in subsidiaries
Current Assets
Trade and other receivables
Intercompany
Derivative financial instruments
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Capital and Reserves Attributable to Equity Holders
Share capital
Share premium
Share based payment reserve
Merger reserves
Retained earnings/ (accumulated losses)
Total Equity
Current Liabilities
Trade and other payables
Intercompany
Derivative financial liabilities
Total Liabilities
Total Equity and Liabilities
87
Strategic Report
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l Financial Accounts
Glossary
Company Information
Notes
2021
$’000
2020
$’000
12
60,347
60,021
20
20
21
22
23
23
28
30
21
200
3,372
–
3,108
6,680
424
4,318
266
4,317
9,325
67,027
69,346
389
–
4,569
6,552
51,526
97,692
139,879
4,064
56,652
(229,422)
63,036
68,865
327
781
2,883
3,991
3,991
481
–
–
481
481
67,027
69,346
The Company has elected to take the exemption under section 408 of the Companies Act 2006, to not present its own
Statement of Comprehensive Income. The net loss for the parent company was $6.4 million (2020: $0.1 million).
The financial statements on pages 85 to 133 were authorised for issue by the Board of Directors on 23 May 2022 and
were signed on its behalf by:
Jeremy Bridglalsingh
Director
23 May 2022
Trinity Exploration & Production plc
Registered Number: 07535869
88
Trinity Exploration & Production plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share Retained
Based Reverse Earnings/
Share Share Payment Acquisition Merger Translation Accumulated Total
Capital Premium Reserve Reserve Reserves Reserve Losses Equity
Year ended 31 December 2020 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 January 2020 97,692 139,879 14,328 (89,268) 75,467 (1,649) (186,024) 50,425
LTIPs exercised (Note 23) – – (527) – – – 527 –
Share based payment
expense (Note 24) – – 963 – – – – 963
Translation difference – – – – – (1) – (1)
Loss for the year – – – – – – (2,835) (2,835)
Total comprehensive
loss for the year – – – – – (1) (2,835) (2,836)
At 31 December 2020 97,692 139,879 14,764 (89,268) 75,467 (1,650) (188,332) 48,552
Year ended 31 December 2021
At 1 January 2021 97,692 139,879 14,764 (89,268) 75,467 (1,650) (188,332) 48,552
Capital reorganisation
(Note 23 & 24) (97,303) (139,879) (11,485) – (75,467) – 324,134 –
LTIPs exercised 1 – – – – – – 47 47
Share based payment
expense (Note 24) – – 505 – – – 91 596
Profit for the year – – – – – – 7,726 7,726
Total comprehensive
income for the year
– – – – – – 7,726 7,726
At 31 December 2021 389 – 3,784 (89,268) – (1,650) 143,666 56,921
1
As described in the notes to the consolidated financial statements, in 2020 the Company issued 4,745,057 ordinary shares (pre share consolidation) to certain
employees on exercise of LTIPs at less than the nominal value in contravention of S580 of the Companies Act 2006. In 2021, on becoming aware of the issue,
the Company sought remedial advice and corrected this.
Annual Report & Financial Statements 2021
Company Statement of Changes in Equity
for the year 31 December 2021
89
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Glossary
Company Information
Share
Based
Share Share Payment Merger Accumulated Total
Capital Premium Reserve Reserves Losses Equity
Year ended 31 December 2020 $’000 $’000 $’000 $’000 $’000 $’000
At 1 January 2020 97,692 139,879 3,628 56,652 (229,833) 68,018
LTIPs exercised (Note 23) – – (527) – 527 –
Share based payment expense (Note 24) – – 963 – – 963
Total comprehensive loss for the year – – – – (116) (116)
At 31 December 2020 97,692 139,879 4,064 56,652 (229,422) 68,865
Year ended 31 December 2021
At 1 January 2020 97,692 139,879 4,064 56,652 (229,422) 68,865
Capital Reorganisation (Note 23 & 24) (97,303) (139,879) – (50,100) 287,282 –
Share based payment charge (Note 24) – – 505 – – 505
LTIPs exercised 1 – – – – 47 47
Total comprehensive loss for the year – – – – (6,381) (6,381)
At 31 December 2021 389 – 4,569 6,552 51,526 63,036
1
As described in the notes to the consolidated financial statements, in 2020 the Company issued 4,745,057 ordinary shares (pre share consolidation) to certain
employees on exercise of LTIPs at less than the nominal value in contravention of S580 of the Companies Act 2006. In 2021, on becoming aware of the issue,
the Company sought remedial advice and corrected this.
90
Trinity Exploration & Production plc
Consolidated Statement of Cash Flows
for the year 31 December 2021
(Expressed in United States Dollars)
Operating Activities
Profit before taxation
Adjustments for:
Translation difference
Finance cost – loans and interest
Finance income
Finance cost – decommissioning provision
Share based payment charge
DD&A
Loss on disposal of assets
Net reversal/(Impairment loss) on financial assets
Reversal of impairment
Inventory impairment
Impairment of property, plant and equipment
Fair value loss on derivative financial instruments
Other non-cash items
Changes In Working Capital
Inventories
Trade and other receivables
Trade and other payables
Income taxation paid
Net Cash Inflow from Operating Activities
Notes
2021
$’000
2020
$’000
2,982
103
9
9
27
24
13-15
13
13
19
16,20,21
21,27,28
(39)
254
(94)
1,222
626
7,428
–
(754)
–
1,220
96
3,149
47
83
195
(108)
1,221
963
8,174
2
515
(126)
–
1,121
(266)
–
16,137
11,877
228
(3,019)
909
(1,882)
(124)
1,556
(1,985)
(553)
(1,700)
(1,028)
12,555
10,296
Investing Activities
Purchase of Exploration and Evaluation (“E&E”) assets
Purchase of computer software and investment in research & development
Purchase of property, plant and equipment
Performance bond released
Net Cash Outflow from Investing Activities
15
15
13
(3,262)
(401)
(9,957)
(220)
(1,062)
–
(4,979)
–
(13,840)
(6,041)
Financing Activities
Finance income
Finance cost
Principal paid on lease liability
Interest paid on lease liability
Bank overdraft
Net Cash (Outflow)/Inflow from Financing Activities
94
(153)
(480)
(101)
–
(640)
108
(55)
(441)
(140)
2,700
2,172
(Decrease)/Increase in Cash and Cash Equivalents
(1,925)
6,427
Cash and Cash Equivalents
At beginning of year
Effects of foreign exchange rates differences on cash
(Decrease)/increase in Cash and Cash equivalents
20,237
19
(1,944)
13,810
(14)
6,441
At end of year
22
18,312
20,237
Annual Report & Financial Statements 2021
Company Statement of Cash Flows
for the year 31 December 2021
(Expressed in United States Dollars)
Operating Activities
Loss before taxation
Adjustments for:
Finance income
Share based payment charge
Net reversal of impairment loss on financial assets
Fair value loss on derivative financial instruments
Other non-cash items
Changes In Working Capital
Trade and other receivables
Trade and other payables
91
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Company Information
Note
2021
$’000
2020
$’000
(6,381)
(152)
178
(28)
3,149
(13)
(3,247)
1,537
354
1,891
(116)
(126)
248
–
–
–
6
(1,074)
(27)
(1,101)
Taxation Paid
–
–
Net Cash Outflow from Operating Activities
(1,356)
(1,095)
Financing Activities
Finance income
Net Cash Inflow from Financing Activities
147
147
126
126
Decrease In Cash and Cash Equivalents
(1,209)
(969)
Cash and Cash Equivalents
At beginning of year
Decrease Cash and Cash equivalents
At End of Year
4,317
(1,209)
22
3,108
5,286
(969)
4,317
92
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements
31 December 2021
1 Background and Summary of significant accounting policies
The principal accounting policies applied in the preparation of this consolidated financial information are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated. The financial
statements are for Trinity Exploration & Production plc (“Trinity” or “the Company” or “Parent”) and its subsidiaries
(together “the Group”).
Background
Trinity is an independent energy company limited by shares and listed on the Alternative Investment Market (“AIM”)
market of the London Stock Exchange (“LSE”). The Company is incorporated and domiciled in England and the address
of the registered office is C/o Pinsent Masons LLP 1 Park Row, Leeds LS1 5AB, United Kingdom (“UK”). The Group is
involved in the exploration, development and production of oil reserves in T&T.
Basis of preparation
The Group’s and Company’s financial statements have been prepared and approved by the Board of Directors (“Board”)
in accordance with international accounting standards as adopted in the United Kingdom.
The preparation of the consolidated financial statements in compliance with IFRS requires the use of certain critical
accounting estimates. It also requires the Board and Executive Management Team (“EMT”) (together “Management”)
to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial
information are disclosed in Note 3: Critical Accounting Estimates and Assumptions.
The Company has taken advantage of the exemption in Section 408 of the Companies Act 2006 not to present its own
income statement or Statement of Comprehensive Income. The loss for the Company for the year was $6.4 million
(2020: $0.1 million loss) driven mainly by the derivative expenses incurred in 2021.
Basis of measurement
This consolidated financial statements has been prepared under the historical cost convention, except certain financial
assets and liabilities (including derivative financial instruments) which are measured at fair value through the Consolidated
Statement of Comprehensive Income. Accounting policies have been applied consistently, other than where a new
accounting policy has been adopted.
Going Concern
The Board have adopted the going concern basis in preparing the Financial Statements.
In making their going concern assessment, the Board have considered the Group’s current financial position, budget
and cash flow forecast for the next twelve months. For the past twelve months the Group continued to operate with no
significant effects nor interruptions from the presence of the Covid 19 pandemic. However, the Board have continued
to measure the potential impact of the Covid 19 pandemic on the Group’s operational capabilities, liquidity and financial
position over the next twelve-month period and beyond. The going concern assessment has considered the current
operating environment and the potential impact of the volatility of the oil price. Oil prices have trended in an upward
direction throughout 2021 and continued to increase in 2022 well over US$100 as at the date of this annual report. Oil
prices are forecast to remain at elevated levels over the next 12 months, which will continue to positively impact the
Group’s operations.
The Group started 2022 with a strong operating and financial position; 2021 average sales of 3,006 barrels of oil per
day (“bopd”), (2020 3,226 bopd), and net cash of US$15.6 million (2020: US$17.5 million) consisting of cash and short
term investments of US$18.3 million (2020: US$20.2 million) and an overdraft facility of US$2.7 million drawn (2020:
US$2.7 million) as at 31 December 2021. In making their going concern assessment, the Board considered a cash flow
forecast based on expected future oil prices, production volumes and discretionary expenditure reductions including
downside scenarios. The base case forecast was prepared with consideration of the following:
•
•
•
Future oil prices assumed to be in line with the forward curve prevailing as at January 2022, with an average realised
oil price of US$68.7/bbl in the period to December 2022. The forward price curve applied in the cash flow forecast
starts at US$70.6/bbl in January 2022, fluctuating each month down to US$65.8/bbl in December 2022 through to
US$63.4/bbl in June 2023
Average forecast production for the year to December 2022 of 3,173 bopd and for the six months to June 2023 of
3,133 bopd with production being maintained by RCPs, WOs and swabbing activities and no new drilling;
No SPT incurred on the onshore assets in 2022, as the SPT threshold for small onshore operators was increased
from US$50 to US$75.0/bbl for 2022;
Annual Report & Financial Statements 2021
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•
Trinity continuing to progress various growth and business development opportunities; and derivative instruments
in place to protect a portion of cashflows against declining oil prices over the forecast period.
As at the current date, Management considers this is a reasonable base scenario, reflecting the outlook of the current
production profile and costs. As oil prices have trended upwards our base scenario will continue to be strengthened.
The cash flow forecast showed that the Group will remain in a strong financial position for at least the next twelve
months, and as such being able to meet its liabilities as they fall due.
Management has considered separate stressed scenarios including:
•
•
the effect of reductions in oil prices as low as $40.0/bbl being sustained across the forecast period, noting that the
base case pricing is in line with market prices; and
the impact of temporary disruption from localised Covid 19 cases reducing forecast production by 10%, albeit
operations have continued uninterrupted to date and the nature of the operations reduces the risk of such an
eventuality.
All reasonably possible forecasts demonstrate that the Group’s cash balances are maintained under such scenarios and
being sufficient to meet the Group’s obligations as they fall due.
Based on the cash flow forecast, when combined with mitigating actions that are within the Group’s control and having
considered the potential impact of Covid 19 pandemic, together with the Government of Trinidad and Tobago’s
(“GORTT’s”) response to date, the Board currently believe the Group can maintain sufficient liquidity and a healthy
positive cash balance, and remain in operational existence, for at least the next twelve months.
On 24 February 2022, Russian forces invaded Ukraine, causing wide-ranging economic sanctions to be applied against
the Russian regime by the US, EU and other major economies. The event caused both Brent and WTI oil prices to soar,
peaking well above US$100 per bbl in March 2022. The increased oil prices have impacted the Group in several ways.
These include, positively impacted the Group’s crude oil revenue, negatively impacted derivative expenses, increased
inflationary impacts and some challenges with supply chain including higher freight costs and delays in receiving
shipments. Overall, whilst there has been no significant adverse impact to the Group, management continues to closely
monitor the event’s impact as it unfolds.
As a result, at the date of approval of the financial statements, the Board have a reasonable expectation that the Group
has sufficient and adequate resources to continue in existence for at least twelve months post approval of these financial
statements and is poised for continued growth as market conditions continue to improve. For this reason, the Board
have concluded it is appropriate to continue to adopt the going concern basis of accounting in the preparation of the
consolidated and company financial statements.
Changes in accounting policies
(a) New standards, interpretations and amendments adopted from 1 January 2021:
New standards impacting the Group that have been adopted in the annual financial statements for the year ended
31 December 2021 are:
•
•
Covid 19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)
On 31 March 2021, the IASB issued another amendment to IFRS 16: Covid-19-Related Rent Concessions beyond
30 June 2021, which extended the above practical expedient to reductions in lease payments that were
originally due on or before 30 June 2022. This amendment is effective for annual periods beginning on or after
1 April 2021 with earlier application permitted.
Interest Rate Benchmark Reform – IBOR ‘phase 2’ (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The amendments provide relief to Group in respect of certain loans whose contractual terms are affected by
interest benchmark reform.
The application of these standards has had no impact on the disclosures, or the amounts recognised in the Group’s
consolidated financial statements.
(b) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the
IASB that are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments will become effective for the period beginning 1 January 2022 (and, in the case of IFRS
17, 1 January 2023):
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
•
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
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Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
1 Background and Summary of significant accounting policies (continued)
•
•
•
•
•
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
References to Conceptual Framework (Amendments to IFRS 3). Disclosure of Accounting Policies
(Amendments to IAS 1 and IFRS Practice Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8);
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12); and
IFRS 17 Insurance Contracts (effective 1 January 2023) - In June 2020, the IASB issued amendments to IFRS 17,
including a deferral of its effective date to 1 January 2023.
While no formal assessment has been performed, the Group does not expect any other standards issued by the
IASB, but not yet effective, to have a material impact on the Group.
Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the subsidiaries listed in Note 12. The
financial information incorporates the financial information of the Group made up to 31 December each year. Control is
achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the
Consolidated Statement of Comprehensive Income from the effective date of acquisition and up to the effective date
of disposal, as appropriate.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of
an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any
non-controlling interest. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,
the difference is recognised directly in the Statement of Comprehensive Income. Costs related to an acquisition are
expensed as incurred.
Uniform accounting policies have been adopted across the Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
Share-based payments
The Group operates a number of equity-settled, share-based compensation plans comprised of Share Options and
Long-Term Incentive Plans (“LTIPs”) as consideration for services rendered by the Group’s employees. The fair value of
the services received in exchange for the grant of share-based payments is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the options or LTIP awards granted:
•
•
•
including any market performance conditions (for example, an entity’s share price);
excluding the impact of any service and non-market performance vesting conditions; and
including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in assumptions about the number of share-based
payments that are expected to vest. The total expense is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the Group revises its estimates of the number of options or LTIP awards that are
expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original
estimates, if any, in the Consolidated Statement of Comprehensive Income, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and share premium.
The grant by the Company of options and LTIPs over its equity instruments to the employees of subsidiary undertakings
in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference
to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings,
with a corresponding credit to equity.
Employee Benefit Trust
On 15 November 2021, the Group established The Trinity Exploration and Production plc Employee Benefit Trust, which
is consolidated in accordance with the principles in Note 1 – Basis of consolidation. When the options are exercised,
trust transfers the appropriate number of shares to the employee. The proceeds received, net of any directly attributable
transaction costs, are credited directly to equity.
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Foreign currency translation
(a) Functional and presentation currency
Company: The functional and presentation currency of the Company is United States Dollars (“USD” or “$”).
Group:
The functional currencies of the Group operating entities are Trinidad & Tobago Dollars (“TTD”) and
USD as these are the currencies of the primary economic environment in which the entities operate.
The presentation currency is USD which better reflects the Group’s business activities and improves
the ability of users of the consolidated financial statements to compare financial results with others in
the international Oil and Gas industry. The Consolidated Statement of Financial Position is translated at
the closing rate and Consolidated Statement of Comprehensive Income is translated at the average
rate from both USD and Great British Pound (“GBP” or “£”) currencies. The following exchange rates
have been used in the preparation of these financial statements:
Average rate TTD= $/£
Closing rate TTD= $/£
(b) Transactions and balances
$
6.765
6.763
2021
£
9.006
9.151
$
6.758
6.761
2020
£
8.646
9.213
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transactions. FX gains/losses resulting from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally
recognised in the consolidated Statement of Comprehensive Income. They are deferred in equity if they relate to
qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment
in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and
liabilities such as equities held at fair value through profit or loss are recognised in the consolidated Statement of
Comprehensive Income as part of the fair value gain or loss and translation differences on non-monetary assets.
(c) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
•
•
•
assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at
the date of that Consolidated Statement of Financial Position
income and expenses for each Statement of Comprehensive Income are translated at average exchange rates
(unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the dates of the transactions), and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
(d) Translation differences
Differences arising from retranslation of the financial statements at the year-end are recognised in the Translation
reserve through “Other comprehensive income”.
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Notes to the Consolidated Financial Statements (continued)
1 Background and Summary of significant accounting policies (continued)
Intangible assets
(a) Exploration and Evaluation (“E&E”) assets
i)
Capitalisation
E&E assets are initially classified as intangible assets. Such costs include those directly associated with an
exploration area. E&E assets are reclassified from E&E when evaluation procedures have been completed
including technical feasibility and commercial viability. E&E assets for which commercially viable reserves
have been identified are reclassified to development assets (refer to E&E expenditure below).
Oil and natural gas E&E expenditures are accounted for using the successful efforts method of accounting.
Under this method, costs are accumulated on a prospect-by-prospect basis and capitalised upon discovery
of commercially viable mineral reserves. If the commercial viability is not achieved or achievable, such costs
are charged to expense.
Costs incurred in the E&E of assets includes:
•
Licence and property acquisition costs
Exploration and property leasehold acquisition costs are capitalised within E&E assets.
•
E&E expenditure
Costs directly associated with an exploration well are capitalised until the determination of reserves is
evaluated. Such costs include topographical, geological, geochemical, and geophysical studies, exploratory
drilling costs, trenching, sampling and activities in relation to evaluating the technical feasibility and
commercial viability of extracting mineral resources. Capitalisation is made within property, plant and
equipment or intangible assets according to its nature, however, a majority of such expenditure is
capitalised as an intangible asset. If commercial reserves are found, the costs continue to be carried as an
asset. If commercial reserves are not found, E&E expenditures are written off as a dry hole when that
determination is made.
Once commercial reserves are found, E&E assets are tested for impairment and transferred to
development tangible and intangible assets as applicable. No depreciation and/or amortisation are charged
during the E&E phase.
ii)
Impairment
E&E assets are tested for impairment (in accordance with the criteria set out in IFRS 6: Exploration for and
Evaluation of Mineral Resources) whenever facts and circumstances indicate impairment. An impairment
loss is recognised for the amount by which the E&E assets’ carrying amount exceed their recoverable
amount. The recoverable amount is the higher of the E&E assets’ Fair Value Less Costs of Disposal
(“FVLCD”) and their Value In Use (“VIU”). For the purposes of assessing impairment, the E&E assets subject
to testing are grouped with existing Cash Generating Units (“CGU”) of related production fields located in
the same geographical region. The geographical region is the same as that used for reserves reporting
purposes.
The following indicators are evaluated to determine whether these assets should be tested for impairment:
•
The period for which the Group has the right to explore in the specific area has lapsed.
• Whether substantive expenditure on further E&E in the specific area is budgeted or planned.
• Whether E&E in the specific area have not led to the discovery of commercially viable quantities and
the Company has decided to discontinue such activities in the specific area; and/or
• Whether sufficient data exists to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the E&E asset is unlikely to be recovered in full from successful
development or by sale.
(b) Computer software
Computer software is initially recognised at cost, once it is purchased. Internally generated software is
capitalised once it is proven technological feasibility, probable future benefits, intent and ability to use the
software, resources to complete the software, and ability to measure cost. It is amortised over its four-year
useful life, based on pattern of benefits (straight-line is the default) and charge recognised under DD&A.
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Property, plant and equipment
(a) Oil & Gas Assets
i)
Development and Producing Assets – Capitalisation
Development expenditures are costs incurred to obtain access to proven reserves and to provide facilities
for extracting, treating, gathering and storing the oil and gas. These costs include transfers from E&Es
subsequent to finding commercially viable reserves, development drilling and new reserve type,
infrastructure costs and development Geological and Geophysical (“G&G”) costs.
Transactions involving the purchases of an individual field interest, or a group of field interests, that at a
minimum includes an input and a substantive process that together significantly contribute to the ability
to create output are classified as a business acquisition. The acquisition method of accounting is used to
account for all business combinations. Alternatively, if these transactions do not meet this definition of a
business combination they are classified as asset acquisitions. Assets are recognised at its fair value and
subsequently depreciated over its useful life or reduced using the unit of production method.
Proceeds on disposal are applied to the carrying amount of the specific asset or development and
production assets disposed of. Any excess is recorded as a gain on disposal in the Consolidated Statement
of Comprehensive Income and any shortfall between the proceeds and the carrying amount is recorded
as a loss on disposal in the Consolidated Statement of Comprehensive Income.
Development expenditure on the construction, installation or completion of infrastructure facilities such
as platforms, pipelines and the drilling of development commercially proven wells is capitalised according
to its nature. When development is completed on a specific field it is transferred to Production Assets. No
depreciation and/or amortisation are charged during the development phase.
Expenditure on G&G surveys used to locate and identify properties with the potential to produce
commercial quantities of oil and gas as well as to determine the optimal location for development wells
are capitalised.
ii) Development and Producing Assets – Impairment
An impairment test is performed whenever events and circumstances arising during the development or
production phase indicate that the carrying value of a development or production asset may exceed its
recoverable amount. Impairment triggers include but are not limited to, declining long term market prices
for oil and gas, significant downward reserve revisions, increased regulations or fiscal changes, market
capitalisation being below net assets, deteriorating local conditions (such that it become unsafe to continue
operations) and obsolescence.
The carrying value is compared against the expected recoverable amount. The recoverable amount is the
higher of an asset’s FVLCD and the VIU. For the purposes of assessing impairment, assets are grouped at
the lowest levels (its CGU) for which there are separately identifiable cash flows. The CGU applied for
impairment test purposes is generally the field. These fields are the same as that used for reserves
reporting purposes.
iii) Producing Assets – DD&A
The provision for DD&A of developed and producing Oil & Gas Assets are calculated using the unit-of-
production method. Oil & Gas Assets are depreciated generally on a field-by-field basis using the unit-of-
production method which is the ratio of oil and gas production in the period to the estimated quantities of
commercial reserves at the end of the period plus the production in the period. Costs used in the unit of
production calculation comprise the net book value of capitalised costs plus the estimated future
development costs. Changes in the estimates of commercial reserves or future development costs are
dealt with prospectively.
iv) Decommissioning asset
Provision for decommissioning is recognised in accordance with the contractual obligations at the
commencement of oil and gas production. The amount recognised is the net present value of the estimated
cost of decommissioning at the end of the economic producing lives of the wells and the end of the useful
lives of refinery and storage units. Such costs include removal of equipment and restoration of land or
seabed. The unwinding of the discount on the provision is included in the Consolidated Statement of
Comprehensive Income within finance costs.
A corresponding asset is also created at an amount equal to the provision. This is subsequently depleted
as part of the capital costs of the production assets. Any change in the present value of the estimated
expenditure or discount rates are reflected as an adjustment to the provision and the asset and dealt with
prospectively.
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Notes to the Consolidated Financial Statements (continued)
1 Background and Summary of significant accounting policies (continued)
Property, plant and equipment (continued)
(b) Non-Oil & Gas Assets
All property, plant and equipment are recorded at historical cost less accumulated depreciation and any
impairment losses. Historical cost includes the original purchase price of the asset and expenditure that is
directly attributable to bringing the asset to its working condition for its intended use. Subsequent costs are
included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably.
The provision for depreciation with respect to operations other than oil and gas producing activities is
computed using the straight-line method based on estimated useful lives as follows:
Leasehold and buildings
Plant and equipment
Other
20 years
4 years
4 years
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at each Statement of
Financial Position date. An asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals
are determined by comparing proceeds with carrying amounts and are included in the Consolidated Statement
of Comprehensive Income.
Repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the
financial period in which they are incurred. The cost of major renovations is included in the carrying amount of
the asset when it is probable that future economic benefits in excess of the originally assessed standard of
performance of the existing assets will flow to the Group. Major renovations such as leasehold improvements
are depreciated over the remaining useful life of the related asset.
Impairment of non-financial assets
At each reporting date, assets that are subject to amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s FVLCD and VIU. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (CGUs). Non-financial assets that suffered impairment are reviewed for
possible reversal of the impairment at each reporting date.
Inventories
Crude oil is stated at the lower of cost and net realisable value. Cost is determined by the average cost method. Net
realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
Materials and supplies used mainly in drilling wells, RCPs and WOs are stated at lower of cost and net realisable value.
Cost is determined using the weighted average cost method.
Cash and Cash equivalents
For the purpose of presentation in the Consolidated Statement of Cash Flows, Cash and Cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Trade receivables
Trade receivables are amounts due from customers for crude oil sold in the ordinary course of business. They are
generally due for settlement within thirty days and therefore are all classified as current. Trade receivables are
recognised initially at the amount of consideration that is unconditional unless they contain significant financing
components, when they are recognised at fair value.
The Group applies the simplified approach to determine impairment of trade receivables. The simplified approach
requires expected lifetime losses to be recognised from initial recognition of the receivables. This involves determining
the expected loss rates using a provision matrix that is based on the historical default rates observed over the expected
life of the receivable and adjusted forward-looking estimates. This is then applied to the gross carrying amount of the
receivable to arrive at the lost allowance for the period.
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Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Impairment of Financial Assets
The financial assets within the Group are subject to the Expected Credit Losses (“ECL”) model. However, the Group
applies the ECL model to trade receivables for sales of inventory and from the provision of consulting services as well
as Intercompany receivables. While Cash and Cash equivalents are also subject to the impairment requirements of IFRS
9, the identified impairment loss was immaterial.
(i) Trade receivables
The Group applies the IFRS 9 simplified approach to measuring ECL which uses a lifetime expected loss allowance
for all trade receivables.
Financial assets recognition of impairment provisions under IFRS 9 is based on the ECL model. The ECL model is
applicable to financial assets classified at amortised cost and contract assets under IFRS 15: Revenue from Contracts
with Customers. The measurement of ECL reflects an unbiased and probability weighted amount that is available
without undue cost or effort at the reporting date, about past events, current conditions and forecasts of future
economic conditions. The Group applied the simplified approach to determine impairment of its trade and other
receivables. The simplified approach requires expected lifetime losses to be recognised from initial recognition of
the receivables. This involves determining the expected loss rates using a provision matrix that is based on the
Group’s historical default rates observed over the expected life of the receivables and adjusted forward looking
estimates. This is then applied to the gross carrying amount of the receivables to arrive at the loss allowance for
the period.
(ii)
Intercompany receivables
The Company applies IFRS 9 through the recognition of ECL for intercompany. Intercompany positions eliminate in
the consolidated financial statements. In measurement of the ECL, IFRS 9 notes that the maximum period over
which expected impairment losses is measured is the longest contractual period where the Company is exposed
to credit risk. The three stage general impairment model was used, Probability of Default (“PD”) x Loss Given Default
(“LGD”) x Exposure at Default (“EAD”). Measurement of the ECL at a probability-weighted amount that reflects the
possibility of a credit loss occurs, and the possibility that no credit loss occurs and even if the possibility of a credit
loss occurring is low.
Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in DTA and DTL attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, DTL are
not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time
of the transaction affects neither accounting nor taxable profit/loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
DTA are recognised only if it is probable that future taxable amounts will be available to utilise those temporary
differences and losses.
DTL and DTA are not recognised for temporary differences between the carrying amount and tax bases of investments
in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the foreseeable future.
DTA and DTL are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
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Notes to the Consolidated Financial Statements (continued)
1 Background and Summary of significant accounting policies (continued)
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Property Tax (“PT”)
PT had been recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method. Assessments were based on the Annual Rental Value (“ARV”) of property. The Annual Taxable Value (“ATV”)
is the ARV subject to deductions and allowances in respect of voids and loss of rent multiplied by the respective PT
rate. The PT rates applicable to the Group were industrial with building rates at 6% and industrial without building rates
at 3%.
Where PT accrued for past years is considered unlikely to be charged and paid, the accrual is reversed in the current
year. Refer to note 3 (f) for further details.
Revenue recognition
IFRS 15 Revenue from Contracts with Customers requires that revenue is recognised by performance obligation, as or
when each performance obligation is satisfied, and that variable elements of pricing are recognised and to the extent
that it is not highly probable they will be reversed.
The Group has evaluated its customer contract with the Heritage Petroleum Company Limited (“Heritage”), to identify
the performance obligations, the timing of the revenue recognition and the treatment of variable elements of pricing.
Sales revenue represents the sales value of the Group’s oil sold in the year.
Revenue associated with the sale of crude oil is measured based on the consideration specified in contracts with
customers.
Revenue is recognised when control is transferred from the Group to its customer and the Group has the present right
to payment. The transfer of control of crude oil coincides with title passing to the customer and the customer taking
physical possession. Typically, payment for the sale of the oil is received by the end of the month following the month
in which the sale is recognised.
Prices are based on prices determined by Heritage, with agreed contractual adjustments for quality. Revenue is
measured at the fair value of the consideration received or receivable, and represents amounts receivable for oil and
gas products in the normal course of business.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
where it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the
amount of the obligation can be made. Provisions are not recognised for future operating losses. Where there are a
number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one
item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognised as a finance cost.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a duration of 12 months or less.
Lease liabilities were measured at the present value of the contractual payments due to the lessor over the lease term,
with the discount rate determined by reference to the group’s incremental borrowing rate. The lease payments are
discounted using the Group’s incremental borrowing rate, being the rate that the Group would have to pay to borrow
the funds necessary to obtain an asset of similar value to the ROU asset in a similar economic environment with similar
terms, security and conditions. To determine the incremental borrowing rate, Trinity received an indicative third party
lending rate from Central Bank of Trinidad and Tobago.
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Right of use assets were initially measured at the amount of the lease liability. Subsequent to initial measurement lease
liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for
lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.
The lease term can be described as the non-cancellable period of the lease plus periods covered by an option to extend
or an option to terminate if the lessee is reasonably certain to exercise the extension option or not exercise the
termination option.
In 2021 the Group revised its estimates due to an addition of two new leased vehicles in December 2021. As a result,
there was a revision to the carrying amount of the lease liability to reflect the payments to be made over the revised
term, which was discounted using the same incremental rate. Equivalent adjustment is made to the carrying value of
the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.
Share capital
Ordinary shares are classified as equity. The nominal value of any shares issued is recognised in share capital with the
excess above the nominal amount paid being shown within share premium.
Incremental costs directly attributable to the issue of new ordinary shares are shown in equity. Where, on issuing shares,
share premium has been recognised, the expenses of issuing those shares and any commission paid on the issue of
those shares have been written off against the share premium account.
Derivative financial Instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group has not applied hedge accounting and all oil price derivative financial instruments (categorised as Derivative
Income/(Expenses)) are measured at fair value through profit and loss.
Financial assets at fair value through profit or loss are classified in this category if acquired principally for the purpose
of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges.
Assets in this category are classified as current assets if expected to be settled within twelve months, otherwise they
are classified as non-current. Financial assets are derecognised when the rights to the cash flows expire, risks and
rewards are transferred or control of the asset is transferred.
A financial liability is removed from the Statement of Financial Position only when it is extinguished; that is, when the
obligation specified in the contract is discharged, cancelled or expired.
Investments
Investments are shown at cost less provision for any impairment in value. The Company performs impairment reviews
in respect of investments whenever events or changes in circumstances indicate that the carrying amount of the
investment may not be recoverable. An impairment loss is recognised when the higher of the investment’s net realisable
value and fair value less cost of disposal is less than the carrying amount.
Exceptional Items
Exceptional items are disclosed separately in the consolidated financial statements where it is necessary to do so to
provide further understanding of the financial performance of the Group. They are distinct from routine operations which
are material items of income or expense that have been shown separately due to the non-recurring nature and in the
significance of their nature or amount.
Royalty expense
Royalty expense is recognized on an accrual basis in accordance with the substance of the relevant agreement. There
are two types of royalties incurred, government royalties and overriding royalties in accordance with the various
agreements held and are calculated based on the percentage rate multiplied by the barrels of oil produced. Government
royalties are paid to the Government of Trinidad and Tobago on a quarterly and monthly basis based on the terms of
the various agreements.
102
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
2 Financial Risk Management
Financial risk factors
The Group’s activities expose it to a variety of financial risks. The Group’s overall Risk Management program seeks to
minimise potential adverse effects on the Group’s financial performance.
Management is responsible for Group Risk Management and for identifying and evaluating financial risks.
(a) Market risk
(i)
Foreign currency (“FX”) risk
The Group is exposed to FX risk primarily with respect to the United States dollar. FX risk arises from future
commercial transactions and recognised assets and liabilities which are denominated in a currency that is not
the entity’s functional currency.
Foreign currency sensitivity
The Group is mainly exposed to the currency fluctuations of the US dollar. The sensitivity analysis principally
arises on FX gain/loss on translation of the USD denominated receivables. The following table details the
Group’s sensitivity to a 10% (2020: 10%) increase and decrease in the functional currency (TT Dollar) of the
main operating subsidiary against the US Dollar with all other variables held constant. 10% (2020: 10%) is the
sensitivity rate that best represents Management’s assessment of the possible change in the foreign exchange
rates affecting the Group. A positive number below indicates an increase in profit and equity when the US
dollar weakens against the functional currency. For a strengthening of the US Dollar against the functional
currency, there would be an equal and opposite impact on the profit and equity, and the balances below would
be negative.
Profit/(loss) for the year and Equity
10% strengthening of the US Dollar/ (2020: 10%)
10% weakening of the US Dollar/ (2020: 10%)
(ii) Price risk
2021
$’000
2020
$’000
(247)
247
(168)
168
The Group is exposed to commodity price risk regarding its sales of crude oil which is an internationally traded
commodity.
Price risk sensitivity
The Group is a price taker and is mainly exposed to the risk relating to price fluctuations. The following table
details the Group’s sensitivity to a 20% (2020: 20%) increase and decrease in realised oil prices. 20% (2020
20%) is the sensitivity rate that best represents Management’s assessment of the possible change in the oil
prices that may affect the group. A positive number below indicates an increase in revenue, while there would
be an equal and opposite impact on revenue if there is a decrease in prices by 20%.
Revenue
20% increase in price/ (2020: 20%)
20% decrease in price/ (2020: 20%)
2021
$’000
2020
$’000
13,168
(13,168)
11,702
(11,702)
The Group implemented hedge options during the financial year, the purpose of which is to offer protection in
the event of oil prices declining significantly.
(iii) Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from borrowings which expose the Group to cash flow interest rate
risk. The Group manages risk by limiting the exposure to floating interest rates and maintaining a balance
between floating and fixed contract rates.
At 31 December 2021, there were no loan commitments to attract interest rates on foreign currency-
denominated borrowings, (2020: nil). During 2021 there was a bank overdraft facility which incurred $0.1 million
interest (2020: $0.1 million).
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(b) Credit risk
Credit risk arises from Cash and Cash equivalents, deposits with banks and financial institutions, as well as credit
exposures to customers, including outstanding receivables. For banks and financial institutions, Management
determines the placement of funds based on its judgement, experience and the institution’s credit rating to
minimise risk.
Our financial institutions credit rating in Trinidad and the UK are BBB- and A+ respectively. (Standards and Poor
2021)
All sales are made to a state-owned entity Heritage.
The Group applies an IFRS 9 simplified model for measuring the ECL which uses a lifetime expected loss
allowance and are measured on the days past due criterion. Having reviewed past payments combined with
the credit profile of its existing trade debtors in order to assess the potential for impairment, Management
made the decision in keeping with the standard to calculate a provision for long outstanding receivables
associated with the Petrotrin outstanding ORR incentive receipts. The ECL for those sales were assessed at
the end of the year and was immaterial. A provision matrix was applied to determine the historical and forward-
looking loss rates which was used to ultimately calculate an ECL allowance, which resulted in a provision being
made of $0.01 million.
For the Heritage sales, the ECL was immaterial as all sales payments were made during the stipulated time
frame. However, ECL was also calculated on Joint interest billings outstanding, which resulted in a provision of
$0.1 million (2020: $0.9 million). Consequently, there was a net reversal of $0.8 million in the current period to
reflect the decrease in the impairment provision. Similar to sales, a provision matrix was applied to determine
the historical and forward-looking loss rates which was used to ultimately calculate an ECL allowance.
The Company also assessed impairment through the three-stage approach to derive at the ECL. Through
assessing impairment via this method, a provision amount of $0.1 million (2020: $0.1 million) was calculated.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and short-term funds and the availability
of funding through an adequate amount of committed credit facilities. Management monitors rolling forecasts
of the Group’s liquidity and Cash and Cash equivalents on the basis of expected cash flow. At the end of the
year the Group held cash at bank of $18.3 million (2020: $20.2 million).
Management monitors rolling forecasts of the Group’s Cash and Cash equivalents on the basis of expected
cash flows. This is carried out at the Group level in accordance with practice and limits set by the Group, refer
to the disclosures in Note 1: Background and accounting policies – Going Concern for more information
regarding the factors considered by the Company in managing liquidity risk.
The table below analyses the Group’s and Company’s financial liabilities into relevant maturity groupings based
on their contractual maturities for:
(a) All non-derivative financial liabilities, and
(b) Net and gross settled derivative financial instruments for which the contractual maturities are essential for
an understanding of the timing of the cash flows.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities.
Group
At 31 December 2021
Non-derivatives
Trade and other payables
Bank overdraft
Lease liabilities
Less than 1 year
$'000
1 to 2 years
$'000
2 to 5 years
$'000
Total
$'000
8,814
2,700
609
12,123
–
–
50
50
–
–
47
47
8,814
2,700
706
12,220
At 31 December 2020
$'000
$'000
$'000
$'000
Non-derivatives
Trade and other payables
Bank overdraft
Lease liabilities
7,803
2,700
614
11,117
–
–
442
442
–
–
7,803
2,700
23 1,079
23
11,582
104
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
2 Financial Risk Management (continued)
Company
At 31 December 2021
Non-derivatives
Trade and other payables
Intercompany
At 31 December 2020
Non-derivatives
Trade and other payables
(d) Capital risk
Less than 1 year
$'000
327
781
1,108
Total
$'000
327
781
1,108
$'000
$'000
481
481
481
481
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce
debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as Net Cash/(Debt) divided by Total Capital. Net Cash/(Debt) is calculated as total borrowings less
Cash and Cash equivalents. Borrowing relates to the overdraft facility where all covenants (current ratio not
less than 1.25:1) were met. Total capital is calculated as ‘equity’ as shown in the Consolidated Statement Of
Financial position plus Net Debt/(Net Cash).
Net cash
Total equity
Total capital
Gearing ratio
(e) Fair value estimation
2021
$’000
(15,612)
56,921
2020
$’000
(17,537)
48,552
41,309
31,015
(37.8)% (56.5)%
The Group and Company have classified financial instruments into the three levels prescribed under the
accounting standards.
•
•
•
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives,
and equity securities) is based on quoted market prices at the end of the reporting period. The quoted
market price used for financial assets held by the Group is the current bid price. These instruments are
included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-
the-counter derivatives) is determined using valuation techniques which maximise the use of observable
market data and rely as little as possible on entity-specific estimates. If all significant inputs required to
fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted equity securities. See Note 21 for details.
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3. Critical Accounting Estimates and Judgements
The preparation of the consolidated financial statements requires the use of accounting estimates which, by definition,
seldom equal the actual results. Management also exercise judgement in applying the Group’s and the Company’s
accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below:
(a) Recoverability of DTA
DTA mainly arise from tax losses and are recognised only to the extent it is considered probable that those assets
will be recoverable. This involves an assessment of when those DTA are likely to reverse, and a judgement as to
whether or not there will be sufficient taxable profits available to offset the tax assets when they do reverse. This
requires assumptions regarding future profitability to be made by Management which are based on key estimates
of future cost, production volumes and price and are therefore inherently uncertain. To the extent assumptions
regarding future profitability change, there can be an increase or decrease in the level of DTA recognised which
can result in a charge or credit during the period in which the change occurs. The Group has concluded that the
DTA recognised will be recoverable within three years using approved business plans and budgets for the specific
subsidiaries in which the DTA arose. See note 18.
(b) Provision for decommissioning costs
This provision is significantly affected by changes in technology, laws and regulations which may affect the actual
cost and timing of decommissioning to be incurred at a future date. The estimate is also impacted by the discount
rates used in the provisioning calculations. The discount rates used are the Group’s risk-free rate and the core
inflation rate applicable. The provision has been estimated using a rate based on maturity and a core inflation rate.
See Note 27: Provision for other liabilities.
Risk free rates
Inflation rate
Bands (years)
2021
2020
8-12
13-18
19-25
1.80%
1.96%
2.20%
2.40%
3.14%
3.17%
2.42%
2.00%
The following table details the Group’s sensitivity to a 1% (2020: 1%) increase and decrease in discount and inflation
rates. 1% (2020: 1%) is the sensitivity rate that best represents Management’s assessment of the possible change
in the rates that may affect the Group. A positive number below indicates an increase in provisions and finance
costs, while a negative number indicates a decrease in provisions and finance costs. The impact in 2021 of a 1%
change in these variables is as follows:
Discount rate
1% increase in assumed rate
1% decrease in assumed rate
Inflation rate
1% increase in assumed rate
1% decrease in assumed rate
Consolidated
Statement of
Financial Position:
Obligation
2021
$’000
Consolidated
Statement of
Comprehensive:
Income/Expense
2021
$’000
(8,917)
10,963
10,813
(8,973)
262
(412)
225
(186)
106
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
3. Critical Accounting Estimates and Judgements (continued)
(c) Estimation of reserves
All reserve estimates involve some degree of uncertainty, which depends chiefly on the amount of reliable geological
and engineering data available at the time of the estimate. Generally, reserve estimates are revised as additional
data becomes available. The Group’s reserve estimates are also evaluated when required by independent external
reserve evaluators. The last independent external reserve valuation was done in 2012. Since 2012 up to and including
2021 the Group estimated its own commercial reserves, guided by international Petroleum Resource Management
System (PRMS) application guidelines, based on technical information compiled by appropriately qualified persons
relating to the geological and technical data on the size, depth, shape and grade of the hydrocarbon body and
suitable production techniques and recovery rates.
The key assumptions used in the estimation of reserves are as follows:
•
•
Technical production profiles for the various assets onshore and offshore held by the Group.
Economic assumptions such as forecast period, discount rate, crude price, operating cost, capital expenditure
and fiscal structure.
As the economic assumptions used may change, and as additional geological information is obtained during the
operation of a field, estimates of recoverable reserves may also change. Such changes may impact the Group’s
reported financial position and results, which include:
•
•
•
•
The carrying value of E&E assets, oil and gas properties, property and plant and equipment, may be affected
due to changes in estimated future cash flows. See notes 13 and 15.
Depreciation and amortisation charges in the Statement of Comprehensive Income are applied on a unit of
production basis at a rate calculated by reference to proved and probable (“2P”) reserve estimates and
incorporating the estimated future cost of developing and extracting those reserves. There may be changes
where such charges are determined using the unit of production method, or where the useful life of the related
assets change. See notes 13 and 15.
Provisions for decommissioning may change - where changes to the reserve estimates affect expectations
about when such activities will occur and the associated cost of these activities. See note 27.
The recognition and carrying value of DTA may change due to changes in the judgements regarding the
existence of such assets and in estimates of the likely recovery of such assets. See note 18.
As at 31 December 2021 all subsidiaries onshore and offshore 2P reserve estimates were re-evaluated by the EMT
and approved by the Board.
(d) Impairment of Property, Plant And Equipment
Management performs impairment assessments on the Group’s property, plant and equipment once there are
indicators of impairment. Triggers for impairment relates to changes in the key factors that impact on impairment
which are production, oil price, capital expenditures and operating expenditures. In order to test for impairment,
the higher of FVLCD and VIU calculations are prepared and an estimate of the timing and amount of cash flows
expected respectively to arise from the CGU. A CGU represents an individual field or asset held by the Group.
During 2021 an impairment charge of $0.1 million was recognised on the Group’s property, plant and equipment
(2020: $1.1 million) see Note 13. The impairment charge resulted in the carrying amount of the respective CGUs
being written down to their recoverable amount.
Oil & Gas Assets $0.1 million (2020: $1.1 million) impairment
Management has carried out an impairment test on the Oil & Gas Assets classified as property, plant and equipment.
This test compares the carrying value of the assets at the reporting date with the recoverable amount for each
CGU. The recoverable amount is the higher of the FVLCD and VIU. The FVLCD is the amount that a market
participant would pay for the CGU less the cost of disposal. The FVLCD approach utilised a discounted cash flow
based on the 2P reserve estimates of the CGUs of the Group. VIU is the present value of the future cash flows
expected to be derived from an asset or CGU in its current condition. The period over which Management has
projected its cash flow forecast, ranges between 9-24 year economic lives based on the field economic life profile.
The field economic life profile was derived by using licence extension data which is permitted in accordance with
the Society of Petroleum Engineers (“SPE”) reserves reporting guidelines outlined in the 2019 Petroleum Resource
Management System (“PRMS”). While there is the risk that licences may not be renewed upon expiry, Management
considers this to be very low based on historic precedent. For the discounted cash flows to be calculated,
Management has used a production profile based on its best estimate of proven and probable reserves of each
CGU and a range of assumptions, including an external oil and gas price profile and a discount rate which, taking
into account other assumptions used in the calculation, Management considers to be reflective of the risks. The
impairment calculation considers the decommissioning asset and liability used to derive the impairment charge.
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The discounted cash flow approach assessment involves judgement as to the likely commerciality of the asset. For
the discounted cash flows to be calculated, Management has used a production profile based on its 2P reserve
estimate of the assets and a range of assumptions (see note 3(c)). Its 2P reserves which are estimated using
standard recognised evaluation techniques on a fully funded basis; future revenues and estimated development
costs and decommissioning liabilities pertaining to the CGU’s; and a discount rate utilised for the purposes of
deriving a recoverable value.
2022
2023
2024
2025
2026
2027
Realised price
65.0
61.0
58.6
57.0
56.1
55.5
If the price deck used in the impairment calculation had been 10% lower than Management’s estimates at 31
December 2021, the Group would have a $0.6 million increase on impairment of Oil & Gas Assets (2020: $1.0 million
increase). If the price deck used in the impairment calculation had been 10% higher than Management’s estimates
at 31 December 2021, the Group would have a $0.1 million decrease on impairment of the Oil & Gas Assets (2020:
$0.6 million decrease). The valuation is considered to be a level 3 in the fair value hierarchy due to unobservable
inputs used in the valuation.
For the year ended 31 December 2021, Management’s estimate of the Group’s cost of capital was 13% (2020:12%).
If the estimated cost of capital used in determining the post-tax discount rate for the CGU’s had been 1% lower
than Management’s estimates the Group would have no change to the impairment position for 2021 (2020: $0.2
million decrease) against Oil & Gas Assets within property, plant and equipment. If the estimated cost of capital had
been 1% higher than Management’s estimates the Group would no change to the impairment position for 2021
(2020: $0.2 million increase).
(e) Impairment of intangible E&E assets
In estimating the recoverability of exploration assets, Management considers contingent resources associated with
certain evaluation assets as estimated by the Group’s internal experts. Furthermore, Management factors in future
development plans and licence expiries into the assessment. Exploration assets remain capitalised as long as
sufficient progress is being made in assessing whether petroleum production is technically feasible and commercially
viable. This assessment requires significant Management judgement, as exploration assets are subject to regular
internal review to confirm the continued intent to establish the technical feasibility and commercial viability of a
project. At the end of 2021 a review for impairment triggers was carried out and there were no impairment losses
realised against the carrying values of the Group’s E&E assets.
The Group reviews the carrying values of intangible E&E assets when there are impairment indicators which would
tell whether an E&E asset has suffered any impairment. The amounts of intangible E&E assets represent the costs
of active projects the commerciality of which is unevaluated until reserves can be appraised.
(f) Property tax reversal of the prior period liability
PT is assessed on property owned by the Group in Trinidad and Tobago governed by the Property Tax Act 2009
and later Property Tax 2018 amendment of Trinidad and Tobago. The calculation of PT is described in note 1
Background and Summary of significant accounting policies.
At the end of 2020 PT accrued for the period 2018 to 2020 within Trade and Other Payables was $1.5 million (2020:
$1.0 million). PT has been accrued using the guidance provided by the legislation noted above, as the administration
arrangements of the PT under the valuation of land act is not in place and the actual method for calculating PT is
therefore unavailable.
The Property Tax Act and subsequent Amendment to the Act requires the Board of Inland Revenue to issue a
Notice of Assessment on or before 31 March in each year. To date, none has been issued for any of the years 2018
to 2020 (nor for 2021). Based on public pronouncements the intention was to complete the assessment for
residential properties by 2021 after which other categories can be assessed. Given the passage of time, it is remote
that retroactive application will be implemented despite waivers being issued by the government for periods 2010-
2017 but not for the period 2018-2021. Whilst there remains some ambiguity within the interpretation of the law,
Industry practice within Trinidad means that it is appropriate to reverse the accrual.
The Group has considered whether a contingent liability exists, however given the judgement is that the law does
not allow for retroactive application there is no liability arising from a past event. A liability will arise when the
valuation roll has been completed and the Notice of Assessment given. The Group will continue to monitor
developments in the Property tax law and reassess this at each reporting period.
As such, the Group has agreed reverse the PT accruals previously recognized ($1.5 million) for 2018 to 2020 and
not recognize any PT liability for the year ended 31 December 2021.
108
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
(g) PS-4 Asset Acquisition
The Group completed the acquisition of the Block on 1 December 2021. IFRS 3 Business Combination, requires an
assessment to be performed to determine whether the acquisition should be accounted for as a business
combination or asset acquisition. To be considered a business acquisition, an acquired set must include an input
and a substantive process that together significantly contribute to the creation of an output otherwise the
acquisition is considered an asset acquisition. An assessment was performed and concluded that although the
acquisition contains outputs, the vast majority of its value resides in the proved undeveloped reserves which does
not contain any material input or output. As such, it was concluded the acquisition did not meet the requirements
to be classified as a business combination and as such the acquisition was treated as an asset acquisition.
(h) Share based payments
The Company has in place a share-based compensation plan (the LTIP) for Executive Directors and the EMT which
is designed to provide long term incentives to align interests with shareholders. The Company measures the cost
of these equity-settled transactions by reference to the fair value of the equity instruments at the date at which
they are granted. The fair value of share-based payments is measured using a Monte Carlo or Black-Scholes option
pricing model. The measurement inputs to this model, including expected volatility, weighted average expected life
of the instruments, expected dividends and risk-free interest rate, rely on Management judgements. See note 24
for details.
4 Segment Information
Management has determined the operating segments which are Onshore, West Coast and East Coast which are
reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker is responsible for making strategic decisions inclusive of; allocating resources and assessing
performance of the operating segments. The chief operating decision maker has been identified as the EMT (which now
comprises the Chief Executive Officer, Finance Director, Chief Operations Officer and Chief of Staff & General Counsel),
which makes strategic decisions in accordance with Board policy.
Management have considered the requirements of IFRS 8 Operating Segments, in regard to the determination of
operating segments, and concluded that the Group has only one significant operating segment being the exploration
and development, production and extraction of hydrocarbons.
All revenue is generated from crude oil sales in T&T to one customer, Heritage. All non-current assets of the Group are
located in T&T.
5 Operating Profit Before Impairment, Covid-19 expenses and Exceptional Items
Operating profit before impairment, Covid-19 expenses and exceptional
items is stated after taking the following items into account:
DD&A (Note 13)
Depreciation on ROU (Note 14)
Amortisation of computer software (Note 15)
Employee costs (Note 34)
Inventory recognised as expense, charged to operating expenses
2021
$’000
2020
$’000
6,756
505
166
9,707
322
7,566
502
106
7,587
330
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Auditors’ remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s
Auditors as detailed below:
- Fees payable to the Company’s auditors’ and their affiliated firms for the audit
of the parent Company and consolidated financial statements:
BDO LLP (UK based)
BDO Limited (T&T and Barbados based)
- Fees payable to the Company’s auditors’ for other services:
The audit of Company’s subsidiaries
Audit related assurance services – interim review
Total assurance and auditors’ remuneration
Professional services:
Tax advice
2021
$’000
2020
$’000
161
84
16
32
293
136
84
13
29
262
2021
$’000
2020
$’000
1
–
All fees in 2021 are in respect of services provided by BDO LLP and their affiliated firms. The independence and
objectivity of the external auditors are considered on a regular basis by the Audit Committee, with particular regard to
the level of non-audit fees incurred. The professional fees relates to tax services rendered for advice on tax losses.
6 Derivative (expenses)/income
The net (loss)/ gain in fair value is recognised in the Consolidated Statement of Comprehensive Income during the year:
Net derivative (expense)/income (realised)
FV of derivative financial instruments (unrealised)
31 December
2021
$’000
31 December
2020
$’000
(1,293)
(3,149)
(4,442)
1,302
266
1,568
110
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
7 Exceptional Items and Covid-19 expenses
Exceptional items:
Items that are material either because of their size, their nature, or that are non-recurring are considered as exceptional
items and are presented within the line items to which they best relate. During the current period, exceptional items as
detailed below have been included in the Consolidated Statement of Comprehensive Income. An analysis of the amounts
presented as exceptional items in these consolidated financial statements are highlighted below.
Reversal of Impairment on equipment
Fees relating to corporate restructuring advice
Exceptional Expense/(Income)
Exceptional items 2021:
2021
$’000
–
113
113
2020
$’000
(126)
83
(43)
•
Fees relating to corporate restructuring advice: $0.1 million charge in relation to professional advice on the capital
reorganisation
Covid-19 expenses:
Covid-19 expense
2021
$’000
669
669
2020
$’000
–
–
•
Covid-19 expense: $0.7 million charge in relation to Covid-19 costs incurred by the Group during 2021. Covid-19
expense of $0.1 million was previously recognised in General and Administration expense in the 2020 comparative.
8 Impairment
Impairment of Inventory
Impairment of property, plant and equipment
Impairment expense
31 December
2021
$’000
31 December
2020
$’000
1,220
96
1,316
–
1,218
1,218
•
•
Impairment of inventory – $1.2 million charge in relation to inventory impairment. During the year Management
engaged certified persons to conduct a review of high value slow moving inventory items which resulted in the
above impairment. In 2020 there was no impairment on inventory items.
Impairment of property, plant and equipment - $0.1 million charge in relation to property, plant and equipment. In
2020 and 2021 the impairment of property, plant and equipment related to charges for impairment losses on cash
generating units (refer to Note 3(d)).
Annual Report & Financial Statements 2021
9 Finance income and costs
Recognised in the Consolidated Statement of Comprehensive Income
Finance income
Interest Income
Finance costs
Decommissioning – Unwinding of discount (Note 27)
Interest on Leases (Note 14)
Interest and other expenses on overdraft
10 Income Taxation
Current tax
Petroleum profits tax
Unemployment levy
Deferred Tax
Current year
Movement in asset due to tax losses (recognised)/derecognised (Note 18)
Movement in liability due to accelerated tax depreciation (Note 18)
Income tax (credit)/ expense
111
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Governance
l Financial Accounts
Glossary
Company Information
2021
$’000
2020
$’000
94
108
2021
$’000
2020
$’000
(1,222)
(101)
(152)
(1,475)
2021
$’000
982
393
(1,221)
(140)
(55)
(1,416)
2020
$’000
817
333
(5,533)
(586)
3,365
(1,577)
(4,744)
2,938
The Group’s effective tax rate varies from the statutory rate for UK companies of 19% (2020:19%) as a result of the
differences shown below:
Profit before taxation
Tax calculated at domestic tax rates applicable to profits in the respective countries
Expenses not deductible for tax purposes
Impact on tax losses
Deferred tax on capital allowances in the current period recognised
Tax losses previously generated now recognised in the current period
Other reconciling differences
2021
$’000
2,982
3,441
9,037
(2,595)
(9,087)
(5,533)
(7)
2020
$’000
103
741
2,163
(2,187)
(1,389)
3,365
245
Tax (credit)/ charge
(4,744)
2,938
Corporate income tax is calculated at 19% (2020: 19%) of the assessable profit for the year for the UK parent company,
55% for the operating subsidiaries in Trinidad and Tobago (2020: 55%) and 30% (2020: 30%) for the corporate
subsidiaries in Trinidad and Tobago.
Taxation losses at 31 December 2021 available for set off against future taxable profits amounts to approximately $234.6
million (2020: $237.2 million), with tax losses generated of $7.4 million (2020: $1.7 million and tax losses utilised
$10.0 million (2020: $5.2 million) during the year. These losses do not have an expiry date and have not yet been
confirmed by the Board of Inland Revenue (“BIR”) and the Her Majesty's Revenue and Customs (“HMRC”). Tax losses
carried forward by companies engaged in the petroleum production business in Trinidad and Tobago are restricted to
set off in a year of income 75% of the otherwise chargeable profits.
112
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
11 Earnings Per Share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary Shareholders by the weighted
average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated using the
weighted average number of ordinary shares adjusted to assume the conversion of all potentially dilutive ordinary
shares.
Year ended 31 December 2021
Basic
Diluted
Year ended 31 December 2020
Basic*
Diluted*
Weighted
Average
Number Of
Shares
’000’
38,879
42,260
Profit/(loss)
$’000
7,726
7,726
Earnings
Per
Share $
0.20
0.18
(2,835)
(2,835)
38,623
38,623
(0.07)
(0.07)
Impact of dilutive ordinary shares:
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The awards issued under the Company’s LTIP (see
movements in number of LTIPs note 24) are considered potential ordinary shares. Share Options of 1,975,084 are
considered potential ordinary shares and have not been included as the exercise hurdle would not have been met.
* Restatement
Comparative figures have been recalculated to conform with changes in presentation in the current year. The comparative figures were recalculated to show
the impact on EPS resulting from the share consolidation which reduced the number of ordinary shares from 388,794,303 to 38,879,430 (refer to note 23).
The impact of the restatement is summarised below:
Year ended 31 December 2020
Basic (restated)
Diluted (restated)
Basic
Diluted
Weighted
Average
Number Of
Shares
’000’
38,623
38,623
386,233
386,233
Profit/(loss)
$’000
(2,835)
(2,835)
(2,835)
(2,835)
Earnings
Per
Share $
(0.07)
(0.07)
(0.01)
(0.01)
12 Investment In Subsidiaries
Company
Opening balance
Share based payment reserve revision
Share based payment
Closing balance
2021
$’000
60,021
(121)
447
2020
$’000
59,306
–
715
60,347
60,021
The investment in subsidiaries is recognised initially at the fair value of the consideration paid. The Group subsequently
measures the investment in subsidiaries at cost less impairments. Increases in the investment in subsidiaries relate to
capital contributed by the Company to its subsidiary undertakings. In addition there was a revision to the Share based
payment reserves as it relates to employees that no longer work for the Group.
Annual Report & Financial Statements 2021
113
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l Financial Accounts
Glossary
Company Information
Listing of Subsidiaries
The Group’s subsidiaries at 31 December 2021 are listed below:
Name
Bayfield Energy Limited
Registered Address/
Country of Incorporation
c/o Pinsent Masons LLP,
1 Park Row, Leeds,
LS1 5AB, UK
Nature of Business
Holding Company
% Shares held
by the Group
99.99998%
Holding Company
100%
Trinity Exploration &
Production (UK) Limited
13 Queen’s Road, Aberdeen,
AB15 4YL, UK
Holding Company
Trinity Exploration and
Production Services (UK)
Limited
c/o Pinsent Masons LLP,
1 Park Row, Leeds,
LS1 5AB, UK
Service Company
Bayfield Energy do Brasil Ltda
Av. Presidente Vargas 509,
Rio de Janeiro, 20071-003,
Brazil
Dormant
Holding Company
Trinity Exploration & Production
(Barbados) Limited
Trinity Exploration and
Production (Trinidad and
Tobago) Limited
Ground Floor,
One Welches, Welches,
St. Thomas BB22025,
Barbados
3rd Floor Southern
Supplies Limited Building,
40-44 Sutton Street,
San Fernando, Trinidad
& Tobago
(“Trinidad address”)
Trinity Exploration and
Production (Galeota) Limited
Trinidad address
Oil and Gas
Oilbelt Services Limited
Trinidad address
Oil and Gas
Trinity Exploration and
Production Services Limited
Trinidad address
Service Company
Trinity Midstream Limited
Trinidad address
Trinidad address
Oil and Gas
Oil and Gas
Trinity Exploration and
Production (Erin 1) Limited
Trinity Exploration and
Production (Erin 2) Limited
Trinity Exploration and
Production (Forest 1) Limited
Trinity Exploration and
Production (Forest 2) Limited
Trinity Exploration and
Production (Forest 3) Limited
Trinity Renewable
Resources Limited
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinity Exploration and
Production plc Employee
Benefit Trust
c/o Pinsent Masons LLP,
1 Park Row, Leeds,
LS1 5AB, UK
Employee Benefit Trust
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
114
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
13 Property, Plant and Equipment
Year ended 31 December 2021
Opening net book amount at 1 January 2021
Additions
Adjustment to decommissioning
estimate (Note 27)
Impairment charge 1
DD&A charge for year
Translation differences
Closing net book amount
at 31 December 2021
At 31 December 2021
Cost
Accumulated DD&A and impairment
Plant &
Equipment
$'000
Leasehold
& Buildings
$'000
2,028
1,328
–
–
(437)
–
1,481
74
–
–
(167)
–
Oil &
Gas Assets
$'000
34,247
8,794
8,407
(96)
(6,153)
1
2,919
1,388
45,200
Other
$'000
–
–
–
–
–
–
–
Total
$'000
37,756
10,196
8,407
(96)
(6,757)
1
49,507
16,222
(13,303)
3,412
(2,024)
318,058
(272,858)
336
(336)
338,028
(288,521)
Closing net book amount
2,919
1,388
45,200
–
49,507
Year ended 31 December 2020
Opening net book amount at 1 January 2020
Disposals
Additions
Adjustment to decommissioning
estimate (Note 27)
Impairment reversal equipment
Impairment charge 1
DD&A charge for year
Closing net book amount
at 31 December 2020
At 31 December 2020
Cost
Accumulated DD&A and impairment
Plant &
Equipment
$'000
Leasehold
& Buildings
$'000
Oil &
Gas Assets
$'000
Other
$'000
1,141
–
1,124
–
126
(116)
(247)
1,652
(2)
(16)
–
–
–
(153)
39,587
–
2,983
(152)
–
(1,005)
(7,166)
2,028
1,481
34,247
–
–
–
–
–
–
–
–
Total
$'000
42,380
(2)
4,091
(152)
126
(1,121)
(7,566)
37,756
14,894
(12,866)
3,338
(1,857)
300,857
(266,610)
336
(336)
319,425
(281,669)
Closing net book amount
2,028
1,481
34,247
–
37,756
1 An impairment loss of $0.1 million (2020: $1.1 million) was recognised on Oil & Gas Assets (see Note 3 (d)) as a result of the carrying value being higher than
the recoverable amount. The recoverable amount was determined by assessing its fair value less costs of disposal.
Annual Report & Financial Statements 2021
115
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l Financial Accounts
Glossary
Company Information
14 Leases
The Group has recognised ROU assets and lease liabilities.
(i) Amounts recognised in the Consolidated Statement of Financial Position
The Consolidated Statement of Financial Position shows the following amounts relating to leases:
Right-of-use assets
Non-current assets
Lease Liabilities
Current
Non-current
31 December
2021
$’000
31 December
2020
$’000
616
1,014
609
97
706
614
465
1,079
The ROU assets relate to motor vehicles, office building, rental property and office equipment leases that met the
recognition criteria of a lease under IFRS 16.
(ii) Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:
Depreciation charge of ROU assets
Included in DD&A – ROU Depreciation
Interest expense (including finance cost)
2021
$’000
(505)
(101)
2020
$’000
(502)
(140)
The total cash outflow for leases in 2021 was $0.6 million (2020: $0.6 million)
(iii) The Group’s leasing activities and how these are accounted for
The Group leases various offices, equipment, staff housing and vehicles. Rental contracts are typically made for
fixed periods of 6 months to 4 years.
Contracts may contain both lease and non-lease components. There were no non-lease components identified and
as such the Group allocates the consideration in the contract to a single lease component based on their relative
stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held
by the lessor. Leased assets may not be used as security for borrowing purposes.
116
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
15 Intangible Assets
The carrying amounts and changes in the year are as follows:
Year ended 31 December 2021
Opening net book amount at 1 January 2021
Additions
Amortisation charge for year
Closing net book amount at 31 December 2021
At 31 December 2021
Cost
Accumulated amortisation
Closing net book amount
Year ended 31 December 2020
Opening net book amount at 1 January 2020
Additions
Amortisation charge for year
Closing net book amount at 31 December 2020
At 31 December 2020
Cost
Accumulated amortisation
Closing net book amount
Exploration and
Evaluation assets
$'000
Computer
software
$'000
Research and
Development
$'000
27,042
3,175
–
30,217
30,217
–
30,217
307
355
(166)
496
877
(381)
496
–
46
–
46
46
–
46
Exploration and
Evaluation assets
$'000
Computer
software
$'000
Total
$'000
27,349
3,576
(166)
30,759
31,140
(381)
30,759
Total
$'000
26,255
1,200
(106)
25,987
1,055
-
27,042
27,042
-
268
145
(106)
307
27,349
520
(213)
27,562
(213)
27,042
307
27,349
•
•
•
E&E assets: Represents the cost of the TGAL 1 exploration well and further Galeota E&E costs. The Group tests
whether E&E assets have suffered any impairment triggers on an annual basis and there were no impairment triggers
identified in 2021 (2020: nil).
In November 2021, the Group received approval for the Field Development Plan (FDP) for the Galeota Asset
Development (GAD) from the MEEI. This approval confirmed the technical feasibility of the asset. To date, the Group
is in the process of determining a funding plan to achieve commercial viability. As such, the Galeota E&E asset
continues to be classified as an E&E asset until both the technical feasibility and commercial viability requirements
are met.
Computer Software: In 2021, costs incurred in connection with the acquisition of software.
Research and Development: In 2021, costs incurred in connection with various initiatives reducing carbon emissions.
16 Abandonment fund
At 1 January
Additions
At 31 December
2021
$’000
3,490
531
4,021
2020
$’000
3,378
112
3,490
Abandonment funds are restricted cash put aside in escrow for abandonment and environmental purposes in
accordance with contractual obligations to be used in accordance with the contract.
Annual Report & Financial Statements 2021
17 Performance bond
At 1 January and 31 December
117
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Governance
l Financial Accounts
Glossary
Company Information
2021
$’000
473
2020
$’000
253
In June 2021 the Group’s Lease Operatorship Assets (“LOA”) licences were renewed with Heritage for ten years effective
1 January 2021 with the exception of the Fyzabad (FZ-2) licence which was extended for two years effective 1 January
2021. New Performance Bonds for each of the LOA were put in place totalling $0.47 million at a bond fee of 1.75%
executed with First Citizens Bank Trinidad and Tobago Limited and effective until 31 December 2030. These funds have
been restricted to fixed deposits for the period of the respective LOA licences at varying rates of interest.
18 Deferred Income Taxation
Group
The analysis of DTA is as follows:
DTA:
-DTA to be recovered in more than 12 months
-DTA to be recovered in less than 12 months
DTL:
-DTL to be settled in more than 12 months
Net DTA
The movement on the deferred income tax is as follows:
At beginning of year
Movement for the year
Unwinding of deferred tax on fair value uplift
Net DTA
The deferred tax balances are analysed below:
DTA
Acquisition
Tax losses recognised
Tax losses derecognised
DTL
Accelerated tax depreciation and
non-current asset impairment
Acquisitions
Fair value uplift
2021
$’000
2020
$’000
(5,130) (4,447)
(6,400) (1,550)
2,025
2,611
(9,505)
(3,386)
2021
$’000
(3,386)
(6,041)
(78)
2020
$’000
(5,174)
1,879
(91)
(9,505)
(3,386)
2019
$’000
Movement
$’000
2020
$’000
Movement
$’000
2021
$’000
(33,436)
(39,476)
63,550
(9,362)
–
–
3,365
3,365
(33,436)
(39,476)
66,915
–
–
(5,533)
(33,436)
(39,476)
61,382
(5,997)
(5,533)
(11,530)
2019
$’000
Movement
$’000
2020
$’000
Movement
$’000
2021
$’000
(17,380)
19,580
1,988
4,188
(1,487)
–
(90)
(1,577)
(18,867)
19,580
1,898
2,611
(508)
–
(78)
(586)
(19,375)
19,580
1,820
2,025
118
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
18 Deferred Income Taxation (continued)
DTA are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future
taxable profits are probable. A DTA of $5.5 million have been recognised during 2021 (2020: $3.4 million was
derecognised) based on future taxable profits. The Group has unrecognised deferred tax assets amounting to $94.3
million which have no expiry date.
DTL have decreased by $0.6 million as the temporary difference between the accounting values of property, plant and
equipment and intangible assets and tax values decreased compared to 2020 year end
•
•
DTA and DTL can only be offset in the Consolidated Statement of Financial Position if an entity has a legal right to
settle current tax amounts on a net basis and Deferred Tax amounts are levied by the same tax authority (as per
IAS 12).
Tax losses – At the end of 2021 the Group had gross tax losses carried forward of $234.6 million (2020: $237.2
million) represented by corporate tax losses in the UK of $23.7 million (2020: $16.6 million) and PPT and Corporate
tax losses in Trinidad and Tobago of $210.9 million (2020: $220.6 million). In the UK corporation tax losses may be
carried forward indefinitely. Similarly, in Trinidad and Tobago PPT and corporate tax losses may be carried forward
indefinitely to reduce the taxes in future years. However, as of 1 January 2020, PPT losses can only be utilised to
shelter a maximum of 75 percent of PPT per annum.
19 Inventories
At 1 January 2021
Impairment (see note 8)
Net inventory movement
At 31 December 2021
At 1 January 2020
Impairment
Net inventory movement
At 31 December 2020
Crude oil
$’000
Materials
and supplies
$’000
67
–
29
96
89
–
(22)
67
5,200
(1,220)
(256)
3,724
5,054
–
146
5,200
Total
$’000
5,267
(1,220)
(227)
3,820
5,143
–
124
5,267
(i) Assigning costs to inventories
The costs of individual items of inventory within the category material and supplies are determined using weighted
average costs. The cost assigned for crude oil is based on the lower of cost and net realisable value. In the current
year there was a total of $1.2 million of impairment of inventory items.
20 Trade and Other Receivables
Due within 1 year
Amounts due from related parties (Note 30 (d))
Trade receivables
Less: provision for impairment of trade
and intercompany receivables
Trade receivables – net
Prepayments
VAT recoverable
Other receivables
Less: provision for Impairment of other receivables
2021
$’000
–
4,641
(6)
4,635
895
4,550
767
(100)
10,747
Group
Company
2020
$’000
–
3,357
(6)
3,351
862
2,467
1,413
(854)
7,239
2021
$’000
3,372
–
2020
$’000
4,418
–
–
(100)
3,372
175
25
–
–
3,572
4,318
149
125
150
–
4,742
Annual Report & Financial Statements 2021
119
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l Financial Accounts
Glossary
Company Information
All trade receivables are with the Group’s only customer, Heritage. Ageing analysis of these trade receivables as at 31
December 2021 is as follows:
Up to 30 days
>60 days
>180 days
2021
$’000
4,495
–
140
4,635
2020
$’000
3,211
–
140
3,351
The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
USD
GBP
TTD
Group
Company
2021
$’000
3,292
169
7,286
10,747
2020
$’000
4,567
191
2,481
7,239
2021
$’000
3,416
156
–
3,572
2020
$’000
4,589
252
–
4,841
The maximum exposure to credit risk at the reporting date is the value of each class of receivable as shown above. The
Group does not hold any collateral as security.
The credit quality of the financial assets that are neither past due nor impaired can be assessed by reference to historical
information about the counterparty default rates:
Trade receivables
Counterparties without external credit rating:
Existing customers with no defaults in the past
Group
Company
2021
$’000
2020
$’000
2021
$’000
2020
$’000
10,747
7,239
–
–
The fair value of trade and other receivables approximate their carrying amounts.
The Group applies the IFRS 9 simplified model for measuring expected credit losses (“ECL”) using a lifetime expected
loss provision for trade and other receivables. The expected loss rates are based on the Group’s historical credit losses
experienced over a period prior to the period end. The historical loss rates are then adjusted for current and forward-
looking information on key macroeconomic factors affecting the Group’s customer including GDP, foreign exchange
rates, crude oil prices and inflation rates. In calculating an ECL, two default loss rates are established; default loss rate
1 which is calculated through the ageing profiles of sales, and default loss rate 2 which is default loss rate 1 adjusted
based on forward looking information.
Having reviewed past payment performance combined with the credit rating of Heritage (and its predecessor, Petrotrin),
a Provision matrix was completed to calculate a potential impairment on the receivable balances. Trade receivables that
are less than six months past due are not considered impaired and at 31 December 2021, trade receivables of $4.6
million (2020: $3.4 million) were therefore considered to be fully performing.
At the end of 2021 a total of $0.1 million was outstanding from Petrotrin (2020: $0.1 million). An ECL of $0.0 million was
applied to the outstanding $0.1 million receivables amount due from Petrotrin.
In June 2021 Trinity renewed its Galeota Block Joint Operating Agreement (JOA) with Heritage. In addition, Heritage
and Trinity formed a new agreement to convert Heritage’s participating interest in the Galeota Block into an Overriding
Royalty with Trinity now having 100% interest in the Galeota Block. Previously, Trinity invested 100% of the funds in
capital expenditure towards the Galeota Asset Development and rebilled Heritage’s share (via Joint Interest Billings
(JIBs)). As at 14 July 2021 all JIBs receivable relating to the Galeota Block was reclassified as capital expenditure. The
total amounts converted from JIBs to E&E expenditure as at 14 July 2021 was $2.2 million which consisted of JIBs
receivable of $1.4 million (2020: $1 million) and reversal of ECL $0.8 million (2020 ECL: $0.8 million).
For other Joint Interest Billing receivable amounts from Heritage, an ECL of $0.1 million (2020: $0.9 million) was
calculated.
120
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
21 Derivative financial assets
Derivative financial assets
The following table compares the carrying amounts and fair values of the Group’s financial assets and financial liabilities
as at 31 December 2021.
Derivative asset
Total
31 December
2021
$’000
31 December
2020
$’000
–
–
266
266
The Group considers that the carrying amount of the following financial assets and financial liabilities are a reasonable
approximation of their fair value:
•
•
•
Trade receivables
Trade payables
Cash and cash equivalents
Fair Value Hierarchy
The level in the fair value hierarchy within which the derivative financial asset is categorised is determined on the basis
of the lowest level input that is significant to the fair value measurement.
The derivative financial assets are classified in their entirety into only one of the three levels.
The fair value hierarchy has the following level:
•
•
•
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 2 recurring fair value measurements:
Opening balance
Opening derivative instrument realised
Closing balance
Derivative financial liabilities
Derivative liabilities
Total
As at 31 December
2021
$'000
266
(266)
–
31 December
2021
$’000
31 December
2020
$’000
2,883
2,883
–
–
On 31 December 2021 the crude derivative contracts were valued using a Mark to Market report. The report provides
estimated forward looking values on the existing crude derivatives held at 31 December 2021.
Annual Report & Financial Statements 2021
22 Cash and Cash Equivalents
Short term investment
Cash and cash equivalents
121
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
Group
Company
2021
$’000
2,449
15,863
2020
$’000
4,055
16,182
18,312
20,237
2021
$’000
2,449
659
3,108
2020
$’000
4,055
262
4,317
Cash and Cash equivalents disclosed above and in the Consolidated Statement of Cash Flows exclude restricted cash
and are available for general use by the Group.
23 Share Capital and Share Premium
Group
As at 1 January 2021
Share reduction and cancellation of deferred shares
Capital reduction
2020 Share Issue – Nominal value 1
Number
of shares
483,594,288
(444,714,857)
–
–
Ordinary
shares
$'000
97,692
–
(97,308)
5
Share
premium
$'000
139,879
–
(139,879)
–
Total
$'000
237,571
–
(237,187)
5
As at 31 December 2021
38,879,431
389
–
389
During 2021 the Company undertook a Capital Reorganisation to enable the Company to pay dividends, or effect share
buybacks, when it is considered prudent to do so. This process comprised:
1.
2.
3.
a Consolidation of every 10 Existing Ordinary Shares into one Consolidated Ordinary Share
an immediate Sub-Division of each of those Consolidated Ordinary Shares into one New Ordinary Share and one
New Deferred Share; and
a Capital Reduction by way of both the cancellation of the Existing Deferred Shares and the New Deferred Shares
and the cancellation of the Company's Share Premium Account.
• On 18 June 2021 the Share Consolidation and Sub-Division reduced the high number of existing Ordinary Shares
in issue and the Sub-Division retained the nominal value of $0.01 each per New Ordinary Share, which is same
as the previous nominal value of each of the existing Ordinary Shares.
• On 14 July 2021 the Capital Reduction effectively cancelled the entire Share Premium Account of the Company
as well as the Existing Deferred Shares and new Deferred Shares created following the Share Consolidation
and Sub-Division.
•
•
The Capital Reorganisation was completed on 14 July 2021 subsequent to the UK Court approval of the Capital
Reduction.
Following the Capital Reduction, the issued ordinary share capital of the Company stood at 38,879,431 ordinary
shares of $0.01 each, with no Ordinary Shares held in treasury. The total number of voting rights in the
Company also remains at 38,879,431.
1
In 2020, 4,745,057 shares (pre-consolidation) were issued at nil value to certain employees who exercised options that vested in respect to one off LTIP
awards made in 2017. In 2021 the nominal value of these shares, being US$0.05 million, were paid to the Company and as part of the Capital Reduction,
$0.05 million was transferred to retained earnings and the remaining US$0.0 million was treated as share capital.
122
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
24 Share Based Payment Reserve
The share-based payments reserve is used to recognise:
•
•
•
•
The grant date fair value of options issued to employees but not exercised
The grant date fair value of share awards issued to employees
The grant date fair value of deferred share awards granted to employees but not yet vested; and
The issue of shares held by the Employee Share Trust to employees.
During 2021 the Group had in place share-based payment arrangements for its employees and Executive Directors, the
LTIP. The Share Option Plan referenced below is fully vested and expensed. The current year charge for share based
payments are solely in relation to the LTIP arrangements shown below, with further details of each scheme following:
At 1 January
Capital Reduction
Share based payment expense:
LTIP exercised
LTIP expense
At 31 December
Share Option Plan
2021
$’000
14,764
(11,485)
–
505
2020
$’000
14,328
–
(527)
963
3,784
14,764
Share Options were granted to Executive Directors and to selected employees. The exercise price of the granted option
was equal to Management’s best estimate of the fair value of the shares at the time of the award of the options. The
Group has no legal or constructive obligation to repurchase or settle the options in cash. These Share Options were
fully vested in 2015 and 2016 with nil exercised and expire in 2022 and 2023. The table below gives details:
Grant-Vest
2012-2015
2013-2016
Expiry
Date
2022
2023
Exercise
price per
Share Option
GBP 8.60
GBP 12.00
2021
Number of
Options
168,554
28,954
197,508
Exercise
price per
Share Option
GBP8.60
GBP12.00
2020
Number of
Share Options
168,554
28,954
197,508
The inputs into the Black-Scholes model for options granted in prior periods were as follows:
Grant date
Grant date
Share price
Average Exercise price
Expected volatility
Risk-free rates
Expected dividend yields
Vesting period
LTIP
29 May 2013
14 February 2013
29 May 2013
GBP 11.90
GBP 12.00
55%
4.5%
0%
3 years
14 February 2013
GBP 12.00
GBP 8.90
78%
4.5%
0%
3 years
LTIP awards are designed to provide long-term incentives for the EMT to deliver long-term shareholder returns. Under
the plan, participants are granted options which only vest if certain performance conditions are met. Participation in the
plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to receive any
guaranteed benefits. The Options are exercisable at nil cost by the participants.
Annual Report & Financial Statements 2021
123
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Glossary
Company Information
2017 LTIPs
One off LTIP awards were granted in August 2017 over 2,541,600 ordinary shares and in June 2020 over a further
142,296 ordinary shares (the “2017 LTIP Awards”). The 2017 LTIP awards, which ordinarily vest on 30 June 2022, partially
vested on 30 June 2020 and 30 June 2021, subject to meeting performance targets relating to the following:
•
•
•
In respect of 70% of the award, the Company’s share price growth from the 2017 placing price of 49.8 pence per
share. If the three-month volume-weighted price (“VWAP”) at the testing date is 350 pence or more per share, this
part of the award will vest in full. If the VWAP at the testing date is 49.8 pence per share or less, this part of the
award will not vest at all. If the VWAP at the testing date is between 49.8 pence and 350 pence per share, this part
of the award will vest on a pro-rated straight-line basis;
In respect of 20% of the award, repayment of the amount due to the BIR in accordance with the terms of the
Creditors Proposal approved in 2017. The final payment occurred in 2018; and
In respect of 10% of the award, redemption of all the Convertible Loan Notes (“CLN”) issued in January 2017 before
the second anniversary of their issue. All of the CLNs were redeemed in 2018.
The total fair value of the 2017 LTIP Award is $2.6 million and will be expensed over the vesting period with the full
charge pro-rated over the period up to 30 June 2022. However, LTIP Award may vest in full or in part on 30 June 2020
or 2021 with the appropriate charge being taken over the vesting period. The fair value at grant date is independently
determined using an adjusted form of the Black Scholes Model which includes a Monte Carlo simulation model that takes
into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations
and volatilities of the peer group companies. The model inputs for LTIP Awards granted in 2017 were as follows:
Grant Date
Share price at grant date
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting period 1
Vesting period 2
Vesting period 3
2019 LTIPs
24 August 2017
30 June 2020
GBP 107.50p
GBP 0.00
73.3%
0.44%
0%
30 June 2020
30 June 2021
30 June 2022
GBP 79.00p
GBP 0.00
84.9%
(0.07%)
0%
–
–
30 June 2022
In January 2019 Options over 282,400 ordinary shares and in May 2019 Options over 383,282 ordinary shares were
granted under the LTIP in accordance with the policy announced to the market on 25 August 2017. The January 2019
LTIP awards vested on 1 January 2021, while the May 2019 awards will vest on 2 January 2022 subject to meeting the
performance criteria set out in the table below and continued employment with the Company.
Performance targets
January 2019
LTIPs
May 2019
LTIPs
Below the Median
None of the award will vest
None of the award will vest
Median (50th percentile)
30% of the maximum award will vest
30% of the maximum award
will vest
Between Median and
Upper Quartile
Straight-Line basis between
these points
Straight-Line basis between
these points
Upper Quartile (75%) and above
100% of the maximum award will vest
100% of the maximum award
will vest
The 2019 LTIP Awards are subject to the achievement of relative Total Shareholder Return ("TSR") performance targets
measured over a 3-year performance period ending on 1 January 2021 and 31 December 2021 respectively. The amounts
stated above represent the maximum possible opportunity.
124
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
24 Share Based Payment Reserve (continued)
The total fair value at grant date of the 2019 LTIP awards was $0.9 million and this will be expensed over the vesting
period with the full charge pro-rated over the vesting period. The fair value at grant date was determined using a Monte
Carlo simulation model that takes into account the exercise price, the term of the option, the share price at grant date
and expected price volatility of the underlying share, the expected dividend yield, the risk free interest rate for the term
of the option and the correlations and volatilities of the peer group companies. The model inputs for the 2019 LTIP
awards granted during the period ended 31 December 2019 were as follows:
Grant Dates
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting period
2020 LTIPs
January 2019 LTIPs
May 2019 LTIPs
2 January 2019
GBP167.7p
GBP0.00
113.9%
0.73%
0%
1 January 2021
9 May 2019
GBP146.6p
GBP0.00
113.9%
0.73%
0%
2 January 2022
On 25 June 2020 and 30 October 2020 Options over a total of 481,586 ordinary shares were granted under the LTIP in
accordance with the policy announced to the market on 25 August 2017 to members of the EMT in respect of the
performance of the Company in the financial year ended 31 December 2019. These LTIP awards will vest on 2 January
2023, subject to meeting the performance criteria set out in the table below and continued employment in the Company.
Performance
Vesting
Below the Median
None of the award will vest
Median (50th percentile)
30% of the maximum award will vest
Between Median and Upper Quartile Straight Line basis between these points
Upper Quartile (75%)
100% of the maximum award will vest.
Above the Upper Quartile
100% of the maximum award will vest
The LTIP Awards are subject to the achievement of relative Total Shareholder Return ("TSR") performance targets
measured over a three-year performance period ending on 31 December 2022. The amounts stated above represent
the maximum possible opportunity.
The total fair value at grant date of the 2020 LTIP awards was $0.4 million and this will be pro-rated and expensed over
the vesting period. The fair value at grant date was determined using a Monte Carlo simulation model that takes into
account the exercise price, the term of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations
and volatilities of the peer group companies. The model inputs for the 2020 LTIP awards granted during the period
were as follows:
Grant Dates
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
2021 LTIPs
June 2020 LTIPs
October 2020 LTIPs
25 June 2020
GBP79.00p
GBP0.00
84.9%
(0.07%)
0%
2 January 2023
30 October 2020
GBP77.00p
GBP0.00
84.9%
(0.07%)
0%
2 January 2023
On 13 August 2021, Options over a total of 325,000 ordinary shares were granted under the LTIP in accordance with a
revised LTIP scheme (the Revised LTIP”) to members of the EMT in respect of the performance of the Company in the
financial year ended 31 December 2020. These LTIP awards will vest on 1 January 2024, subject to meeting the
performance criteria set and continued employment in the Company.
Annual Report & Financial Statements 2021
125
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
The performance targets set for the 2021 Annual LTIP Awards will be measured considering both the Company's
absolute TSR performance and the Company's relative TSR performance over a three-year period, commencing 1
January 2021. TSR calculations will be determined by reference to the volume weighted three-month average price
prior to the start and end of the measurement period (with the starting average price adjusted for the Share
Consolidation). The three-month volume weighted average price at the start of the performance period for the 2021
Annual LTIP Award was 88p (adjusted for the Share Consolidation).
The performance targets provide that:
•
•
No portion of a distinct one-half of the 2021 Annual LTIP Award (the "Absolute TSR Part") may vest unless the
Company's compound annual growth rate of TSR over the performance period is at least 10% p.a., for which 30%
of the Absolute TSR Part may vest, rising on a straight line basis for full vesting of the Absolute TSR Part if the
Company's compound annual growth rate of TSR over the performance period equals or exceeds 25% p.a.
No portion of the other distinct one-half of the 2021 Annual LTIP Award (the "Relative TSR Part") may vest unless
the Company's TSR over the performance period ranks at least median relative to the TSR performance within a
comparator group of companies, for which 30% of the Relative TSR Part may vest, rising on a straight line basis for
full vesting of the Relative TSR Part if the Company's TSR over the performance period ranks upper quartile or
better relative to the TSR performance within a comparator group.
However, an underpin term applies to the Relative TSR Part which provides that, regardless of relative TSR performance,
no vesting may ordinarily accrue in respect of the Relative TSR Part unless the Company's compound annual growth
rate of TSR over the performance period is at least 10% per annum.
The total fair value at grant date of the 2020 LTIP awards was $0.7 million and this will be pro-rated and expensed over
the vesting period. The fair value at grant date was determined using a Monte Carlo simulation model that takes into
account the exercise price, the term of the option, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield, the risk-free interest rate for the term of the option and the correlations
and volatilities of the peer group companies. The model inputs for the 2021 LTIP awards granted during the period were
as follows:
Grant Date
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
August 2021 LTIPs
13 August 2021
GBP146.00p
GBP0.00
6.3%
(0.20%)
0%
1 January 2024
Movements in the number of LTIPs outstanding and their related weighted average exercise prices are as follows:
At 1 January
Forfeited
Granted 1
Exercised 2
At 31 December
2021
Average exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
2020
Average exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
Number of
Options
3,156,299
(100,000)
325,000
–
Number of
Options
3,178,982
(172,059)
623,882
(474,506)
GBP 0.00
3,381,299
GBP 0.00
3,156,299
1 Weighted average fair value of LTIPs granted GBP 0.70
2 Weighted average share price at the date of exercise GBP 0.80
LTIPs outstanding at the end of the year have the following expiry date and exercise prices:
Grant-Vest
24/8/2017 – 30/6/2022
2/1/2019 – 1/1/2021
9/5/2019 – 2/1/2022
25/6/2020 – 2/1/2023
13/8/2021 – 31/12/2023
Expiry date
24/8/2027
1/1/2023
2/1/2024
2/1/2025
2/1/2025
Exercise price
2021
2020
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
2,103,032
252,510
319,171
381,586
325,000
2,103,032
252,510
319,171
481,586
–
126
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
25 Merger and Reverse Acquisition Reserves
At 1 January 2021
Capital re-organisation/reduction
Translation differences
At 31 December 2021
At 1 January 2020
At 31 December 2020
Reverse
Acquisition
Reserve
$’000
(89,268)
–
–
(89,268)
Merger
Reserve
$’000
75,467
(75,467)
–
Total
$’000
(13,801)
(75,467)
–
–
(89,268)
(89,268)
75,467
(13,801)
(89,268)
75,467
(13,801)
The issue of shares by the Company as part of the reverse acquisition (February 2013) met the criteria for merger relief
such that no share premium was recorded. As allowed under the UK Companies Act 2006 and required by IAS 27
(‘Consolidated and separate financial statements’), a merger reserve equal to the difference between the fair value of
the shares acquired by the Company and the aggregation of the nominal value of the shares issued by the Company
has been recorded.
26 Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by the Group to measure business performance. It is calculated as
Operating Profit before SPT, PT, Impairment and Exceptional Items for the period, adjusted for DD&A, ILFA, SOE, FX
Gain/(Loss) and FV Derivative Instruments.
The Group presents Adjusted EBITDA as it is used in assessing the Group’s growth and operational performance as it
illustrates the underlying performance of the Group’s business by excluding items not considered by Management to
reflect the underlying operations of the Group.
Adjusted EBITDA is calculated as follows:
Operating Profit Before SPT, PT, Impairment and Exceptional Items
and Covid-19 expense
Covid-19 expense
DD&A (note 13 - 15)
ILFA (note 20)
SOE (note 24)
FX (loss)/gain
FV Derivative Instruments (note 6)
Adjusted EBITDA
Weighted average ordinary shares outstanding - basic
Weighted average ordinary shares outstanding - diluted
Adjusted EBITDA per share – basic (note 11)
Adjusted EBITDA per share - diluted (note 11)
2021
$’000
2020
$’000
10,019
(669)
7,428
(754)
626
14
3,149
2,965
–
8,174
252
963
(7)
(266)
19,813
12,081
$'000
$'000
38,879
41,969
38,623
41,780
$
$
0.51
0.47
0.31
0.29
Annual Report & Financial Statements 2021
127
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
Adjusted EBITDA after current taxes (the impact of SPT, PT and PPT/UL) is calculated as follows:
Adjusted EBITDA
SPT
PT
PPT/UL
Adjusted EBITDA After Current Taxes
Weighted average ordinary shares outstanding - basic
Weighted average ordinary shares outstanding - diluted
Adjusted EBITDA After Current Taxes per share - basic
Adjusted EBITDA After Current Taxes per share - diluted
* Restatement 2020 balance
2021
$’000
2020
$’000
19,813
(5,074)
1,516
(1,375)
12,081
153
(532)
(1,143)
14,880
10,559
'000
'000
38,879
41,969
38,623
41,780
$
0.38
0.35
$
0.27
0.25
Comparative figures have been recalculated to conform with changes in presentation in the current year. The
comparative figures were recalculated to show the impact on the Adjusted EBITDA per share resulting from the 10:1
share consolidation which reduced the number of ordinary shares from 388,794,303 to 38,879,430 (see note 23). The
impact of the restatement is summarised below:
Adjusted EBITDA
Adjusted EBITDA per share - basic
Adjusted EBITDA per share - diluted
Adjusted EBITDA after Current Taxes
Adjusted EBITDA after Current Taxes per share - basic
Adjusted EBITDA after Current Taxes per share - diluted
27 Provision for Other Liabilities
(a) Non-current:
Year ended 31 December 2021
Opening amount as at 1 January 2021
Unwinding of discount (Note 9)
Revision to estimates (Note 13)
Decommissioning contribution
Translation differences
Closing balance at 31 December 2021
Year ended 31 December 2020
Opening amount as at 1 January 2020
Unwinding of discount (Note 9)
Revision to estimates
Translation differences
Closing balance at 31 December 2020
31 December
2021
$
Restated
31 December
2020
$
Prior period
0.31
0.29
0.27
0.25
0.03
0.03
0.03
0.03
Decommissioning
provision
$’000
Closure
of pits 1
$’000
45,405
1,222
8,407
195
(9)
55,220
44,330
1,221
(152)
6
45,405
470
–
–
–
–
470
–
–
–
–
Total
$’000
45,875
1,222
8,407
195
(9)
55,690
44,330
1,221
(152)
6
45,405
128
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
27 Provision for Other Liabilities (continued)
Decommissioning cost
The Group operates Oil fields and this cost represents an estimate of the amounts required for abandonment of
the Group’s wells, platforms, gathering stations and pipeline infrastructures. The amounts are calculated based on
the provisions of existing contractual agreements with Heritage and MEEI. Furthermore, liabilities for
decommissioning costs are recognised when the Group has an obligation to dismantle and remove a facility or an
item of plant and to restore the site on which it is located, and when a reasonable estimate of that liability can be
made. An obligation for decommissioning may also crystallise during the period of operation of a facility through a
change in legislation or through a decision to terminate operations.
The amount recognised is the present value of the estimated future expenditure determined in accordance with
local conditions and requirements. A corresponding item of property, plant and equipment of an amount equivalent
to the provision is also created. This is subsequently depreciated as part of the capital costs of the facility or item
of plant. Any change in the present value of the estimated expenditure is reflected as an adjustment to the provision
and the corresponding property, plant and equipment. Some of the key assumptions made in the present value
decommissioning calculation include the following:
a. Core inflation rate – 2.40% (2020: 2.00%)
b. Risk free rate – 1.80% - 2.20% (2020: 2.42% - 3.17%)
c.
d.
Estimated market value/decommissioning cost
Estimated life of each asset
See Note 3(b): Critical Accounting Estimates and Assumptions for the rates used and sensitivity analysis.
1 There was a change in estimate whereby the Closure of pits provision was reclassified from current to non-current liabilities for the period to 31
December 2021 as management obtained new information in the current period estimating that the liability may extend beyond 12 months.
(b) Current:
Opening and Closing balance 2021
Opening and Closing balance at 2020
Litigation claims
Litigation claims
$’000
46
46
In 2021 there was a litigation settlement for $0.0 million and increase in the provisions for $0.0 million.
Closure of Pits
In 2020 there was a decrease in the provision of $0.0 million relating to the revision to remedy and closure of pits
associated with drilling new onshore wells. It is an environmental regulatory requirement set by the Environmental
Management Authority (“EMA”) that all open drill pits for onshore drilling must be closed after sufficient testing has
deemed it safe to close the pit. Testing period can last up to or over a year depending on the testing criteria.
28 Trade and Other Payables
Current
Trade payables
Accruals
Other payables
SPT & PT
Group
Company
2021
$’000
2,274
4,486
492
1,562
8,814
2020
$’000
2,024
3,793
471
1,515
7,803
2021
$’000
88
239
–
–
327
2020
$’000
130
351
–
–
481
Annual Report & Financial Statements 2021
29 Bank overdraft
Bank Overdraft
129
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
31 December
2021
$’000
Restated
31 December
2020
$’000
Prior period
2,700
2,700
2,700
2,700
In 2020, an on-demand operating (overdraft) line of $2.7 million was established with FirstCaribbean International Bank
(Trinidad & Tobago) Limited (“CIBC”). Details of the overdraft facility:
•
•
•
•
•
Description: Demand revolving credit
Interest Rate: United States dollar prime rate minus 4.05% per annum, effective rate 4.95%, floor rate of 3.95%.
Interest is payable monthly.
Repayment: Upon demand at CIBC’s discretion.
Debenture: Floating charge debenture, giving the lender a first ranking floating charge over inventory and trade
receivables only.
Covenant: Current Ratio not less than 1.25:1.
On 2 April 2020 the Company drew down the $2.7 million in full. For the year ended 31 December 2021, the credit limit
was increased to $5 million but no further amounts were drawn.
30 Related Party Transactions
Group
The following transactions were carried out with the Group’s subsidiaries and related parties. These transactions
comprise sales and purchases of goods and services and funding provided in the ordinary course of business during
the year. The following are the major transactions and balances with related parties:
(a) Transfers of funds from related parties
Company subsidiaries:
Trinity Exploration and Production Services
Trinity Exploration & Production (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Bayfield Energy Limited
Oilbelt Services Limited
Trinity Exploration and Production (Trinidad and Tobago) Limited
Galeota Oilfield Services Limited
Trinity Exploration and Production Services Limited (UK) Limited
Transfer of funds
(b) Transfer of funds to related parties
Company subsidiaries:
Trinity Exploration and Production Services
Bayfield Energy Limited
Trinity Exploration and Production Services Limited (UK) Limited
2021
$’000
856
8
659
19
1,659
393
–
30
73
Company
2020
$’000
–
10
26
61
170
–
3
899
–
3,697
1,169
Company
2021
$’000
2020
$’000
(70)
(100)
(2,063)
(2,233)
(473)
–
–-
(473)
Related party transactions comprise of the transfer of funds to and from related parties which are payable on
demand. Positive balances indicate increase in funds transferred to the entities, while negative balances indicate
repayment to entities.
130
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
30 Related Party Transactions (continued)
(c) Key Management and Directors’ compensation: Key Management includes Board (Executive & Non-Executive).
The compensation paid or payable to Key Management for employee services is shown below:
Salaries and short-term employee benefits
Post-employment benefits
Share-based payment expense
(d) Year-end balances arising from transfer to and from related parties
Receivables from related parties:
Trinity Exploration and Production Services Limited
Trinity Exploration & Production (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Bayfield Energy Limited
Oilbelt Services Limited
Galeota Oilfield Services Limited
Trinity Exploration and Production (Trinidad and Tobago) Limited
Trinity Exploration and Production Services (UK) Limited
Employee Benefit Trust (See note 1)
Total intercompany receivables (Note 20)
2021
$’000
1,337
27
305
1,669
2021
$’000
–
28
–
192
–
–
22
3,129
73
3,443
Group
2020
$’000
1,219
26
469
1,714
Company
2020
$’000
408
28
159
104
1,029
4
414
2,272
–
4,418
Less: provision for impairment of intercompany receivables
Closing intercompany receivables (Note 20)
(71)
3,372
(100)
4,318
Company
•
The receivables from related parties arise mainly from inter-group recharges. The receivables are unsecured and
bear no interest. An ECL provision was calculated $0.1 million (2020: 0.1 million).
Payables to related parties:
Trinity Exploration and Production Services Limited
Trinity Exploration and Production Services (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Oilbelt Services Limited
Total intercompany payables
Company
2021
$’000
2020
$’000
167
7
112
495
781
–
–
–
–
–
Annual Report & Financial Statements 2021
31 Taxation Payable
Taxation payable
PPT
UL
131
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
2021
$’000
–
–
–
2020
$’000
144
58
202
Trinidad and Tobago statutory petroleum profit tax (“PPT”) and unemployment levy (‘UL”) are a combined rate of 55%
of taxable income. PPT has a tax charge of 50%, while UL has a tax charge of 5% on taxable profits.
32 Financial Instruments by Category
At 31 December 2021 and 2020, the Group held the following financial assets at amortised cost:
Trade and other receivables – current*
Abandonment fund – non current
Intercompany
Cash and cash equivalents
Note (*): Excludes prepayments and VAT recoverable
Group
Company
2021
$’000
5,302
4,021
–
18,312
27,635
2020
$’000
3,910
3,490
–
20,237
27,637
2021
$’000
200
–
3,372
3,108
2020
$’000
424
–
4,318
4,317
6,680
9,059
At 31 December 2021 and 2020, the Group held the following financial liabilities at amortised cost:
Accounts payable and accruals
Intercompany
Bank overdraft
Group
Company
2021
$’000
8,814
–
2,700
11,514
2020
$’000
7,803
–
2,700
10,503
2021
$’000
327
781
–
1,108
2020
$’000
481
–
–
481
At 31 December 2021 and 2020, the Group held the following financial asset at fair value through profit or loss:
Derivative financial asset
Derivative financial liability
Group
Company
2021
$’000
–
–
2021
$’000
2,883
2,883
2020
$’000
266
266
2020
$’000
–
–
Group
2021
$’000
–
–
2021
$’000
2,883
2,883
2020
$’000
266
266
Company
2020
$’000
–
–
132
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
33 Commitments and Contingencies
a) Commitments
There are commitments for decommissioning costs of the wells and facilities under the Group’s agreements with
Heritage, which have been provided for as described in Note 27: Provision for other liabilities.
b) Contingent Liabilities
i)
The West Coast Point Ligoure, Guapo Bay and Brighton Marine Outer (“PGB”) licences and the Farm-Out Agreement
for the Tabaquite Block (held by Coastline International Inc.) have expired. There may be additional liabilities and
commitments arising when new agreements are finalised, but these cannot be presently quantified until new
agreements are available.
ii)
Parent Company Guarantee:
a) PGB - A Letter of Guarantee has been established in substance over the PGB Block where a subsidiary of
Trinity is obliged to carry out a Minimum Work Programme to the value of $8.4 million. A clause within the
Letter of Guarantee implies that the Guarantor may reduce the Guarantee Sum available for payment to
the MEEI under the Letter of Guarantee on an obligation by obligation basis provided PGB delivers to the
Guarantor a certificate duly issued and signed by the MEEI. The PGB licence has expired.
b) Galeota - A Letter of Guarantee has been established in substance over the Galeota Block where a
subsidiary of Trinity is obliged to carry out a Minimum Work Programme to the value of $0.9 million. A
clause within the Letter of Guarantee implies that the Guarantor may reduce the Guarantee Sum available
for payment to the MEEI under the Letter of Guarantee on an obligation by obligation basis provided the
subsidiary of Trinity delivers to the Guarantor a certificate duly issued and signed by the Minister of the
MEEI. The Letter of Guarantee was effective from 14 July 2021 until the earlier of performance of Minimum
Work Programme or the Guarantor has paid the Guarantee amount.
iii) The Group is party to various claims and actions. Management has considered the matters and where
appropriate has obtained external legal advice. No material additional liabilities are expected to arise in
connection with these matters, other than those already provided for in these condensed consolidated financial
statements.
iv) On 1 December 2021, Trinity acquired the PS-4 Block Lease Operatorship Sub-Licence. As part of the lease
agreement, a Performance Bond of $0.13 million is required to be executed with Heritage. At 31 December
2021, the Performance Bond was not finalised and is expected to be completed subsequent to the year-end.
34 Employee Costs
Employee costs for the Group during the year
Wages and salaries
Other pension costs
Share based payment expense (Note 22)
Group
Company
2021
$’000
8,625
372
673
9,670
2020
$’000
6,266
358
963
7,587
2021
$’000
1,170
–
94
1,264
2020
$’000
910
–
248
1,158
Average monthly number of people
(including Executive and Non-Executive Directors’) employed by the Group
Executive and Non-Executive Directors
Administrative staff
Operational staff
2021
number
2020
number
2021
number
2020
number
6
95
144
245
6
85
131
222
6
–
–
6
6
–
–
6
Annual Report & Financial Statements 2021
133
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
35 Events after the Reporting Period
1.
The Company implemented crude derivatives over the Group’s monthly production in 2021 and 2022. The derivative
protection currently in effect for 2022 is as follows:
Type of Derivatives Index
Sell
Put
Buy
Put
Sell
Call
Buy Effective Expiry Execution
Call Production Date Date Date
Premium
USD MM
USD/bbl USD/bbl USD/bbl USD/bbl Barrels
Monthly
3-Way Cost Collar ICE Brent 50.00 60.00 66.90
- 10,000 1 Jan 22 30 Jun 22 04 Mar 21
3-Way Cost Collar ICE Brent 50.00 60.00 74.40
- 12,500 1 Jan 22 31 Dec 22 02 Jun 21
4-Way Cost Collar ICE Brent 59.00 68.00 72.00 82.00 15,000 1 Jan 22 30 Jun 22 05 Jul 21
3-Way Cost Collar ICE Brent 40.00 50.00 80.50
-
Put Spread Option ICE Brent 40.00 50.00
- 15,000 1 Jan 22 31 Dec 22 27 Aug 21
- 15,000 1 Jul 22 31 Dec 22 14 Jan 22
0.15
2. On 24 February 2022, Russian forces invaded Ukraine, causing wide-ranging sanctions to be applied against the
Russian regime by the US, EU and other major economies. The event caused both Brent and WTI oil prices to soar,
peaking well above $100 per bbl into March 2022. The impact of increased oil prices has mainly positively impacted
the Group’s crude oil revenue but negatively impacted derivative expenses. Overall, whilst there has been no
significant adverse impact to the Group, Management continues to closely monitor the event’s impact as it unfolds.
3.
In 2021 Trinity engaged with a range of potential partners as part of the Galeota farm down process. The Company
on 3 May 2022 indicated, whilst initial feedback has been encouraging, a number of participants have informed the
Company that they are unable to fully assess the economics of the opportunity at Galeota without clarity on the
expected reforms to Supplemental Petroleum Tax (“SPT”), which are currently being considered by the Government
of Trinidad and Tobago (“GORTT”) and which were initially expected to have been confirmed sooner than now
appears likely. Pending SPT reform, which management still expects to happen, the Company has decided to pause
the Galeota farm down process. This will enable the Company to seek the best value proposition for Galeota when
the GORTT's fiscal reforms have been confirmed.
In the interim, the Company will continue to refine its plans for Galeota. In particular, it will advance preparations for
exploiting the 9.77mmstb of 2P reserves remaining in the Trintes field.
134
Glossary
Trinity Exploration & Production plc
Abbreviation
Meaning
2P
2C
Adjusted EBITDA
AGM
AIM
APM
ARV
ATV
bbl
BDO
BIR
BM
Board
bopd
boepd
c./~
CA 2006
Capex
CGU
Proved and probable resources
Best estimate of contingent resources
Operating Profit before Taxes for the period, adjusted for depreciation, depletion & amortisation
(“DD&A”), non-cash Share Option Expenses (“SOE”), Impairment losses on Financial assets
(“ILFA”) and FX gains/(loss)
Annual General Meeting
Alternative Investment Market of the London Stock Exchange plc
Alternative Performance Measures Guidelines
Annual Rental Value
Annual Taxable Value
barrel
Binder Dijker Otte
Board of Inland Revenue of Trinidad & Tobago
Brighton Marine
Board of Directors
barrels of oil per day
barrels of oil equivalent per day
circa (approximately)
Companies Act 2006 (as amended from time to time)
Capital expenditure
Cash generating units
CIBC
FirstCaribbean International Bank (Trinidad & Tobago) Limited
CIMA
CLN
COSA
CSR
Covid 19
CVORR
DD&A
DOA
DRC
DTA
DTL
EAD
E&E
ECTT
EIA
ECL
EMA
EMT
ESG
ESP
EU
EUR
FCF
FEED
FDP
FID
FOA
FRC
Chartered Institute of Management Accountants
Convertible Loan Notes previously in issue by the Group which were fully redeemed as part of
the Group's fundraising in 2018
Crude Oil Sales Agreement
Corporate Social Responsibility
Coronavirus disease (Covid 19) is an infectious disease caused by a new virus. The disease
causes respiratory illness (like the flu) with symptoms such as a cough, fever, and in more severe
cases, difficulty breathing.
Conversion to Overriding Royalty
Depreciation, depletion and amortisation
Delegation of Authority
Drilling, Recompletions & Workovers
Deferred Tax Asset
Deferred Tax Liabilities
Exposure at Default
Exploration and Evaluation
Energy Chamber of Trinidad and Tobago
Environmental Impact Assessment
Expected Credit Loss
Environmental Management Authority
Executive Management Team
Environmental Social Governance
Electrical Submersible Pump
European Union
Estimated Ultimate Recovery
Free Cash Flow
Front End Engineering Design
Field Development Plan
Final Investment Decision
Farmout Agreement
Financial Reporting Council
FVLCD
Fair Value less Costs of Disposal
135
Strategic Report
Governance
Financial Accounts
l Glossary
Company Information
Annual Report & Financial Statements 2021
Abbreviation
Meaning
FX
G&A
GBP or £
GHG
GORTT
Group
H
HAW
Derivatives
Heritage
HMRC
HSSE
IOC
IP
IOR
IAS
IFRS
IFRS IC
ITC
ILFA
JOA
KPI(s)
LI
LGD
LLP
LNG
LO
LOA
LTA
LTIP
MOU
MEEI
MM
Management
mmbbls
mmstb
mt
NE
NGC
NOC
NOS
Foreign Exchange
General and Administrative expenses
Great British Pound
Green House Gases
Government of the Republic of Trinidad and Tobago
Trinity and its Subsidiaries
Half Year i.e. H1 means first half
High Angle Well
Oil Price Derivative Financial Instruments
Heritage Petroleum Company Limited
Her Majesty Revenue and Customs of the United Kingdom
Health, Safety, Security & Environment
Independent Oil Group
Initial Production
Improved Oil Recovery
International Accounting Standards
International Financial Reporting Standards
IFRS Interpretations Committee
Investment Tax Credits
Impairment losses on Financial assets
Joint Operatorship Agreement
Key Performance Indicator(s)
Land Infrastructure
Loss Given Default
Limited liability partnership
Liquefied Natural Gas
Lease Operator
Lease Operatorship Agreement
Lost Time Accidents
Long-Term Incentive Plan
Memorandum of Understanding
Ministry of Energy and Energy Industries of Trinidad & Tobago
million
Board and EMT
million barrels
million stock tank barrels
metric tonnes
North East
National Gas Company of Trinidad and Tobago Ltd
National Oil Company also known as Heritage
Net Oil Sands
Operating Break-even
The realised price where the Adjusted EBITDA for the respective asset is equal to zero.
Consolidated Operating Break-even is the realised price where the Adjusted EBITDA for the
entire Group is equal to zero)
OCF
Net Cash Flow from Operating Activities
Operating Expenses
Royalties, Production costs (“Opex”), Depreciation, Depletion & Amortisation (“DD&A”), General
& Administrative (“G&A”) expenses, Impairment losses on financial assets (“ILFA”), Share Option
Expense (“SOE”) and Foreign exchange (“FX”) (loss)/gain
Opex
OPEC
Operating Profit
ORR
Production costs
Organization of the Petroleum Exporting Countries
Operating Profit from business operations (Operating Revenues less Operating Expenses less
SPT & PT less Exceptional items)
Overriding Royalties
136
Trinity Exploration & Production plc
Glossary (continued)
Abbreviation
PD
Petrotrin
PGB
Plc
PPE
ppm
PPT
PRMS
PT
Q
REI
RNS
RCP(s)
Realised price
ROU
SCADA
SOE
SPE
SPT
Meaning
Probability of Default
The Petroleum Group of Trinidad and Tobago Limited
Point Ligoure-Guapo Bay-Brighton Marine Outer (West Coast Assets)
Public Limited Group
Personnel Protective Equipment
parts per million
Petroleum Profits Tax
Petroleum Resource Management System
Property Tax
Year quarter (3 months) i.e. Q1 means first quarter
Reportable Environmental Incidents
Regulatory News Service
Recompletion(s)
Actual price received for crude oil sales per bbl. A discount is normally applied to the WTI price
by Petrotrin and, since 1 December 2018, Heritage to derive the realised price received by Trinity.
Right-of-Use
Supervisory Control and Data Acquisition
Share Option Expense
Society of Petroleum Engineers
Supplemental Petroleum Tax
START Card
See Think Act Reinforce Track Card
STOIIP
STOW
SW
Stock Tank Oil Initially in Place
Safe to Work
South West
T&T based bank
First Citizens Bank Limited
Trinity/Company/Parent
Trinity Exploration & Production plc
TSR
TTD
T&T
UK
UL
USD or US$
UWI
VAT
VIU
vs
VWAP
WFH
WTI
WO(s)
YE
Total Shareholder Return
Trinidad & Tobago Dollars
Trinidad & Tobago
United Kingdom
Unemployment Levy
United States Dollars
University of the West Indies
Value Added Tax
Value in Use
versus
Volume-Weighted Average Price
Work From Home
West Texas Intermediate - is a grade of crude oil used as a benchmark in oil pricing
Workover(s)
Year-end
137
Strategic Report
Governance
Financial Accounts
Glossary
l Company Information
Advisers
NOMAD
SPARK Advisory Partners Limited
5 St. John’s Lane
London EC1M 4BH
Broker
Cenkos Securities plc
678 Tokenhouse Yard
London EC2R 7AS
Independent Auditors
BDO LLP
55 Baker Street
London W1U 7EU
United Kingdom
Tax Advisers
Ernst & Young LLP
Blenheim House
Fountainhall Road
Aberdeen AB15 4DT
Legal Advisers & Solicitors
Pinsent Masons LLP
1 Earl Grey Street
Edinburgh EH3 9AQ
Public Relations Adviser
Walbrook PR
4 Lombard Street
London EC3V 9HD
Annual Report & Financial Statements 2021
Company Information
Company addresses
Corporate Secretarial
Company Secretary
AMBA Secretaries Limited
400 Thames Valley Park Drive
Thames Valley Park
Reading RG6 1PT
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Main Bankers
Lloyds Banking Group plc
Bank of Scotland
Level 6 110 St Vincent Street
Glasgow G2 5ER
First Citizens Bank Limited
Superpharm Building
2 South Trunk Road, Gulf View
La Romain
Trinidad & Tobago
CIBC FirstCaribbean International
Bank
(Trinidad & Tobago) Limited
74 Long Circular Road
Maraval, Port of Spain
Trinidad & Tobago
United Kingdom
and Registered Office
c/o Pinsent Masons LLP
1 Park Row
Leeds LS1 5AB
Trinidad & Tobago Office
3rd Floor Southern
Supplies Limited Building
40-44 Sutton Street
San Fernando
Trinidad, West Indies
Certifications
Affiliations
Trinity Exploration & Production plc
c/o Pinsent Masons LLP
1 Park Row
Leeds LS1 5AB
United Kingdom
E: info@trinioil.com
www.trinityexploration.com