Annual Report & Accounts
for the year ended 31 December 2022
Company Number: 07535869
Stock Code: TRIN
Contents
Strategic Report
Financial Accounts
65 Consolidated Statement of Comprehensive Income
66 Consolidated Statement of Financial Position
67 Company Statement of Financial Position
68 Consolidated Statement of Changes in Equity
69 Company Statement of Changes in Equity
70 Consolidated Statement of Cash Flows
71 Company Statement of Cash Flows
72 Notes to the Consolidated Financial Statements
Glossary of Terms
114 Glossary of Terms
Company Information
117 Company Information
Highlights of 2022
1
Chairman & CEO Statement
3
5 Our Business Strategy & Model
6 Operations Review
10 Stakeholder Engagement
12 Environmental and Social Governance
16 Financial Review
24 Risk Management and Internal Controls
Governance
30 Directors’ Statement s172
32 Corporate Governance Statement
33 QCA Principles
38 Board of Directors
40 Executive Management Team
41 Board Activities
42 Audit Committee Report
43 Technical Committee Report
44 Remuneration Committee Report
46 Directors’ Remuneration Report
54 Directors’ Report
57 Statement of Directors’ Responsibilities
58 Independent Auditors’ Report
For more information on
Trinity Exploration & Production visit
trinityexploration.com
Annual Report & Financial Statements 2022
Highlights of 2022
1
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Sales (bopd)
2,975
(2021: 3,006 bopd)
Operating Profit before
SPT, Impairments and
Exceptional Items (USD)
$19.0m
(2021: $9.3m USD)1
Adjusted EBITDA (before hedge costs)
(APM Result) (USD)
Profit before income
taxation (USD)
$35.1m
(2021: $21.1m USD)
$2.5m
(2021: $3.0m USD)
Adjusted EBITDA (after hedge costs)
(APM Result) (USD)
$24.7m
(2021: $19.8m USD)
Adjusted EBIDA after Current
Taxes (APM Result) (USD)
$12.3m
(2021: $14.8m USD)
Cash generated from continuing
operations (USD)
$12.0m
(2021: $12.6m USD)
Cash flow used in
investing activities (USD)
$15.6m
(2021: $13.8m USD)
Total year-end cash
(USD)
$12.1m
(2021: $18.3m USD)
Note:
Refer to the Financial Review Section 16 to 23 for additional information.
1.
Covid 19 expenses in prior year reclassified as operating expenses.
2
Trinity Exploration & Production plc
Highlights of 2022 (continued)
2P Reserves + 2C Resources*
Total Year End
2P
2C
Total
West Coast
2P
2C
Total
Onshore
2P
2C
Total
East Coast
2P
2C
Total
Note:
*
2022 Management estimates for reserves and resources
2022
mmstb
17.96
48.88
66.84
2022
mmstb
2.17
3.45
5.62
2022
mmstb
6.53
8.62
15.15
2022
mmstb
9.26
36.81
46.07
2021
mmstb
19.73
47.22
66.95
2021
mmstb
2.70
3.01
5.71
2021
mmstb
7.26
3.82
11.08
2021
mmstb
9.77
40.39
50.16
Annual Report & Financial Statements 2022
Chairman & CEO Statement
3
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Strategic Performance
During 2022 Trinity put in place the foundations for an
ambitious growth programme, developing a series of catalysts
to drive shareholder value that we are now starting to execute
in 2023. This important process has involved taking tough
decisions based on identifying the most efficient allocation
of capital across the portfolio.
We chose not to pursue several initiatives which we had
previously been exploring, such as the Jubilee field off the
West Coast and NWD deeper play, and instead decided to
focus on three key initiatives which we believe have the
potential to deliver meaningful value for shareholders.
additional growth opportunities for Trinity and we
continue to engage with Government in a constructive
way, as we believe further reform is necessary to achieve
the Government’s aim to stimulate greater activity levels
across our sector.
First, the Company has matured its understanding of the
deeper prospectivity across its onshore portfolio using
the 3D seismic which we had acquired to map nine
'Hummingbird' prospects across its Palo Seco assets. In
May 2023 we commenced the first well, Jacobin, the start
of an ambitious, risk-appropriate exploration programme
that we hope will fast-track the monetisation of these
substantial resources. In a success case, this will generate
material growth for our shareholders, further de-risk this
potentially extensive play across our existing acreage and
allow us to quickly evaluate the significant potential in the
Buenos Ayres block offered in the 2022 Onshore and
Nearshore Competitive Bid Round.
Second, during 2022, the Company participated in the
2022 Onshore and Nearshore Competitive Bid Round,
bidding for the Buenos Ayres block, which is located
immediately to the west of Trinity’s existing Palo Seco
interests, comprising Blocks WD5-6, WD-2 and PS-4
and, at its closest, is only around 500 metres from the
Company’s existing sub-licences. If awarded, Trinity
intends to take advantage of its unique understanding
of the stratigraphy in this area onshore Trinidad, where
there are strong analogues to the Company’s existing
acreage, to quickly progress from drilling to production.
As an Exploration and Production licence, Buenos Ayres
would benefit from better commercial and fiscal terms
than the Lease Operatorship Agreements; principally, no
overriding royalty payable, instead state-owned Heritage
participating as a joint venture partner with a 15% working
interest carried through the exploration phase.
Third, having paused the Galeota farm-out process, we
initiated an in-depth review of the opportunities across
the offshore Galeota block, including the existing Trintes
producing field, to formulate a revised development plan
that offers greater capital efficiency and shorter
development and payback timelines, with the aim of
avoiding significant dilution for existing shareholders.
This work continues in 2023 and we aim to finalise the
development option in order to progress by Q4 this year.
In addition to progressing each of these attractive
opportunities, Trinity has continued to lobby the
Trinidadian Government to take the steps necessary to
stimulate activity in the energy sector. As well as the
successfully completed 2022 Onshore and Nearshore
Competitive Bid Round, we welcomed the fiscal changes
that were introduced, particularly changes to
Supplemental Petroleum Tax (“SPT”), announced in
September 2022 which took effect from 1 January 2023.
This positive approach from the Government will provide
Operating Performance
Trinity delivered a robust operating performance in 2022
which continues to highlight the strength and resilience of
our core business. We delivered production for the year
within guidance, and we remain on track to progress our
growth agenda in 2023.
Group net sales for 2022 were 2,975 bopd (2021: 3,006
bopd). Trinity managed to substantially mitigate natural
production decline through a programme including; 3 new
wells, 17 RCPs, 120 Workovers, swabbing across its asset
base, including the recently acquired PS-4, and improved
production monitoring using automation and revised
completion strategies.
The Company’s investment in technology to automate
and remotely optimise over 50% of its production is
proving to be effective, helping to ensure steady
production whilst minimising non-productive downtime.
The Company aims to extend this automation to an
additional 37 onshore wells during 2023, which would
result in the proportion of Group production covered by
automation rising from 50% to approximately 80%.
Three new development wells were drilled and completed
during H2 2022. Initial production levels for the three
wells were on prognosis but subsequent performance
was below plan and increased supply chain costs have
impaired the economic potential of conventional drilling.
The data acquired through this campaign is helpful,
however, and is currently being used to revise our
plans for future drilling campaigns.
Financial Performance
Our 2022 financial results demonstrate the Company’s
resilience despite encountering significant external
headwinds. Adjusted EBITDA for the year was USD 24.7
million (2021: USD 19.8 million) and cash resources were
USD 12.1 million (2021: USD 18.3 million) at year-end.
Global supply chain pressures and cost inflation saw our
operating breakeven nudge above USD 30.0/bbl (to USD
32.1/bbl) (2021: USD 29.2/bbl) for the first time in seven
years. This still represents a relatively low operating
cost, which provides a buffer in times of low oil prices.
Nevertheless, we are continuing to experience inflationary
pressures within the supply chain and are working with
our contractors and partners proactively to manage our
cost base and execute our development programme in
a cost-effective manner.
4
Trinity Exploration & Production plc
Chairman & CEO Statement (continued)
In 2022, in line with previous years, we hedged around
50% of our production to counteract the impact of low oil
prices and the impact of SPT which, prior to the recent
reforms, was at its most punitive when realised oil prices
were between USD 50.01 and USD 55.0 per barrel. The
hedging programme, put in place during 2021 to shield
the Company from the possibility of weaker oil prices,
worked against us in 2022 when prices rose sharply in
response to Russia’s invasion of Ukraine. This resulted in
a cash payment for hedging of USD 10.4 million for the
year (compared to USD 1.3 million in 2021). The Company
has elected to remain unhedged moving into 2023.
Returns to Shareholders
Following the share capital re-organisation undertaken
in 2021, to restore distributable reserves at PLC level,
the Board sanctioned two share buyback programmes
in 2022, commencing in September/October 2022 to
repurchase up to USD 2.0 million in shares. The second
share buyback concluded at the end of April 2023.
The first and second share buyback acquired 1,432,000
shares, representing 3.6% of our issued share capital
for USD 2.0 million, terms which the Board believes are
accretive to shareholder value. A third share buyback
was announced on 28 April 2023 to return up to
USD 1.0 million to shareholders of the Company.
The Board believes that consistent returns to
shareholders should be an important driver for capital and
operational discipline whilst not impeding the Company's
growth potential, and has accordingly affirmed a new
Capital Allocation Policy which will comprise payment
of a modest but sustainable dividend and the scope for
additional distributions in the form of share buybacks
or special dividends. Going forward, the Board intends
to aim to distribute 15% of operating cash flow to
shareholders, for each calendar year when the realised
oil price is USD 80/bbl and below, and at least 20% of
operating cash flow for each calendar year when the
realised price is above USD 80/bbl. This is expected to
include a total dividend (split 1/3 interim, 2/3 final) of
1.5p per share, provided the realised price is at least
USD 50/bbl. It is expected that the maiden interim
dividend will be declared following publication of the 2023
interim results, in Q3 2023, followed by a final dividend
being declared following publication of the 2023
preliminary results in Q2 2024.
HSSE and ESG performance
HSSE performance remains a high priority for Trinity, and
at the beginning of 2022 an HSSE Improvement Plan was
developed to enhance the existing HSSE Management
System. Key elements of this plan included creating a
Steering Committee, chaired by the CEO, developing
a monthly HSSE Scorecard of key leading and lagging
indicators that is disseminated throughout the
organisation, the introduction of an ongoing Critical
Safety Rule campaign and more focus on contractor
management and inclusion. The HSSE Team was
instrumental in achieving Safe To Work ("STOW")
recertification for a further two years with a score of
100%. Unfortunately, we recorded two Lost Time Incidents
in 2022. Since then, we have bolstered our incident
investigation procedure to ensure that actions and lessons
learnt are being implemented throughout the organisation.
During 2022, we also commenced the quantification of our
Scope 1 and 2 emissions across all assets; established the
Bruce Dingwall Memorial Scholarship (in memory of our
Founder and former Executive Chairman) for Caribbean
nationals pursuing studies in Geoscience; and we continued
to foster partnerships with our fence line communities
through the sponsorship of awards for excellence in
education to students undertaking the 11+ examinations.
Cyber Incident
In December 2022 Trinity was subject to a ransomware
attack, something that is becoming increasingly
commonplace across all businesses and geographies. We
responded quickly and comprehensively to this external
attack on our business. Our production facilities remained
safe and continued to produce. We suffered a temporary
disruption to our administrative systems, but Trinity’s IT
team and our external advisers have returned systems to
full capacity incorporating changes and learnings from the
incident and embedding more resilient IT infrastructure,
cybersecurity systems and procedures.
Organisational changes
The Board and management team was restructured
and strengthened in 2021 following the untimely passing
of our founder and Executive Chairman Bruce Dingwall,
CBE. During 2022 the management team was further
reinforced by the recruitment of Julian Kennedy (Chief
Financial Officer), Alistair Green (Development Manager)
and, more recently, Mark Kingsley (Chief Operating
Officer). We welcome them all and look forward to
driving the business forward with their assistance. Angus
Winther has completed two full terms as a Director and
specifically in the role of the Audit Committee Chairman.
Therefore, he has decided not to stand for re-election at
this forthcoming Annual General Meeting which coincides
with Angus taking on greater levels of responsibility
in other roles outside of Trinity. We want to express
our thanks and that of our fellow Directors for his
conscientious stewardship of the Audit Committee
since he joined the Board in 2017.
Thanks
Your Board is appreciative of the support we continue
to receive from shareholders during what are very
demanding and complex times. On behalf of the Board,
we must also thank our employees and suppliers for their
commitment which has allowed Trinity to deliver its core
business in a safe manner while positioning the Company
to hopefully move into a period of growth.
In summary, following significant challenges
experienced by Trinity in 2021, 2022 proved to be
a year of consolidation and focus, resulting in the
identification of numerous near-term and medium-term
catalysts to drive growth and value. We will continue to
advance these during 2023, with a view to generating
meaningful returns for shareholders.
Nicholas Clayton Jeremy Bridglalsingh
Non-Executive Chairman Chief Executive Officer
Annual Report & Financial Statements 2022
Our Business Strategy & Model
5
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Why Invest in Trinity?
Our Business Strategy
We are a forward-thinking company, harnessing the
benefits of new datasets, software, processes and
technologies to drive efficiency and responsibly deliver
hydrocarbon-based energy. Trinity’s investment case
is based upon resilient, low-cost production; near term,
deliverable catalysts with the potential to achieve
incremental growth; and a medium-term hopper
of organic opportunities capable of delivering
transformational growth. On behalf of our shareholders,
we are focused on delivering significant growth in
production and free cash flow, allowing us to pursue
new growth opportunities and deliver sustainable returns
to shareholders. Our strategy and business model are
designed to deliver this core objective.
Our objective is for Trinity to be a leading independent
energy producer, capable of delivering meaningful and
sustainable growth in shareholder value.
Our core strategic priorities are:
•
•
Safely optimising the value to be derived from our
current producing assets.
Deploying growth capital to economically attractive
and fundable projects based on developing
undeveloped reserves and resources.
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.
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.
OP ERATE SAFELY
& RESPONSIBLY
EFFICIENCY &
INNOVATION
FINANCIAL &
CAPITAL DISCIPLINE
PRIORITISE HSSE
•
PRESERVE THE INTEGRITY
OF OUR ASSET BASE
•
PROTECT OUR PEOPLE, OUR
COMMUNITY AND THE ENVIRONMENT
•
MAINTAIN STRONG RELATIONSHIPS
WITH THE GOVERNMENT
AND PARTNERS
•
CONSISTENTLY EARN THE
RIGHT TO OPERATE
ACTIVE MANAGEMENT
OF OPERATING PROCEDURES
ACROSS ASSETS
•
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
RIGOROUS COST MANAGEMENT TO
MAINTAIN ATTRACTIVE OPERATING
MARGINS
•
MAINTAIN A STRONG BALANCE SHEET
THROUGH INVESTING IN PROJECTS
WITH LIMITED PAYBACK PERIODS AND
ATTRACTIVE CASH RETURNS
•
ENGAGE WITH SHAREHOLDERS AND
OTHER POTENTIAL CAPITAL
PROVIDERS
•
DELIVER VALUE TO SHAREHOLDERS
THROUGH SHARE PRICE
APPRECIATION, BUYBACKS AND
DIVIDENDS.
6
Trinity Exploration & Production plc
Operations Review
The Group achieved net sales of 2,975 bopd in 2022 (2021:
3,006 bopd). Investments into production related to
activities, such as three new infill wells, RCPs, workovers
and swabbing, together with greater automation and
monitoring of our key wells, enabled the Company to
deliver annual production rate in line with the prior year,
thereby largely offsetting the expected natural field decline
rate of between 7% and 10%.
Figure 1:
2022 vs 2021 Annual, Half Year and Quarterly Sales Breakdown
3500
3000
2500
2000
1500
1000
500
bopd
0
255
269
249
288
244
254
261
361
1107
1051
1037
1065
1015
1058
1074
1056
1644
1655
1688
1623
1669
1707
1656
1589
12m
2021
12m
2022
H1
2022
H2
2022
Q1
2022
Q2
2022
Q3
2022
Q4
2022
Figure 2:
2022 daily reported production volume chart illustrates the production across each of the assets by location
4000
3500
3000
2500
2000
1500
1000
500
bopd
0
Jan
2022
Feb
2022
Mar
2022
Apr
2022
May
2022
Jun
2022
Jul
2022
Aug
2022
Sept
2022
Oct
2022
Nov
2022
Dec
2022
l Onshore
l East Coast
l West Coast
7
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
In 2023, Trinity intends to manage its base production
through additional automation of wells, further RCP
activity, re-evaluation of the inactive well hopper,
and swabbing. Trinity’s use of automation to optimise
production and costs continues to meet our objectives.
The three new wells drilled in 2022 contributed 20 bopd
to the annual average.
East Coast Assets
Current East Coast production is generated from the
Alpha, Bravo and Delta platforms in the Trintes field
located in the Galeota block.
Average net sales for 2022 from the East Coast were
1,051 bopd (2021: 1,107 bopd) which accounts for 35%
of Group sales for the period. A total of 23 workovers
in 2022 (2021: 16) were conducted across the assets
focusing on optimising and stabilising production from
all wells via a data-driven strategy utilising automation.
Chemical injection initiatives were also deployed to
counteract increased solids deposition in mature wells.
The Galeota licence has significant growth potential from
undeveloped reserves and resources in the Trintes field
and broader development of the Galeota block.
Having paused the Galeota farm-out process in May
2022, the Company initiated an in-depth review of the
opportunities across the offshore Galeota block, including
the existing Trintes producing field, to formulate a revised
development plan that offers greater capital efficiency
and shorter development and payback timelines.
Annual Report & Financial Statements 2022
Onshore Assets
Trinity’s onshore assets comprise the lease
operatorship blocks: WD-5/6, WD-2 and PS-4 (together
“Palo Seco”), FZ-2, WD-13, WD-14 (together “Forest
Reserve”) and one farmout block, Tabaquite.
The average net sales for 2022 was 1,655 bopd (2021:
1,644 bopd) which accounts for 56% of our total annual
sales. A breakdown of the sales by block is shown in the
table below.
Table 1:
2022 vs 2021 Onshore Sales breakdown by block
2021 2022
Avg Sales Avg Sales
Block (bopd) (bopd)
Palo Seco
WD-5/6 1,050 1,004
WD-2 246 258
PS-4* 4 63
Forest Reserve
FZ-2 122 117
WD-13 95 109
WD-14 110 100
Tabaquite
Tabaquite 17 4
Annual Average 1,644 1,655
Note PS-4* was acquired on 1 Dec 2021 at an average monthly
rate of 52 bopd
Trinity drilled 3 new onshore development wells in 2022
(2021: nil), completed 17 RCPs (2021: 7), 1 sand control job
(2021: 5), and 86 workovers (2021: 74), which, together
with the inclusion of PS-4 for the full year, resulted in a
modest uplift in our onshore production for the year as
a whole.
Table 2:
2022 Onshore Work Programme Breakdown by Block
New Re-
Block Wells completions Workovers SCN
Palo Seco
WD-5/6 1 0 38 0
WD-2 1 2 3 0
PS-4 0 5 17 0
Forest Reserve
FZ-2 0 7 12 0
WD-13 1 1 9 0
WD-14 0 2 7 1
Tabaquite
Tabaquite 0 0 0 0
Total 3 17 86 1
8
Trinity Exploration & Production plc
Operations Review (continued)
West Coast Assets
West Coast production is generated from the Point
Ligoure-Guapo Bay- Brighton Marine (“PGB”) and
Brighton Marine (“BM”) licence areas.
West Coast net sales averaged 269 bopd in 2022 (2021:
255 bopd) which accounted for 9% of the Group’s total
annual average sales. This was a 5% year on year increase
on the 2021 average. The increase was achieved through
increased swabbing activity via 10 conversions to swab
workovers in 2022 (2021: nil) conducted across the
assets. Subsequent to the period end, in March 2023,
ABM-151, was producing at a managed rate of 140 bopd,
higher than the expected range of 60 to 110 bopd,
thereby significantly improving the economics of our
West Coast assets in 2023.
2021 2022
Avg Sales Avg Sales
Block (bopd) (bopd)
Brighton 155 158
PGB (70%) 100 111
Total 255 269
Facilities Management and Infrastructure
In 2022, the Facilities team focused on asset integrity,
welfare initiatives and projects supporting production.
On Trintes, the Company replaced gratings on offshore
platform production decks and improved key electrical
equipment on the Alpha, Bravo and Delta platforms,
resulting in the repurposing of floor space allowing for
better access and more efficient use of the work area.
Accommodation units were replaced, fuel and water
tanks were upgraded and repositioned for better
use of the available space.
The construction of a new 10,000 bbl storage tank to
accommodate production from the Trintes field was 86%
complete at the end of 2022. The project experienced
some delays but is now expected to be fully operational
in Q2-2023.
Activities for the Onshore and West Coast operations
focused on upgrading welfare facilities and construction
of a new crow’s nest to support the ABM-151 well
reactivation.
In total, the team progressed 40 projects of which 32
were completed by the end of 2022 and 8 rolled over
in 2023.
Facilities Management and Infrastructure spend in 2022
was USD 4.0 million (comprising East Coast – USD 2.9
million, West Coast – USD 0.7 million and Onshore –
USD 0.4 million).
Onshore Drilling
Trinity’s onshore development drilling campaign during
2022 comprised three wells drilled in the second half of
the year (one well in each of WD-5/6, WD-2 and WD-13)
targeting Lower Forest and Upper Cruse reservoirs.
Supply chain challenges and inflationary pressures
significantly increased the cost of drilling and impaired
economics. While we encountered reservoir in all wells
broadly on prognosis, we observed higher than expected
depletion in all three which resulted in stabilised
production rates being lower than predicted. Our
intention is to manage the wells’ up-hole potential to
maximise the economic recovery. Data acquired from the
2022 drilling campaign and the performance of these
wells will be incorporated into our regional model to de-
risk and re-prioritise future infill development candidates.
Reserves and Resources
A comprehensive reserves and resources review of all
assets has been completed by Management which
estimates Trinity’s current 2P reserves to be 17.96 mmstb
at the end of 2022, compared to the year-end 2021
reserve estimate of 19.73 mmstb. This represents a 9%
year-on-year decrease. The overall decrease in reserves of
1.77 mmstb comprise 1.09 mmstb produced in 2022 and
revisions, including re-categorisation of reserves from 2P
to 2C of 0.68 mmstb. Factoring in the 2022 produced
volume of 1.09 mmstb, the 2P year-on-year decline is 3.4%.
Brent Forward Price Deck applied to Reserves Economic Limit Testing from Britannic Trading LLC
as at 3 January 2023
(USD/bbl)
Price Strip
2023
2024
2025
2026
2027
2028
2029
2030
2031
82.13
77.09
73.50
70.83
68.78
67.85
68.31
67.50
68.72
Annual Report & Financial Statements 2022
9
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Management considers the reserves presented in the table below to be its best estimate as at 31 December 2022 of
the quantity of reserves that can be recovered from Trinity’s current assets. It includes forecasted 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 2022 2P Reserves
Net Oil Reserves
Asset
Onshore
West Coast
East Coast
Total
Note:
31 December
2021
mmstb
Production
mmstb
Revisions
mmstb
31 December
2022
mmstb
7.26
2.70
9.77
19.73
(0.60)
(0.11)
(0.38)
(1.09)
(0.13)
(0.42)
(0.13)
(0.68)
6.53
2.17
9.26
17.96
•
•
The 2022 produced volume of 1.09 mmstb accounts for 61.6% of the overall 2P decrease in 2022 compared to 2021.
Revisions:
Onshore: FZ-2 +0.22 mmstb and WD-14 +0.26 mmstb, due to Economic Limit Testing. Onshore sub-licences decrease
(-0.61 mmstb) due to uneconomic infills.
West Coast: Reactivation of ABM-151 in March 2023 and revised IP of 80 bopd; +0.15 mmstb. Reallocation of infill wells from 2P to 2C category
(-0.20 mmstb). PGB base decreased -0.37 mmstb.
East Coast: Reduced base performance due to decreased well performance from key producers in Trintes (-0.78 mmstb). Reduced RCP 2P from 2021 to
2022 mainly due to reduced RCP count (-0.07 mmstb). Reclassification of three conventional infill wells from the Echo FDP back to Trintes development 2P
reserves. +0.72 mmstb.
Management’s Estimate of 2C Resources
as at 31 December 2022
Net Oil Resources
Asset
Onshore
West Coast
East Coast
Total
Note:
31 December
2021
mmstb
Revisions
mmstb
31 December
2022
mmstb
3.82
3.01
40.39
47.22
4.80
0.44
(3.58)
1.66
8.62
3.45
36.81
48.88
•
•
•
Onshore:
Recently concluded 3D seismic mapping work across WD-5/6, WD-2, PS-4 assets has redefined the subsurface structure/model resulting in the addition of
2C resources +4.80 mmstb in Year End 2022.
West Coast:
Reallocation of infill wells from 2P to 2C category across West Coast +0.44 mmstb
East Coast:
Year End 2021 most likely case of 12-well development inclusive of three Trintes infills re-categorised at Year End 2022 as part of Trintes development 2P
rather than as Echo 2C (-3.58 mmstb)
Management’s Estimate of Reserves and Resources
as at 31 December 2022
Asset
Onshore
West Coast
East Coast
Total
2022
2P
Reserves
mmstb
2022
2C
Resources
mmstb
2022
2P Reserves
and 2C
Resources
mmstb
2021
2P Reserves
and 2C
Resources
mmstb
6.53
2.17
9.26
17.96
8.62
3.45
36.81
48.88
15.15
5.62
46.07
66.84
11.08
5.71
50.16
66.95
10
Trinity Exploration & Production plc
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 understand that
identifying what is important to each of them enables us to
work more effectively as a business, so our Board is
committed to regular stakeholder engagement.
The Board recognises the need to balance the different and sometimes
contrasting interests of our stakeholder groups and we believe that the
Board has acted in accordance with its duties as codified in law. In the table
below we provide examples of our stakeholder engagement activity.
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
Operating, financial and
ESG performance.
Board
& EMT
l3 l3 l3 l3
l3
Growth strategy and new
business.
Major project initiatives.
Strategic and
organisational changes.
The primary
communication tool with
our shareholders is
Regulatory News Service
and the Group’s website,
www.trinityexploration.com.
Specifically, in relation to
shareholders, both retail
investor events and
institutional investor
meetings take place during
the year to provide
updates and receive
feedback.
Financial
Institution
Meetings coordinated as
required.
Employees
Formal correspondence
issued as required.
Quarterly performance and
ad hoc feedback meetings
with employees.
Monthly departmental
‘focal points’ meetings.
Operate an independent
whistleblowing policy.
Company town halls and
pulse surveys.
Customers
(Heritage)
Quarterly review
meetings are held with
Heritage for sub-
licenses. Operating and
Technical committee
meetings in accordance
with Joint operating
agreements.
Routine and non-routine
banking transactions 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 changes.
Training and
development.
Remuneration.
HSSE training, reviews
and updates.
Team building sessions.
Safety performance.
Training.
Effluent results.
EMT
& Staff
l3
l3 l3
l3
Production performance in
relation to MWOs/MPLs,
ESDs, swab wells, future
plans.
Inspections of facilities/wells.
Major project initiatives.
Annual Report & Financial Statements 2022
11
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
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.
Formal correspondence
issued to suppliers when
processes and procedures
are being revised and
standardised.
Working conditions.
Review and assessments.
HSSE discussions on issues
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.
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.
12
Trinity Exploration & Production plc
Environmental Social Governance (ESG)
Trinity recognises the importance of Environmental Social
Governance and has taken a deliberate decision to embark
on this transitional journey as a responsible employer and
corporate citizen with the aim of preserving our environment
and remaining relevant as a hydrocarbon operator while we
deliver on our business strategy.
Our ESG strategy comprises three core areas of focus:
Emissions & Transition, Community, and Environment
which are all interconnected and interdependent.
These areas of focus further define 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, Efficiency & Innovation,
and Financial & Capital Discipline - have integral ESG
elements that help us to deliver our goals with purpose.
In early 2022, we finalised our HSSE Strategy and
Framework and proceeded to plan the way forward,
towards the implementation of workstreams designed to
achieve our goals. We recognise that our ESG ambitions
will take some time and effort to realise, but Management
agreed that Trinity’s near-term priorities should be to
focus on establishing a baseline for our Scope 1 and the
main Scope 2 emissions baseline while continuing our
social initiatives and improving on our already robust
governance structure.
There were many highlights in 2022 as we progressed
our ESG Strategy and Initiatives. These include but are
not limited to the following:
Environmental
l3 Measurement of Scope 1
and main Scope 2 emissions
Social
l3 Sponsorship of awards for
educational excellence
l3 Wind and Solar
Study underway
l3 Co-ordinated Toy Drive for
250+ children
l3 HSSE Improvement Plan
successfully implemented
l3 Social Committee established
and social calendar developed
l3 Chemical Management Audit
completed and opportunities
for improvement implemented
l3 Crisis & Emergency
Management Review
undertaken
l3 Employee benefits (Pension,
Medical, Life Insurance)
l3 Free Access to Employee
Assistance Program
Governance
l3 Trinidad and Tobago
STOW recertification
obtained – 100% score
l3 Robust HSSE Governance
Structure further improved
l3 HSSE contractor
management enhanced
l3 Annual Compliance
Rollouts effected
l3 Whistleblowing Policy in place
l3 Flexi week for Corporate Staff
in place
l3 Established Grievance
Procedure in place
l3 Board Champion Appointed
Annual Report & Financial Statements 2022
13
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Robust HSSE Management Framework
Environment
Trinity remains focused on maintaining a robust HSSE
Management Framework. Significant effort is devoted to
continuously improving existing processes and systems
in pursuit of United Nations Sustainable Development
Goals (“UN SDG”) 3: Good Health and Well Being. Trinity
recorded 1,043,780 manhours with 0 fatalities in 2022.
Unfortunately, we recorded two Lost Time Incidents
in 2022. Since then, we have bolstered our incident
investigation procedure to ensure that actions and
lessons learnt are being implemented throughout
the organisation.
Our continued focus on a strong HSSE culture has allowed
us to sustain a reporting standard above what is required
by local regulations. Some highlights of our HSSE
Management Framework are:
•
•
•
•
•
•
•
-
-
-
-
-
Active Governance Committees comprising an
Executive Management Steering Committee and
a multidiscipline Tactical Committee. The latter has
been expanded to include field personnel so that
there is continuous feedback from our Operations.
Achieved the Trinidad and Tobago Energy
Chamber’s STOW recertification with a score
of 100% compliance.
Consistent and Visible Leadership. Instilling positive
HSSE culture by consistent Leadership presence
throughout our operations aimed at winning hearts
and minds by tapping into employees’ emotions to
inspire them.
Successful implementation of our 2022 HSSE
Improvement Plan with the introduction of:
A monthly standardised HSSE Scorecard that
gives visibility throughout the Company to our
HSSE Performance
Critical Safety Rules, each of which is the focus
of a monthly campaign led by an Executive
Manager
Improved channels of internal and external
HSSE communication
Implementation of an approved 2023 Improvement
Plan is in progress.
Efforts continue towards the Company becoming
ISO 45001:2018 compliant.
Increased focus placed on Contractor Management
with the implementation of Safety Villages and
Contractor Forums to disseminate training, best
practices and lessons learnt.
Energy Transition & Innovation
Trinity remains committed to the implementation of
energy transition initiatives to become more climate and
environmentally conscious in pursuit of the UN SDG 13 of
Climate Action: Take urgent action to combat climate
change and its impacts.
We have embarked on addressing climate change
through establishing a baseline for our Scope 1 and the
main Scope 2 emissions as the first step of being able to
develop an emissions reductions plan.. The challenge is
that many of Trinity's assets include mature, brownfield
sites, with aged infrastructure.
Trinity committed to reviewing the Company’s emissions
(Scope 1, 2 & 3) in 2022. This review resulted in the Board
and Management focusing on establishing a baseline
for all Scope 1 and the main Scope 2 emissions, which
commenced during 2023 with measurement and
quantification of these emissions based on an auditable
plan using ISO-14064-3 as the standard for quantification.
We took this as an opportunity to increase our internal
capabilities by training a member of staff to be a Certified
Internal Auditor for 2023.
Scope 1 Emissions Quantification:
•
This comprises emissions from all well sites, gathering
stations, fuel tanks, diesel generators, produced
liquids transport and Company vehicle fleet. The
measuring programme will sample 34 wells across a
range of producing lithologies and production rates
onshore and offshore and also samples taken from
different tanks. The vented gases will be laboratory
analysed for their composition and the vented gas
rates and volume will be directly measured via the
use of calibrated vent bags. Vehicle emissions will
be tested at source and distance travelled measured
by GPS transceivers. Other Scope 1 emissions will
be quantified via calculations, all measured against
appropriate ISO-Standards.
This comprises the emissions caused through power
consumed at gathering stations, well sites and
administrative offices and will be measured by
directly clamping laboratory grade, calibrated
equipment under the supervision of subject matter
experts.
The Scope 1 and 2 Emissions Quantification programmes
will continue during 2023 and a plan for potential emission
reductions will be developed. For Streamlined Energy
& Carbon Reporting framework for UK operations, there
is no requirement to report as energy use falls below
40 MWh.
An HSSE Audit Plan and associated training
Scope 2 Emissions Quantification:
A more rigorous training schedule
•
14
Trinity Exploration & Production plc
Environmental Social Governance (continued)
•
•
4,196 hours of training have been provided to our
staff and contractors with 69.1% of staff benefitting.
A Social Committee from among Staff volunteers
was established and a deliberate 2023 Social
Calendar was developed that aligns to international
observances and internal need. We have recognised
that more initiatives were required to foster team
spirit and camaraderie as we returned to office
post the Covid 19 pandemic. The Committee has
successfully executed on several initiatives including
a Sports and Family Day and a Christmas Fun
Afternoon for the children of Trinity’s employees.
• Our Employee Reward and Recognition Programme
profile has been lifted and has also been expanded
to focus more on HSSE best practices. Approximately
40 employees have benefitted from this initiative for
their efforts during 2022.
Responsible Corporate Citizen:
•
•
•
Trinity, in conjunction with the University of the West
Indies, has established the Bruce Ian Alan Dingwall
(Trinity) Memorial Scholarship for students studying
for qualifications in Geosciences. This tribute to our
late Chairman is available for any Caribbean student
who meets the established criteria set for the
scholarship. The selection is undertaken by a Joint
Committee comprising of various representatives
including Mr. Jack Dingwall, the eldest son of Bruce
Dingwall, CBE.
For the third consecutive year Trinity has
partnered with the Mayaro Past Pupils Association,
a non-governmental organisation, to recognise
excellence in education by sponsoring awards to
students from the Mayaro/Guayaguayare
communities who excelled at the Secondary
Entrance Assessment Examinations. Thus far
90 students have benefitted from our support.
In December 2022 Trinity embarked on a Toy
Drive whereby through staff contributions we
were able to distribute 250+ presents and snack
bags to underprivileged children in our fence line
communities.
Transitioning to a Lower Carbon Future
In addition to Trinity’s intention to create an Emissions
Reduction Plan post the establishment of our Scope 1
and 2 emissions baseline, Trinity’s operational automation
initiatives support our vision to evolve into a more
efficient and cleaner business. These initiatives continued
to be rolled out in 2022. Of note, key onshore and
offshore wells were automated to drive efficiency, reduce
intervention, improve safety, and reduce energy intensity.
At the end of 2022, approximately 50% of Trinity’s
production was automated using a remote monitoring
surveillance centre allowing wells to be controlled via
a Supervisory Control And Data Acquisition (“SCADA”)
system.
Based on the success of our 2021/2022 land well
automation programme, the Company has taken the
decision to expand the programme in 2023 to include
an additional 30% of our total production.
Social
In pursuit of the UN SDG 3: Good Health and Well-Being,
Goal 4: Quality Education and Goal 8: Decent Work and
Economic Growth, our Board continues to place strong
emphasis on our employees and the communities in which
we operate. In this regard we not only placed focus on all
stakeholder engagement but supported initiatives in
alignment with these Goals.
Responsible Stakeholder Engagement:
Trinity continues to ensure that there is ongoing
stakeholder engagement and reviews our levels of
engagement continuously to ensure that they are
effective and relevant. Refer to ‘Stakeholder
Engagement’ section pages 10 to 11.
Responsible Employer
•
•
Trinity prides itself on being an equal opportunity and
inclusive employer. We aim to be an employer of
choice and have well-established programmes for
recruitment, training and recognition/rewards.
-
-
-
277 employees including full time and contract
at end of December 2022.
22% of all staff are female.
24% of new hires in 2022 were females.
Trinity continues to provide benefits to its staff
in the form of a non-contributory pension, medical
coverage as well as life insurance coverage and free
access to a recognised Employee Assistance
Programme.
15
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Annual Report & Financial Statements 2022
Governance
Trinity’s core values of behaviour, rigour and purpose,
which align with the UN SDG 16: Peace, Justice and
Strong Institutions, continue to influence Management’s
efforts to maintain strong corporate governance as it
conducts its business.
Trinity has expanded its governance structure to support
its ESG Strategy and this is in addition to robust policies
(inclusive of Compliance, Whistleblowing, Gender,
Diversity and Inclusion, Conflict of Interest and Code of
Business Conduct), continuous training, risk management
and due diligence guide how we realise good Governance
within the business.
Policies for honest, fair and professional business
As an AIM quoted company, Trinity’s philosophy is to
have a zero-tolerance approach to bribery and unethical
behaviour by anyone associated with its business. Along
with this position being clearly defined in our Employee
Manual, various Compliance Policies (reviewed
periodically) and all contracts, annual compliance rollouts
are conducted to all members of staff to ensure ongoing
awareness and a conflict-of-interest review is undertaken
to ensure staff provide the necessary declarations. Trinity
has adopted the highest standards in this regard as
defined in the UK Bribery Act, UK AIM Market Rules,
UK QCA Code, Disclosure and Transparency Rules
and Know Your Client Procedures.
Trinity has an established Grievance Procedure and
a Whistleblowing Policy and Procedure in place. The
latter provides the conduit for all Trinity employees to
independently and anonymously report any conduct
suspected to be wrongdoing or dangers in the
operations. Reports are lodged to immediate supervisors,
the Compliance Officer or the Chairman of the Audit
Committee.
16
Trinity Exploration & Production plc
Financial Review
KPI’s
During 2022 the Group benefitted from higher oil prices and, combined with the Group’s robust cost control structure,
resulted in Adjusted EBITDA (before hedge costs) increasing by 66% to USD 35.1 million (2021: USD 21.1 million). The crude
oil hedges in place muted our upside exposure, although the Group delivered a resilient operating performance as shown
by Adjusted EBITDA (after hedge costs) increasing by 25% to USD 24.7 million and IFRS Operating Profit before SPT doubling
compared to 2021.
A summary of the year-on-year operational and financial highlights are set out below:
FY 2022
FY 2021
Change %
Average realised oil price1
Average net production2
Revenues
Cash balance
IFRS Results
Operating Profit before SPT
Total Comprehensive income for the year
Earnings Per Share – Diluted
APM Results
Adjusted EBITDA (before hedge costs)3
Adjusted EBITDA (after hedge costs)4
Adjusted EBITDA (after hedge costs)5
Adjusted EBITDA margin (after hedge costs)6
Adjusted EBIDA after Current Taxes7
Adjusted EBIDA after Current Taxes Per Share – Diluted
Consolidated operating break-even8
Net cash plus working capital surplus9
Notes:
USD/bbl
84.9
bopd
2,975
USD million
USD million
USD million
USD million
USD cents
USD million
USD million
USD/bbl
%
USD million
US cents
USD/bbl
USD million
92.2
12.1
19.0
0.1
0.0
35.1
24.7
22.7
26.8
12.3
30.6
32.1
14.2
60.4
3,006
66.3
18.3
9.3
7.7
18.0
21.1
19.8
18.0
29.9
14.8
35.0
29.2
20.8
41
(1)
39
(34)
104
(99)
(100)
66
25
26
(10)
(17)
(13)
10
(32)
1.
2.
3.
4.
5.
6.
7.
8.
9.
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 (before hedge) (USD MM): Adjusted EBITDA for the period, before Derivative expense.
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.
Adjusted EBITDA (USD/bbl): Adjusted EBITDA/Annual sales volume.
Adjusted EBITDA margin (%): Adjusted EBITDA/Revenues.
Adjusted EBIDA after Current Taxes: Adjusted EBIDA less Supplemental Petroleum Taxes ("SPT"), 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 27 to Consolidated Financial Statements – Adjusted EBITDA for further details on page 106.
Annual Report & Financial Statements 2022
17
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Adjusted EBITDA Calculation
Adjusted EBITDA is an Alternative Performance Measure guideline (“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.
2022
USD MM
2021
USD MM
Change %
Operating Profit Before SPT, Impairment and Exceptional Items
Add back realised hedge costs
DD&A
Share Option Expense
Impairment Losses on Financial Assets
FX loss/(gain)
FV gain/(loss) on derivative financial instruments
Adjusted EBITDA (before hedge)
Deduct realised hedge costs
Adjusted EBITDA (APM Result)
Current Taxes:
SPT
PPT and UL
Adjusted EBIDA after Current Taxes (APM Result)
Refer to Glossary for abbreviations.
2022 Trading Summary
19.0
10.4
7.6
0.6
0.0
0.4
(2.9)
35.1
(10.4)
24.7
(9.0)
(3.4)
12.3
9.3
1.3
7.4
0.6
(0.7)
0.0
3.2
21.1
(1.3)
19.8
(5.1)
(1.4)
13.3
104
697
3
0.0
(100)
2,857
(191)
66
697
25
77
143
(17)
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.
Realised Price
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
Opex/bbl – Consolidated
G&A/bbl – Consolidated2
Operating Break-Even3
Onshore
West Coast
East Coast
Consolidated4
Notes:
USD/bbl
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
USD/bbl
20181
59.8
1,563
198
1,110
2,871
24.2
10.0
14.5
19.1
11.7
22.1
20.1
16.8
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
10.7
12.1
26.9
17.1
14.9
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
14.0
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
16.0
6.3
19.0
32.2
23.2
29.2
2022
84.9
1,655
269
1,051
2,975
35.9
15.8
17.9
27.7
17.0
30.7
23.2
17.7
6.6
19.2
31.8
24.4
32.1
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 (before hedge) 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.
18
Trinity Exploration & Production plc
Financial Review (continued)
Review of Financial Statements
Summary of Results for the Year
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 72 to 88.
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 has 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 21
to the consolidated financial statements.
Higher revenue driven by higher average realised
oil price in 2022:
The positive impact of a 41% increase in average oil price
realisations to USD 84.9/bbl (2021: USD 60.4/bbl), and
a modest 1% decrease in average annual sales to 2,975
bopd (2021: 3,006 bopd), resulted in a 39% increase in
revenues to USD 92.2 million (2021: USD 66.3 million).
Maintained robust operating profits despite
inflationary pressures:
The Group continued to deliver strong operating margins
despite the inflationary pressures on goods and services.
Operating profit before taxes was USD 19.0 million (2021:
USD 9.3 million). The Adjusted EBITDA margin (pre-hedge
costs) increased to 38.1% (2021: 31.9%), with consolidated
operating break-even moving up to USD 32.1 (2021: USD
29.2) demonstrating the Group’s ability to be profitable
across a broad range of oil prices. The 25% increase in
Adjusted EBITDA (after hedge costs) to USD 24.7 million
(2021: USD 19.8 million) is a direct result of the increased
realised oil price and strong operational performance.
Increased capex investment programme to
drive growth:
USD 15.5 million (2021: USD 13.6 million) invested to
drive future production growth. This comprised:
•
•
•
•
•
USD 8.4 million Production capex comprising three
onshore wells drilled (USD 5.8 million), 17 RCP’s
(USD 1.5 million) and ABM-151 reactivation project
(USD 1.1 million).
USD 4.8 million Infrastructure Capex including
facilities, operations and ICT.
USD 1.7 million Subsurface and time-writing costs.
USD 0.3 million in Exploration and Evaluation (“E&E”)
relating to Onshore and West Coast.
USD 0.3 million Exploration and Evaluation (“E&E”)
assets relating to Galeota.
Refer to Notes to Financial Statements: Note 13 Property,
Plant and Equipment – Additions (USD 15.1 million) on
page 93 and Note 15 – Intangible Assets – E&E Additions
(USD 0.5 million) inclusive of accruals on page 95.
Continued financial strength:
The Group’s cash balances at year end were USD 12.1
million (2021: USD 18.3 million), primarily reflecting positive
cash generated from operations of USD 12.0 million (after
derivative payments and taxes), Capex spend of USD
(15.6) million and Financing activities of USD (2.2) million
(which included effecting our first share buyback).
In aggregate, despite these significant cash outflows,
the Group’s net cash plus working capital surplus stood
at USD 14.2 million (2021: USD 20.8 million) and our
current ratio was a healthy 2.1x (2021: 2.2x).
Annual Report & Financial Statements 2022
19
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Statement of Comprehensive Income
Operating Profit Before SPT, Impairment and
Exceptional Items
2022 Financial Highlights
Average realisation of USD 84.9/bbl (2021: USD 60.4/bbl).
Operating Revenues
Operating revenues up 39% to USD 92.2 million
(2021: USD 66.3 million).
Operating Expenses
Operating expenses increased by 29% in 2022 to
USD (73.3) million reflecting operating in a higher
crude oil price environment (2021: USD (56.9) million)
and comprised:
Operating Expenses (excluding non-cash items):
USD (67.6) million (2021: (46.4) million):
•
Royalties of USD (30.1) million (2021: USD (19.8)
million), this increase being driven by the higher
average realised oil price.
• Opex of USD (19.2) million (2021: USD (17.6) million),
the increase mainly due to impact of inflationary
pressures on goods and services as well as increased
repairs and maintenance, workovers and fuel in
the year.
•
•
•
•
G&A expenses of USD (7.2) million (2021: USD (7.0)
million), the increase mainly due to recruitment
and replacement of key personnel to support
the businesses growth strategy, increased levies,
business travel, and administrative costs including
professional fees.
Derivative expense of USD (10.4) million (2021:
Derivative expense of USD (1.3) million) being the
cash impact of derivative instruments paid out
for 2022.
Covid 19 expense of USD (0.6) million (2021:
USD (0.7) million) being the costs associated
with accommodation, testing and sanitisation
related to our prevention and response.
Cash FX loss USD (0.1) million (2021: USD 0.0 million)
Non-Cash Operating Expenses: USD (5.7) million
(2021: USD (10.5) million):
•
•
•
•
•
DD&A of USD (7.6) million (2021: USD (7.4) million).
Derivative credit of USD 2.9 million (2021: Derivative
expense of USD (3.2) million) being the movement in
the FV of derivative instruments held at the beginning
and end of the financial year.
SOE of USD (0.7) million (2021: USD (0.6) million).
ILFA reversal USD 0.0 million (2021: USD 0.7 million).
FX loss USD (0.3) million (2021: USD 0.0 million).
The operating profit before SPT, impairment and
exceptional items for the year amounted to USD 19.0
million (2021: USD 9.3 million) and was mainly due to
higher operating revenues resulting from higher oil
prices despite inflationary pressures on cost.
SPT and PT
SPT and PT of USD (9.0) million (2021: USD (3.6) million)
and comprised:
•
•
SPT of USD (9.0) million (2021: USD (5.1) million)
mainly due to the higher realised oil prices in relation
to the Group’s operations in 2022. Both onshore and
offshore assets were subject to SPT in 2022 as the
realised oil price throughout the year was higher
than USD 75/bbl.
PT nil (2021: USD 1.5 million net reversal), as
no Notice of Assessment has been received in
relation to this tax.
Operating Profit before Impairment and
Exceptional items
The Group’s reported operating profit before impairment
and exceptional items was USD 10.0 million (2021: USD
5.8 million). Adjusting for non-cash expenses, the Group’s
Adjusted EBIDA after Current Taxes was USD 12.3 million
(2021: USD 14.8 million) (further details below).
Impairment charge
Impairment charges taken were USD (6.1) million (2021:
USD (1.3) million) relating to the Impairment of property,
plant, and equipment USD (5.8) million and Inventory
USD (0.3) million.
See Note 3(d) to Consolidated Financial Statements -
Impairment of Property, Plant and Equipment for further
details on page 86.
Exceptional Items
Exceptional items were USD (0.2) million relating to the
cyber incident costs in December 2022 (2021: USD (0.1)
million relating to fees for corporate restructuring advice).
See Note 7 to Consolidated Financial Statements -
Exceptional items for further details on page 89.
Finance Income
Finance income is solely related to bank interest income
received on short term investments with financial
institutions of USD 0.1 million (2021: USD 0.1 million).
20
Trinity Exploration & Production plc
Financial Review (continued)
•
Decrease in Deferred Tax Liabilities (“DTL”)
USD 0.1 million due to accelerated accounting
impairments/depreciation (2021: USD 0.6 million
decrease).
See Note 10 to Consolidated Financial Statements –
Income Taxation for further details on page 90.
Total Comprehensive Income
Total Comprehensive Income for the period was
USD 0.09 million (2021: USD 7.7 million income).
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, 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 after hedge
expense at USD 24.7 million and Adjusted EBIDA
after Current Taxes at USD 12.3 million as it is used
by Management and judged to be a better measure
of underlying performance.
Finance Costs
Finance costs amounted to USD (1.3) million
(2021: USD (1.5) million) and comprised:
•
•
•
Unwinding of the discount rate related to the
decommissioning liability USD (1.1) million
(2021: USD (1.2) million).
Bank overdraft interest USD (0.1) million
(2021: (0.2) million).
Interest on Leases USD (0.1) million
(2021: USD (0.1) million).
See Note 9 to Consolidated Financial Statements –
Finance Costs for further details on page 90.
Income Taxation
Income Taxation charge for 2022 of USD (2.3) million
(2021: USD 4.7 million credit), comprising the following:
•
Current Taxes comprising
-
-
Petroleum Profit Tax (“PPT”) USD (2.4) million
(2021: (1.0) million).
Unemployment Levy (“UL”) USD (1.0) million
(2021: USD (0.4) million).
•
Increase in Deferred Tax Assets (“DTA”) recognised
on available tax losses of USD 1.0 million (2021:
Increase in DTA of USD 5.5 million).
Adjusted EBITDA
100
92.2
(67.5)
90
80
70
60
50
40
30
20
10
0
(5.7)
5.7
24.7
(12.4)
19.0
12.3
USD MM
Revenue
Cash
Operating
Expenses
Non-Cash
Operating
Expenses
Operating
Profit
Before SPT
Adjustments:
Non-Cash
Expenses
(DD&A, SOE,
Other Expenses,
ILFA & FX)
Adjusted
EBITDA
Currrent
taxes
(SPT AND
PPT/UL)
Adjusted
EBIDA
After Current
Taxes
Annual Report & Financial Statements 2022
21
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Reconciliation of Adjusted EBIDA after Current Taxes and Net Cash Inflow from Operating Activities
3.4
(3.4)
12.0
(0.1)
(0.2)
12.0
18
15
12
9
6
3
0
USD MM
Adjusted
EBIDA
after
current taxes
Changes in
Working Capital
Exceptional
items
Current
tax expense
Current
tax paid
Cash flow from
Operating Activities
Consolidated Statement of Cash Flows
35
30
25
20
15
10
5
0
USD MM
12.0
(15.6)
18.3
(2.2)
(0.3)
12.1
12.0
Opening Cash
Balance
Operating
Activities
Investing
Activities
Financing
Activities
Effects of FX
rates on Cash
Closing Cash
Balance
22
Trinity Exploration & Production plc
Financial Review (continued)
Statement of Cash Flows
Cash inflow from operating activities
Cash outflow from financing activities
Operating Cash Flow was USD 12.0 million
(2021: USD 12.6 million) comprising:
Cash outflow from financing activities was
USD (2.2) million (2021: USD (0.6) million):
• Operating cash flow before working capital
and income taxes of USD 15.5 million
(2021: USD 16.1 million).
•
•
Changes in working capital resulted in a net decrease
of USD (0.1) million (2021: USD (1.8) million decrease).
Income taxes, PPT and UL paid USD (3.4) million
(2021: USD (1.7) million paid) resulting from the
higher oil price.
•
•
•
•
Share buyback of USD (1.5) million (2021: nil).
Principal paid on lease liability USD (0.5) million
(2021: (0.4) million).
Interest paid on lease liability USD (0.1) million
(2021: (0.1) million).
Net Finance cost of USD (0.1) million
(2021: USD (0.1) million).
Cash (outflow) from investing activities
Cash outflow from investing activities was
USD (15.6) million (2021: USD (13.8) million):
•
•
•
•
Property, plant and equipment for the year totaling
USD (15.0) million (2021: USD (10.0) million).
Expenditure on exploration and evaluation assets
and other intangible assets USD (0.4) million
(2021: USD (3.2) million) as the Group continued
to invest in Galeota.
Computer software USD (0.1) million
(2021: USD (0.4) million).
Performance bond related to the onshore
lease operatorship assets USD (0.1) million
(2021: USD (0.3) million).
Net Cash Plus Working Capital Surplus
(All figures in USD million)
A:
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative Financial Instrument
Total Current Assets
B:
Current Liabilities
Trade and other payables
Bank overdraft
Lease liability
Taxation payable
C:
D:
Derivative Financial Instrument
Provision for other liabilities
Total Current Liabilities
(A-B+C+D):
Cash plus working capital surplus
Closing Cash Balance
Trinity's cash balance at 31 December 2022 was
USD 12.1 million (31 December 2021: USD 18.3 million).
FY 2022
Audited
FY 2021
Audited
FY 2020
Audited
FY 2019
Audited
12.1
10.7
4.6
–
27.4
9.9
2.7
0.6
–
–
0.2
13.4
14.2
18.3
10.8
3.8
–
32.9
8.8
2.7
0.6
–
2.9
0.1
15.1
20.8
20.2
7.2
5.3
0.3
33.0
7.8
2.7
0.6
0.2
–
–
11.3
21.4
13.8
9.4
5.2
0.1
28.5
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 2022
23
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
Events since Year End
1.
Subsequent to 31 December 2022, the Group has
received further VAT refunds of USD 2.6 million as
at 31 May 2023. On 10 May 2023, the Government
of Trinidad and Tobago announced that it intends
to settle outstanding VAT refunds via interest
bearing bonds in order to meet VAT arrears of
those registrants who are owed in excess of
USD 0.03 million in VAT refunds. At the end
of May 2023, the Group had USD 2.0 million
in VAT refunds recoverable in VAT bonds.
2. On 31 December 2022, the FZ-2 Lease Operating
Agreement (“LOA”) expired. Trinity obtained an
interim renewal of the LOA to 31 March 2023 and
obtained a further extension to 30 June 2023 to
execute the LOA for the period 1 January 2023
to 30 September 2031.
3. On 29 March 2023, the Group provided six-months’
notice to Heritage to terminate the sub-licence Farm-
Out agreement for the Tabaquite block. The new
sub-licencee requirements proposed to the Group
makes this licence uneconomic to operate.
4. Cyber incident – The Group was the subject of a
sophisticated cyber incident in December 2022 and
immediately took precautionary measures to protect
its IT infrastructure. The Group engaged with external
specialists to investigate the nature and extent of the
incident and implement its systems recovery plan.
Trinity moved quickly to notify relevant regulators
and law enforcement agencies. Trinity's production
facilities continued to operate safely throughout. In
2023, the Group continues to execute its recovery
plan. Trinity's IT team and its external advisers
continue to support the business in returning its
administrative systems to full capacity incorporating
learnings from the incident and embedding more
resilient IT infrastructure, cyber security systems
and procedures.
5. Trintes Field Incident – On the evening of 10 April
2023, a fire occurred in one of the two generators
on the Trintes Bravo platform. Production across
the field was halted and the fire was contained.
Production restarted from Alpha and Delta platforms
on 11 April 2023. Four operators, all Trinity staff,
were on Bravo at the time of the incident and,
having suffered minor injuries, all have now recovered
and resumed work. Following approval from the
Ministry of Energy and Energy Industries, received
on 17 April 2023, the Company successfully restored
oil production from all previously producing wells
on the Bravo platform on 18 April 2023. Production
from the field is in-line with pre-incident levels at
approximately 1,010 bopd.
6. Share buyback – As at 31 December 2022, the
second tranche of the share buyback programme
was still ongoing with 400,000 shares having been
repurchased to 31 December 2022 utilising USD 0.5
million of the USD 1.0 million second tranche. On 26
April 2023, the second tranche of the share buyback
programme was completed and a third tranche
was announced on 28 April 2023 for up to a further
USD 1.0 million. This tranche will be funded from
the Group’s existing cash resources and will,
unless terminated at an earlier date, expire at the
conclusion of the 2023 AGM, or 30 June 2023,
whichever is earlier.
7. Renewal of PGB Exploration and Production Licence
– On 3 May 2023, the MEEI provided confirmation of
the renewal of the PGB Licence for an additional 25
years from the Effective Date of 18 December 2012.
Consequently, the PGB Licence expires on 17
December 2037. There were no additional liabilities
and commitments arising from the renewed Licence.
24
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 2021 for each of the principal risks.
Change Strategic
Risk from Objective
Profile What is the risk? KPI's affected 2021 Impacted Responsibility Page
A HSSE Loss Time Accidents h e CEO 25
Reportable Environmental
Incidents
B Climate Change (Emissions) Production h er Board 25
& Energy Transition
Impact
Liquidity
C Production and Production = rt CEO, COO and 26
Reserves Risk Executive Manager
Exploration
Liquidity
D Development Risk Production = t COO 26
E Counterparty/Contractor Production = ert COO & CFO 27
Exposure
Cash from Operations
Liquidity
F Commercial Risk Production h rt CFO 27
- Oil Price Risk
Cash from Operations
Liquidity
G Customer Cash from Operations = t CFO 27
Concentration Risk
Liquidity
H Competition Risk and Liquidity h rt EMT 27
Cost Inflation
Operating Cash Flow
I Regulatory/Fiscal Risk Reputational x et EMT 28
J Major breach of business, Cash from Operations = er EMT 28
ethical, or compliance
standards
Liquidity
K Cash Flow & Financing Risk Cash from Operations = t CFO 28
Liquidity
L Operational Risks Production = ert COO 29
M Cybersecurity and ICT Risks Reliable information h rt CFO 29
systems
Refer to Our Strategic Objectives & Priorities on page 5.
e Operate Safely and Responsibly.
r Efficiency & Innovation.
t Financial and Capital Discipline.
Annual Report & Financial Statements 2022
Risk Details
A HSSE
Management of HSSE risk 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, and subject to typical retentions, but should an
incident occur of a scale in excess of these recommended
limits, or within these retentions, 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 measures taken. Throughout
2022 the enhanced HSSE Governance via the Board
appointed HSSE champion and the two Management
HSSE Committees proved very effective in leading
initiatives to further improve the HSSE culture and
practices across the Group. Opportunities for
improvement identified at the end of 2021 formed the
basis of a defined HSSE Improvement Plan for 2022 and
this Plan was successfully implemented. This improved
Governance Model has proven to be fit for purpose and
is adding value in the effective management of risk across
the operations.
COVID-19 – Post Pandemic
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
in place and provides appropriate guidance to all staff.
In 2022 Trinity continued its hybrid in-office and work-
from-home arrangements for administrative staff, even
after Government restrictions were lifted, as we believe
that it is a win-win for both Trinity and its employees
post the learnings of the pandemic.
B
Climate Change (Emissions) & Energy Transition
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
25
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
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.
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 the medium term whilst supply will become
increasingly challenged as the Majors divert capital
expenditure towards diversifying their revenue
streams. 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).
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,
26
Trinity Exploration & Production plc
and various chemicals. Once the effluent water
meets the requirements and can be recycled
there is potential that it can be used for activities
such as WO operations.
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.
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.
4.
5.
Trinity is also looking into renewable energy
solutions/sources of energy for its existing and
potential future assets. In 2021, Trinity employed
a solar system to power its WD-5/6 field office
and remove it from the grid.
Trinity is assessing our current scope 1 and 2
emissions and seeking methods to reduce them.
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 over 380 wells 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
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 380 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 on a well’s
criticality to 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.
D Exploration/drilling, Development Risk
The Group has invested in oil and gas exploration and
development assets which involve a significant degree of
risk. There is no guarantee that such exploration/drilling
or development will lead to commercial discovery, and
that reserves will be realised. 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/onshore
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.
Annual Report & Financial Statements 2022
27
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
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. 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 practice, 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 safely deliver on time, within budget and to a sufficient
quality and ethical manner. Failure by counterparties to
safely deliver on their commitments on time and within
budget creates a risk of reputational/environmental
damage, delay and/or overspend on any given project.
The key risks we have seen in 2022 to present, relate to;
reduction in the number of service providers; inflationary
pressures, and poor contractor HSSE performance.
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. The Group also encourages its
safety culture with our counterparties through training,
drills and safety village meetings. As the Group continues
to navigate this period of uncertainty, Management is
confident that our demonstration of agility, adaptability
and alignment have placed Trinity in an advantageous
position as it relates to managing counterparty/contractor
risk.
as demonstrated in 2022. 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. In 2023 there are currently no hedging
instruments in place.
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 (“COSA”),
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 at a price
determined by Heritage which is at a discount to market
traded prices. There is the potential for the discount
to widen and thereby impact revenues received under
these types of contracts. The Group has the right,
subject to first refusal from Heritage, to market
production from its E&P licences (Galeota, Brighton
Marine and PGB) to third parties and the ability to
enter into COSA with them.
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.
F
Commercial Risk - Oil Price Risk
H Competition Risk and Cost Inflation
The market price of oil is affected by global supply and
demand, and therefore can be very volatile. 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 impact 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,
inflationary increases typically set in, muting increases
in 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. Conversely,
hedging to mitigate the risk of a fall in oil price can mean
the Group misses out on the upside from higher prices,
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
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. The rapid increase in hydrocarbon prices
and increased level of cost inflation has had a knock-on
impact in increasing the cash required to support
economically viable projects. Furthermore, due to
the Russia Ukraine conflict, the Group experienced
challenges with supply chain disruptions including higher
freight costs and longer lead time 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
28
Trinity Exploration & Production plc
Risk Management and Internal Controls (continued)
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. However, 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.
During 2022 realised oil prices exceeded the threshold for
SPT for all assets which resulted in higher SPT liabilities
for the Group.
Effective 1 January 2021, the Government of Trinidad and
Tobago increased the SPT threshold for small onshore
producers from USD50/bbl to USD75/bbl for fiscal years
2020 and 2021 (and, subsequently, 2022). This incentive
has been enhanced effective 1 January 2023, whereby
the definition of a small onshore producer was revised
from a person who produces less than 2,000 bopd to a
person who producers less than 4,000 bopd and by the
removal of the sunset clause that had previously limited
the incentive to the 2020-2022 fiscal years.
New wells in existing shallow marine areas is a new
element of the SPT regime introduced, whereby a lower
rate of SPT applies to new wells in existing fields in
shallow marine areas that have been approved and
certified for development by the Minister of Energy.
In this regard, an “existing field” is defined as a field that
produced oil before 1 January 2023 while a “new well” is
one that was not producing oil before 1 January 2023.
There is an increase to the Investment Tax Credit
available to production companies from 25% to 30% of
the qualifying capital expenditure.
The revised and new clauses were enacted in Finance Act
No. 2, 2022 and became effective 1 January 2023.
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 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 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 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.
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.
rigorous financial discipline and maintaining a
strong balance sheet and cost control culture;
29
l Strategic Report
Governance
Financial Accounts
Glossary
Company Information
As techniques used to obtain unauthorised access to, or
to sabotage, systems change frequently and may not be
known until launched against us or our third-party service
providers, we may be unable to anticipate or implement
adequate measures to protect against these attacks and
our service providers may likewise be unable to do so.
In December 2022 the Company was subject of a
sophisticated cyber incident and immediately took
precautionary measures to protect its IT infrastructure
and engaged with international external specialists to
investigate the nature and extent of the incident and
implement its systems remediation plan. Trinity quickly
notified relevant regulators and law enforcement
agencies. The impact to the business was limited,
principally to support and administrative functions, whilst
operations continued with minimal disruption. Following
the incident, the Company and its external advisors
successfully returned its administrative systems to full
capacity incorporating learnings from the incident and
embedding more resilient infrastructure, cyber security
systems and procedures.
Annual Report & Financial Statements 2022
3.
4.
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.
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 and
negotiations for the renewal of the remaining one
(FZ-2) is in progress. Each of these LOAs have a
Minimum Work Obligations programme. Although the
Tabaquite Farmout has expired Trinity has been
operating the asset under an agreed holding-over
arrangement pending the formal extension or
termination. However, in March 2023, Trinity served
notice of its intention to terminate the sub-licence
Farm-out agreement for the Tabaquite block as the
new sub-licencee requirements proposed to the
Group makes this licence uneconomic to operate.
Trinity operates 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 licence has expired and on 3 May 2023 was
renewed for 25 years effective from the 18 December
2012. There were no additional liabilities and
commitments arising from the renewed Licence.
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-Licensee, Heritage, and the
MEEI and routinely seeks to mitigate any risks by ensuring
that the co-Licensee, Heritage, and the main government
regulator, MEEI, are kept updated and informed
throughout the period.
M Cybersecurity and ICT Risks
Cybersecurity risks for companies have increased
significantly in recent years due to the increasing global
threat and sophistication of cybercrime. A cybersecurity
breach, incident or failure of our IT systems could disrupt
our businesses, put employees at risk, result in the
disclosure of confidential information, damage our
reputation and create financial and legal exposure.
30
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:
throughout the year. Specifically in respect of
shareholders, both retail investor events and institutional
investor meetings are held regularly during the year to
provide updates and receive feedback. We value feedback
from our stakeholders and take every opportunity to
ensure that their wishes are duly considered.
•
•
•
•
•
•
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
Shareholders
The Board places equal importance on institutional and
individual shareholders and recognises the significance
of transparent and effective communications with all
shareholders.
As an AIM listed company, we recognise a need to provide
fair and balanced information in a format that all stakeholders,
and particularly our shareholders, can understand.
The primary communication tool with our shareholders is
through the 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’s CFO
monitors and coordinates investor relations programmes.
We update, and where appropriate seek feedback from, all
key stakeholders via regular meetings and communications
Employees
The Board recognises that the employees are one of
the Group’s key resources, enabling delivery of the
Group’s vision and goals.
Annual pay and benefit reviews are carried out regularly
to determine whether all employees are aligned to industry
regional benchmarks 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 2022
awards were issued under the Company’s long term
incentive plan to certain individuals within the executive
management team (“EMT”) and the awards issued in 2020
vested. A new cash-based scheme was introduced in 2022
to team leaders (being the next level below the EMT). Both
the awards and the cash-based scheme are designed to
encourage and incentivise senior members of the team
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 to use their skills in
the relevant areas of the business. The Remuneration
Committee works to ensure that staff are appropriately
rewarded to maintain engagement and commitment.
Suppliers and Customers
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 interactions with 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 2022, and through into 2023,
there has been regular engagement with key suppliers
to ensure the ongoing safety and performance of the
business as the Group implemented improved measures
to safeguard the protection of staff.
Government and Regulatory Bodies
The Board understands the importance of strong
relationships with the government and regulatory bodies.
Day to day interactions is delegated through the EMT
to have direct engagement with local, regional and
national government authorities regarding operations,
environmental issues, permitting and other relevant
topics. Respecting our agreements with our partners
is at the heart of our licence to operate, and we engage
in regular discussions with government and state
representatives to ensure that expectations are
understood, and assets are managed effectively.
Annual Report & Financial Statements 2022
Community and environment
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 values 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:
Initiate thought before action by promoting
sustainability and proactively protecting the
environment.
Purpose:
Fit for delivering our goals by engaging with,
learning from, as well as 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.
Policies and process
The Board reviews the HSSE measures implemented by
the Group and the EMT’s recommendations for better
practices on a monthly basis. Kaat Van Hecke, Non-
Executive Director, is the Board’s designated HSSE
Champion and is 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 take
place on a quarterly basis (and ad hoc as required).
The importance of making all staff feel safe in their
environment is acknowledged 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.
31
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
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 refreshers 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.
2022 and on-going performance: post the global Covid-19
pandemic, the Company has delivered a robust operating
performance and worked hard to ensure the stability of
the business, despite disruptions to the supply chain and
higher inflation. Solid production levels have been
maintained, and projects have been progressed to grow
the business, including the 2022 Onshore and Nearshore
Competitive Bid Round submission and preparations for
drilling the deep ‘Jacobin’ well in 2023.
Principal decisions during 2022
Key decisions made by the Board were in relation to:
•
•
•
•
•
•
•
•
•
Implementing a comprehensive HSSE plan during
the year;
Share buyback programmes which as at 31 December
2022 had returned USD 1.53 million to shareholders;
Drilling three infill wells onshore;
Progressing plans to drill the deeper "Jacobin" well,
drilling commenced on 15 May 2023;
Progressing a reactivation programme for a key
West Coast well, ABM-151;
Approval of the 2023 Budget;
Preparation of a bid for the Buenos Ayres block in
the 2022 Onshore and Nearshore Competitive Bid
Round conducted by the Government of Trinidad and
Tobago Ministry of Energy and Energy Industries. The
Company’s bid was submitted on 9 January 2023;
Strengthening the executive management team with
three new senior appointments, including Julian
Kennedy as CFO in January 2023; and
Agreeing to commence the field development study
to develop Trintes 2P reserves.
Further details can be found in the Chairman and Chief
Executive Officer’s Statement.
On behalf of Board
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
Nicholas Clayton
Non-Executive Chairman
31 May 2023
32
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 2022. At Trinity we 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 progress to date.
All AIM listed companies are required to comply with a
recognised corporate governance code and the Board
made the decision to 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 elsewhere in this
report and on the Group’s website.
The Board is committed to ensuring good corporate
governance, at Board level and throughout the business.
The Board comprises a Non-Executive Chairman, CEO,
three Independent Non-Executive Directors and one
Non-Executive Director. In February 2022, David Segel
resigned as Non-Executive Director and Kaat Van Hecke
was appointed as an Independent Non-Executive
Director.
As Non-Executive Chairman it is my duty to ensure that
very high standards of governance are delivered and fed
down throughout the organisation. The Board 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 24 to 29 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.
2022 was characterised by high oil prices and high
inflation following the well documented Russian invasion
of Ukraine. The Company delivered a robust operating
performance during the year, highlighting the strength
and resilience of our core business. However, cashflow
growth was muted by substantial hedging arrangements
put in place during 2021 to protect the business from the
risk of low oil prices given the punitive nature of SPT.
Those hedging instruments gradually unwound over the
course of 2022, and from 1 January 2023 the Company
has no hedging instruments in place. The total cash cost
of the hedging programme in 2022 was 10.4 million
million. The Company believes that hedging remains a
valuable component of its risk management toolkit and
will continually monitor the oil price environment
alongside its financial commitments to determine its
future hedging strategy.
Operationally, the Group maintained operations
throughout 2022, with 2 LTIs which was a deterioration,
with plans in place to remedy the safety gaps that were
identified. The framework that Management has built up
over the past few years has enabled the business to
develop during a period of considerable uncertainty since
the Covid 19 pandemic. The Board has continued to work
effectively through this period, increasing the number of
ad hoc meetings to ensure that the Company’s strategy
can be delivered and its 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 community. Governance of HSSE
and ESG functions are overseen by Kaat Van Hecke at
board level.
As the Group addresses the next phase of development
for the business, as Non-Executive Chairman, I will work
with the Board to cement the existing values and ensure
that sound corporate governance and strong principles
continue to be present throughout the organisation, for
the benefit of all stakeholders.
Nicholas Clayton
Non-Executive Chairman
31 May 2023
Annual Report & Financial Statements 2022
QCA Principles
33
Strategic Report
l Governance
Financial Accounts
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 QCA Code is a corporate governance code published
by the Quoted Companies Alliance and is the code
adopted by the majority of AIM companies. It is a
principles-based code for companies focused on growth.
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 aims to position the Group to create
long-term shareholder value by developing and
maximising the value of its resource base in Trinidad &
Tobago, whilst maintaining rigorous focus on cost control,
efficient capital deployment and capital discipline.
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 limit the level of
risk associated with our operating activities to an
acceptable level.
Our Business Model and Strategy is outlined on page 5 of
the Strategic Report and details of the key risks for the
business and how these are mitigated can be found on
pages 24 to 29.
2. Seek to understand and meet shareholder needs
and expectations
The Group welcomes the opportunity to maintain an open
dialogue with its shareholders, to ensure that it can
understand and meet shareholder needs and
expectations.
General inquiries can be submitted directly to the Group or
our PR advisors (Vigo Consulting Limited) by either calling
+1 868 612 0067 or emailing info@trinioil.com or
trinity@vigoconsulting.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.
Nicholas Clayton, Non-Executive Chairman, 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 emailing
trinity@vigoconsulting.com.
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. Shareholders can submit their proxy
votes 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 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. If 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 on 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
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:
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.
34
Trinity Exploration & Production plc
QCA Principles (continued)
We value feedback 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.
During 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 HSSE measures are in place to protect the
environment. The CSR philosophy of the Group is fed
down from the Board throughout the organisation. During
2022 the Group engaged with the local community,
providing toys around Christmas to underprivileged
children. 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 24 to 29. 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.
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 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 director 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 Director. The Board does not
deem this necessary given the Chairman is non-executive.
The Board have 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 a Remuneration
Committee and a Technical 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 in reality all Non-Executive Directors commit
substantially more time than this to the Company.
The Board holds monthly board calls, which it believes is
beneficial given the current development of the business,
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.
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, three Independent Non-Executive Directors,
one Non-Executive Director 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.
Annual Report & Financial Statements 2022
35
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Company Information
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, and
embraces diversity across the workplace.
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 of
the Directors’ continued independence. A formal review
of the performance of the Board was undertaken in Q4
2022 by a third-party provider. All members of the Board
participated in an anonymous survey, which covered
areas including: Board performance, dynamics and
leadership, strategic oversight and risk management and
a report was provided to the Board analysing the results.
Improvements and recommendations arising from the
evaluation process are currently being implemented.
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.
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.
A Delegation of Authority 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 holds monthly board calls, which it believes is
beneficial given the current development and uncertainties
surrounding the business, to enable the Non-Executive
Directors to be more involved in core decision making
between formal (in person) board meetings which involve
approving quarterly updates, interim and annual financial
accounts, budget and remuneration reviews.
The Board retains full and effective control over the
business and operations of the Group. The Board’s regular
schedule provides for monthly Board meetings, of which
four are formal in-depth meetings and the remaining being
monthly calls providing operational, HSSE, financial and
business development updates. The Board also has ad-
hoc calls as and when the business requires. 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 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
36
Trinity Exploration & Production plc
QCA Principles (continued)
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 and calls 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 HSSE, Production/Operations, Financial and
Strategic goals 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.
6.
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;
setting the capital allocation policy that includes
returns to shareholders in the form of share buybacks
and dividends.
any decision to cease to operate all or any part of the
Group’s business;
7. major changes to the Group’s corporate structure and
management and control structure;
any changes to the Group’s listing;
changes to governance and key business policies;
8.
9.
10. ensure maintenance of a sound system of internal
control and risk management;
11.
12.
approval of half yearly and annual report, accounts
and preliminary announcements of final year results;
review material contracts and contracts not in the
ordinary course of business; and
13. 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 Kaat
Van Hecke is the Board member responsible for
overseeing 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 Kaat
Van Hecke who was appointed Chair effective from 1 July
2022, Derek Hudson and Angus Winther. Nicholas Clayton
stepped down as Chair of the Committee on 1 July 2022.
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.
The Technical Committee currently comprises two Non-
Executive Directors; James Menzies (Chair) and Derek
Hudson, and three other independent experts who bring
complementary and relevant expertise to the
Annual Report & Financial Statements 2022
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 page 10 for further information.
Corporate Governance Framework
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.
Technical Committee
The Technical Committee interacts with the sub-surface
teams at a working level, offering mentorship. It follows
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.
37
Strategic Report
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Glossary
Company Information
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.
Company Secretary
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
Nicholas Clayton
Non-Executive Chairman
31 May 2023
38
Trinity Exploration & Production plc
Board of Directors
Executive Directors
Jeremy Bridglalsingh
Executive Director
Non-Executive Directors
Nicholas Clayton
Non-Executive Chairman
(11 January 2017 to present)
(28 November 2018 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 10 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.
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 Director of Active
Away Ltd and Royal Lymington Yacht Club Limited.
James Menzies
Independent Non-Executive Director
Technical Committee Chairman
(23 June 2017 to present)
James is British and is 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.
James is a Director of Topaz Number One Limited and
Topaz Advisers Limited.
Annual Report & Financial Statements 2022
39
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Financial Accounts
Glossary
Company Information
Angus Winther
Non-Executive Director
Audit Committee Chairman
(11 January 2017 to present)
Angus is British and spent 28 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 non-executive chairman (designate) of Apollo
Syndicate Management Limited (a Lloyd’s managing
agent), a non-executive director of 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.
Kaat Van Hecke
Independent Non-Executive Director
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 the chairwoman of
the Remuneration Committee, a member of the Audit
Committee and is responsible for the Board’s oversight
of the HSSE function.
David Segel
Non-Executive Director
(11 January 2017 to 22 February 2022)
Derek Hudson
Independent Non-Executive Director
(14 September 2021 to present)
Derek is Trinidadian and 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.
40
Trinity Exploration & Production plc
Executive Management Team
Jeremy Bridglalsingh
Chief Executive Officer
Denva Seepersad
Executive Manager, Finance & ICT
Joined Trinity in 2012. Chartered Management Accountant
for 17 plus years with previous financial services
experience gained in the United Kingdom.
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 plus years’
experience in the upstream oil sector in Trinidad.
Julian Kennedy
Chief Financial Officer
Julian has 30 plus years in the oil and gas sector in the
disciplines of Strategic Planning, Business Development
and M&A. He joined Trinity in September 2022 and was
appointed Chief Financial Officer in January 2023. He has
overall responsibility for Finance, Investor Relations,
Supply Chain and Commercial.
Mark Kingsley
Chief Operations Officer
Mark has over 35 years in the upstream oil and gas
industry, including managing operating companies, assets
and multiple functional disciplines. He joined Trinity in April
2023 and has overall responsibility for Operations,
Subsurface and Developments.
Nirmala Maharaj
Chief of Staff & General Counsel
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 plus
years’ experience.
Dr. Ryan Ramsook
Executive Manager, Exploration
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 also lectures and is involved in
collaborative Geoscience research with the University
of the West Indies and Fellow of the Geological Society
(FGS) of London. He is a Geologist by background with
19 plus years’ experience.
Alistair Green
Executive Manager, Development
Alistair has 15 plus years’ experience working in a wide
range of commercial and technical roles. He joined Trinity
in December 2022 and is responsible for maturing new
Developments and the Petroleum Engineering portfolio
in our operations.
Ronald Solomon
Executive Manager, Operations
Joined Trinity in 2021. Engineer by background. 17 plus
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 2022
Board Activities
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The Board is responsible for maintaining full and effective
control over the Group. The Board holds regular meetings
at which HSSE, Production/Operations, Financial and
strategic goals are considered and agreed.
Matters which are reserved for the Board include:
•
•
•
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,
Remuneration and Technical Committees are chaired
by Non-Executive Directors who work closely with
the Company 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 his working time to his 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. It is expected, where possible, 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 2022 is detailed
in the table below:
Directors’ attendance
Director Requirement
Jeremy Bridglalsingh
Angus Winther
David Segel2
James Menzies
Nicholas Clayton
Derek Hudson
Kaat Van Hecke3
Total meetings
Notes:
Board
Scheduled
Meeting
Board
Ad Hoc
Meeting1
Audit
Committee4
Remuneration
Committee5
Technical
Committee
11
11
11
1
9
11
10
9
11
4
4
4
4
3
4
4
4
3
3
3
2
3
2
3
5
5
1
5
4
4
5
Ad hoc
15
15
15
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.
David Segel resigned as Non-Executive Director on 22 February 2022.
Kaat Van Hecke was appointed as Non-Executive Director on 22 February 2022.
On 6 May 2022 Nicholas Clayton stood down as a member of the Audit Committee and Kaat Van Hecke was appointed as a member.
On 6 May 2022 Nicholas Clayton and James Menzies stood down as members of the Remuneration Committee and Kaat Van Hecke and Derek Hudson were
appointed as members.
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.
42
Trinity Exploration & Production plc
Audit Committee Report
Responsibilities of the Audit Committee
External Auditors
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.
2022 Activities
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 41. Although not members of the Audit
Committee, the Chairman, Chief Executive Officer, Chief
Financial Officer and Executive Manager of Finance and
ICT 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.
Appointment of External Auditors
•
•
•
The Group fee to BDO for the financial year
to 31 December 2022 is USD 0.3 million
(2021: 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 2023.
In relation to the appointment, re-appointment
and removal of the Company's External auditor.
The Audit Committee oversees the selection
process for a new auditor.
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.
The Audit Committee reviewed the impact of the
sophisticated Cyber incident that occurred in December
2022, the steps taken by the Company to close out and
reestablish its systems and was satisfied that the rebuild
is resilient and fit for purpose.
Angus Winther
Chairman of the Audit Committee
31 May 2023
Annual Report & Financial Statements 2022
Technical Committee Report
43
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
The Technical Committee is responsible for providing
objective and independent feedback to the Board of
Directors on opportunities being considered.
The Committee’s role includes:
• Mentoring and providing guidance to the Subsurface
Team, supporting and providing the Board with
assurance and confidence in order to support the
Executive team and wider Board’s ability to make
confident decisions concerning the business.
•
•
•
Assisting in the development of work processes for
continuous improvement based on the exchange of
industry best practices and knowledge in discussion
forums.
Assisting the Subsurface Team to fully realise the
potential of increased amounts of data, new
capabilities that should be added to already existing
tools/workflows, and in addition, new tools to be
developed.
Encouraging communication and the exchange of
knowledge and experience with industry peers as the
basis for a maintaining a competitive edge.
Activities in 2022
During the year the committee met 15 times both in
Trinidad and London as well as virtually. The Technical
Committee was constituted early in the year following
recruitment of the Committee members, who are experts
in their fields and are external to the Company. The
Committee’s work initially focussed on an Onshore and
West Coast portfolio review. This was followed by an
assessment of Trinity’s Palo Seco and Fyzabad assets
which led to a focus on the PS-4, WD-5/6 blocks.
A comprehensive review of the 3D seismic interpretation
and the implications for deeper prospectivity in the Palo
Seco area was completed, highlighting the attractions of
the deeper Miocene play and high grading the Jacobin
prospect as one of a number of deeper prospects
mapped in the play.
Later in the year, the Committee met to discuss the
onshore bid round and to review Management’s initial
screening of the blocks. This review led to the high-
grading of the Buenos Ayres block, where the Committee
felt that the Company had developed a competitive edge
in the understanding of the trapping mechanisms at both
Forest and deeper Cruse levels. The Committee’s work
supported Board approval for the subsequent bid for the
Buenos Ayres block.
James Menzies
Chair of the Technical Committee
31 May 2023
44
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 Director and other
members of the 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 the Executive
Director and, under guidance of the Executive
Director, 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. The Committee
engages an external remuneration consultant, FIT, to
provide analysis, including on benchmarking, trends and
LTIP awards, which provides useful guidance to the
Committee. 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.
In 2021 the salaries of the Executive Directors and other
members of the EMT were held constant, reflecting the
difficult operating environment. However, executive salary
increases were implemented in 2022 to ensure that they
remain competitive with executive salaries remaining
constant for 2023. In 2022, due to the global increase in
inflation, the Committee reviewed the cost-of-living
component in the employee’s remuneration and the
recommendation was to increase the employee’s
remuneration below EMT and Team lead level with
a fixed amount. This way, the lower paid employees
within the organisation were most protected. Details on
implementation have been dealt with by the Executive.
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 10 to 15 KPIs covering a range of strategic targets
deemed critical to the business and falling within the
following areas:
•
Financial – including Operating Cashflow and cost
control targets;
• Operational – including annual production targets
and drilling objectives;
•
•
•
HSSE / ESG – targets for the avoidance of
incidents and GHG emission management;
Strategic – progression of major value accretive
initiatives; and
Corporate – includes investor relations and
shareholder structure targets.
The Executive Director works 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 consider 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 2021 were paid
in June 2022 shortly after publication of the audited
accounts. In 2022 the business continued to deliver
robust operating performance. As a result, 2022 bonus
awards were approved by the Remuneration Committee,
and are to be paid shortly after publication of the 2022
audited accounts. Bonuses will be lower than levels
declared in 2021.
Our Auditors have audited aspects of this report as it
relates solely to the reported items within the financial
statements.
Annual Report & Financial Statements 2022
45
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
2022 Performance and Review
Corporate KPI’s:
Cash-Based Option awards:
•
Setting corporate KPI’s which are used to determine
the bonus awards of the Executive Director and the
EMT. The EMT’s bonus awards were set according
to a mixture of Corporate KPI’s and personal
performance.
•
In 2022 a cash-based option scheme was introduced
to encourage and incentivise Team Leaders within
the organisation. The cash-based scheme is based on
share price performance over a three-year period
and aligns Team Leaders interest with shareholders.
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 a performance monitoring
of the Company’s LTIP awards.
Chair of the Remuneration Committee:
•
Nicholas Clayton stepped down as Chair of the
Remuneration Committee and Kaat Van Hecke was
appointed Chair with effect from 1 July 2022.
Kaat Van Hecke
Remuneration Committee Chair
31 May 2023
• Mid-year/Year-end review of corporate KPI’s.
Key pay outcomes:
•
•
•
Jeremy Bridglalsingh’s base salary for 2022 was
USD 300,000 per annum (2021: USD 273,750).
Nicholas Clayton’s fees as Non-Executive Chairman
were established, in pounds sterling, at the equivalent
of USD 99,650 per annum. An additional fee of USD
49,825 was paid for the support and assistance Mr
Clayton provided to the Executive Director after
Bruce Dingwall’s, passing. Mr Clayton, as Chair of
the Remuneration Committee until 1 July 2022,
recused himself from all discussions relating to
his fee for the role.
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 and subsequently Kaat Van
Hecke (as Chair of the Remuneration Committee)
in consultation with Mr Bridglalsingh, with the other
members of the Remuneration Committee recusing
themselves from all discussions relating to their
own fees.
LTIP awards:
•
Reviewed performance criteria and recommended
grant of the 2021 LTIP awards. The Group granted
options over 290,000 ordinary shares on 6 June
2022 (the “2021 Award”), which represented 0.73%
of the Company’s then issued capital), in respect of
performance during 2021, including 90,000 options
to Jeremy Bridglalsingh. From September 2022 to
31 December 2022 a further 125,000 options were
granted to new members of the EMT. The total
options granted under the 2021 LTIP Award were
therefore 415,000.
• On 2 January 2022, 258,674 options vested from
awards granted on 9 May 2019 (the “2018 Award”) as
a result of the performance conditions being partially
satisfied. This included 54,853 options to Jeremy
Bridglalsingh.
46
Trinity Exploration & Production plc
Directors’ Remuneration Report
Review and Approval Process
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.
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 Director and members of
the EMT 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.
The Executive Director and
members of the EMT 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 Director.
Maximum: up to 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 2022
47
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
Operation
Maximum opportunity
Performance assessment
Element
LTIP
The LTIP seeks to
align the Executive
Director’s and other
EMT members’
interests with those
of shareholders and
drive superior long-
term performance.
Under the LTIP, the Executive
Director and other members of the
EMT may be provided with awards
in the form of conditional shares or
nil-cost options.
Other benefits
To provide
competitive levels
of employment
benefits.
The Committee may provide a
benefits package to the Executive
Director and other EMT members
at its discretion.
Reviewed periodically to ensure
benefits remain market
competitive.
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.
Shareholding Policy
To ensure that the
Executive Director’s
interests are aligned
with those of
shareholders over a
longer time horizon.
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 25 in Notes to
Financial Statements.
Not applicable
Aggregate annual awards
made to the Executive
Director 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,
Executives promoted to
the Board or new joiners.
Awards under the LTIP
are non-contractual.
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.
Not applicable.
Executive Directors’ service contracts
The Company’s policy on Directors’ service contracts are indicated below:
Effective term Notice period
Chief Executive Officer Rolling with no fixed expiry date. Six months
Non-executive Director Remuneration Policy
Maximum potential value
Objective
To attract Non-Executive Directors with the requisite skills
and experience.
Operation
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.
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. Additional fees are paid for chairing Board
Committees and for additional consultancy services,
beyond those normally provided by a Non-Executive
Director. The additional fees for consultancy services
are capped to a maximum amount per quarter and are
periodically reviewed by the Remuneration Committee.
48
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
Performance assessment
Executive Remuneration (Audited)
Not applicable for Non-Executive Directors. Annual review
of Board performance undertaken.
Annual Report on Remuneration
This section of the Remuneration Report contains details
of how the Group’s Remuneration Policy was
implemented in 2022.
Our Auditors have audited aspects of this report as it
relates solely to the reported items within the financial
statements.
Jeremy Bridglalsingh served as Chief Executive Officer.
The table below sets out the single total figure of
remuneration and breakdown for the Executive Director
paid for the 2022 financial year. Comparative figures for
2021 have also been provided where applicable.
All figures expressed in USD1
Base Salary
Taxable Benefits2
Annual Bonus
Pension
LTIP(s)3
Gain on exercise of Share Options4
Total
Notes:
1.
Foreign Exchange (“FX”) Conversions:
Jeremy Bridglalsingh
2022
2021
300,000
20,417
75,000
30,000
141,484
446,520
273,750
20,417
138,000
27,375
132,908
—
1,013,421
592,450
2.
3.
4.
i.
ii.
GBP fees were converted to USD using an exchange rate of 1.2456 (2021: 1: 1.3511)
TTD fees were converted to USD using an exchange rate of 6.7546 (2021: 1: 6.7591)
Taxable benefits include: Vehicle allowance in favour of Executive Director.
LTIP: The LTIP is an important element 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 50 to 53 for further information). The cost shown in the table represents the non-cash Share Option
Expense to the Company incurred in the year in relation to LTIP awards granted to the Executive Directors.
2022 Gain on exercise of Share Options (“SO”) = (SO x Market Value at date of exercise less Exercise Price). 361,369 options were exercised in 2022, with a
Market Value of GBp 99.2. Gain value of GBP 358,478 was converted at 1.2456). 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. No share options were exercised in 2021.
Annual Report & Financial Statements 2022
49
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
Non-Executive Directors Fees (Audited)
All figures expressed in USD equivalent7
Non-Executive Director Fees
Chair of the Board
Audit Committee Chair
Remuneration Committee Chair
Technical Committee Chair
Other consultancy fees8
Nicholas Clayton1
Angus Winther2
David Segel3
James Menzies4
Derek Hudson5
Kaat Van Hecke6
Total
Notes:
Director
Fees
2022
99,650
52,316
7,597
52,316
52,316
44,720
Director
Fees
2021
Committee and
Other Fees
2022
Committee and
Other Fees
2021
76,562
54,720
54,720
54,720
16,836
—
56,053
12,456
—
57,299
40,000
6,228
32,089
13,511
—
3,378
7,481
—
Total
2022
155,703
64,773
7,597
109,615
92,316
50,948
209,265
99,650
12,456
12,456
12,456
134,668
Total
2021
108,651
68,231
54,720
58,097
24,317
—
308,915
257,558
172,036
56,459
480,951
314,016
1.
2.
3.
4.
5.
6.
7.
8.
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 Chair and Chair of Remuneration Committee until 1 July 2022. Additional consultancy fees for support given to the Executive
Director after the passing of the Executive Chair, Bruce Dingwall, CBE.
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.
David Segel – Non-Executive Director from 11 January 2017 to 22 February 2022.
James Menzies – Non-Executive Director effective 23 June 2017 and appointed Technical Committee Chair effective 1 January 2022. Fees include Non-Executive
Director, Technical Committee Chair and consultancy fees for services which are considered to be beyond those typically provided by a non-executive director.
Derek Hudson – Non-Executive Director fees and consultancy fees for services which are considered to be beyond those typically provided by a non-executive
director.
Kaat Van Hecke – Non-Executive Director fees and Remuneration Committee Chair effective from 1 July 2022. Fees include Non-Executive Director and
Remuneration Committee Chair fees.
Non-Executive Director Fees are paid in GBP and were converted to USD using an exchange rate of 1.2456 for 2022 (2021: 1: 13511).
Total Other Fees of USD 134,668 comprises of USD 49,825 Non-executive Chair additional time; USD 44,843 Technical Committee Chair additional time and
USD 40,000 Consultancy for Derek Hudson. All additional fees for consultancy services to Non-Executive Directors are capped to a maximum amount per
quarter and are regularly reviewed by the Remuneration Committee.
Group Remuneration Spend (Audited)
The following table indicates the Group’s total remuneration for 2022:
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
2022 2021 2022 2021 2022 2021 2022 2022 2022 2021
1,185 1,669 7,132 8,001 8,317 9,670 -29% -11% 14% 17%
Notes:
1.
2.
3.
Refer to Note 31 Related Party Transactions – Key Management and Directors’ compensation in the Financial Statements on page 109.
Refer to Note 35 Employee Costs on page 112.
All figures expressed in USD ‘000.
50
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
Statement of Executive Directors’ Shareholding (Unaudited)
The table below summarises the Executive Directors’ interests in shares at 31 December 2022:
Outstanding interests
Interests subject
Shareholding to conditions
Director
Current
Shareholding
(% salary)1
Beneficially
owned
shares2
Vested but
unexercised
LTIP awards
Share
interests
– LTIP3
Options/
Mirror
Scheme4
Total held at 31
December
2022
Jeremy Bridglalsingh
252%
319,463
0
244,128
2,000
565,591
Notes:
1.
2.
3.
4.
5.
The closing share price of GBp 103.5 (USD 128.9 equiv.) as at 31 December 2022 has been taken for the purpose of calculating the current shareholding as a
percentage of salary at the last day of trading for the financial year and includes LTIP interests subject to conditions.
Beneficial interests include shares held directly or indirectly by connected persons.
The options over 244,128 ordinary shares held by Jeremy Bridglalsingh subject to conditions 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 expired in March 2023.
All GBP fees were converted to USD using an exchange rate of 1.2456 for 2022.
Share based payments
Refer to Note 25 - Notes to Financial Statements.
Total Shareholder Return (“TSR”) 2017-2022 ((Unaudited)
TSR factors in capital gains and dividends when measuring the total return generated per share for a Trinity shareholder.
Average
Share price
Closing
Opening
121
142
83
118
177
132
104
127
109
112
120
145
127
109
112
120
145
501
Annual
TSR GBp
%
Cumulative
TSR since 2017
GBp
%
(18)
17
(3)
(7)
(17)
291
209
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).
2022
2021
2020
2019
2018
2017
Note 1:
Long term incentive Share Plans (“LTIPs”) (Unaudited)
The LTIP is designed to provide long-term incentives for
the Executive Director 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 the Executive Director
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 the Board or new joiners.
Annual Report & Financial Statements 2022
51
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Glossary
Company Information
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
Lapsed/Forfeited
Granted
Exercised
At 31 December
2022
2021
Average
exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
Number of
Options
3,381,299
(1,360,733)
415,000
1,005,206
1,430,360
Average
exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
Number of
Options
3,156,299
(100,000)
325,000
–
3,381,299
LTIPs outstanding as at 31 December 2022 have the following expiry date and exercise prices:
Grant-Vest
25/8/2017 – 30/6/2022
2/1/2019 – 1/1/2021
9/5/2019 – 2/1/2022
25/6/2020 – 2/1/2023
12/8/2021 – 1/1/2024
6/6/2022 – 01/01/2025
2021 LTIP Award
The following LTIP awards were granted to the Executive
Director during 2022:
Name/Position
Jeremy Bridglalsingh
Chief Executive Officer
Number of
ordinary shares
subject to the Option
90,000
On 6 June 2022, Options over a total of 290,000 ordinary
shares (representing 0.75% of the Company’s issued
share capital at the time) 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 2021 (the “2021 LTIP Award”). This included
90,000 options to the CEO, Jeremy Bridglalsingh. From
September 2022 to 31 December 2022 a further 125,000
options were granted to two new members of the EMT.
The total options granted under the 2021 LTIP Award
were therefore 415,000. These LTIP awards will vest
on 1 January 2025, 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 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 with the current financial year of
the Company (i.e., a measurement period of 1 January
2022 to 31 December 2024). TSR calculations will be
determined by reference to the volume weighted three-
month average price prior to the start and end of the
Expiry
date
Exercise
price
2022
2021
24/8/2027
1/1/2024
2/1/2025
2/1/2026
1/1/2027
1/1/2027
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
167,037
50,858
90,879
381,586
325,000
415,000
2,103,032
252,510
319,171
381,586
325,000
–
measurement period. The three-month volume weighted
average price at the start of the performance period for
the 2021 Annual LTIP Award was £1.38.
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 20% p.a.
No portion of the other distinct one-half of the 2021
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.
Vesting occurs on a straight-line basis between threshold
and maximum.
52
Trinity Exploration & Production plc
Directors’ Remuneration Report (continued)
The Relative TSR Comparator Group has been
determined as follows:
•
FTSE AIM All Share Oil & Gas constituents.
• Market capitalisation of between GBP 20 million
and GBP 400 million
•
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 2022, 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 LTIP Award
On 13 August 2021, Options over a total of 325,000
ordinary shares (representing 0.84% of the Company’s
issued share capital at the time) were granted under the
LTIP in accordance with the Revised LTIP to members of
the EMT in respect of the performance of the Company
in the financial year ended 31 December 2020 (the “2020
LTIP Award”). This included 75,000 options to CEO
Jeremy Bridglalsingh. 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 exerciseable at nil cost by the
participants.
The performance targets set for awards made under
the 2020 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. The three-month volume weighted
average price at the start of the performance period for
the 2020 LTIP Award was 88p.
2019 LTIP Award
On 25 June 2020 Options over 381,586 ordinary shares
(representing 1% of the Company’s issued share capital at
the time) 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 (the “2019 LTIP Award”). These include the awards
of 118,692 and 79,128 share options respectively issued to
the Executive Chairman and Managing Director at the
time. 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 vested on 2 January
2023. The 2019 LTIP Awards are subject to the
achievement of Relative 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. The
meeting of the performance criteria are under evaluation
by the Board.
2018 LTIP Award
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 “2018 LTIP Award”). The
Group announced the grant of Options over 383,282
ordinary shares (representing approximately 1% of the
Group’s issued share capital at the time) under the LTIP
on 9 May 2019, including awards to the then Executive
Directors Bruce Dingwall, CBE (99,168 ordinary shares)
and Jeremy Bridglalsingh (66,112 ordinary shares).
The 2018 LTIP Award 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, CBE and 54,853 to Jeremy Bridglalsingh, and
to date 167,794 of these options have been exercised.
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. On 2 January 2022, 258,674 options under this
award vested and to date 167,794 options have been
exercised. The remaining 90,879 options are available
to be exercised until 1 January 2025 at nil cost by
the participants.
2017 LTIP Award
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 “2017 LTIP Award”).
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 then Executive Directors; Bruce
Dingwall, CBE (66,422 ordinary shares) and Jeremy
Bridglalsingh (47,824 ordinary shares). On 1 January 2021,
167,018 options under this award vested (representing
Annual Report & Financial Statements 2022
53
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
66.67% of the award) and to date 116,160 of these options
have been exercised. The remaining 50,858 options are
available to be exercised until 1 January 2024 at nil cost
by the participants.
•
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 vested 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
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 One-Off 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 final vesting of the 2017 One Off Award was due to
occur on 30 June 2022. However, as the three-month
average VWAP to 30 June 2022 of 130.0p was below
that prevailing at 30 June 2021 the remaining 1,214,744
unvested options lapsed.
A total of 1,195,755 options have so far been exercised
and the remaining 167,039 vested options are available
to be exercised until 24 August 2027 at nil cost by
the participants.
2017 Grant of Initial Awards (“2017 One Off Award”)
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 the 2017 One Off Award gave
Management the opportunity to build up a meaningful
shareholding in Trinity which would further align their
interests 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 then 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 One Off Award 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 vested 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
54
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 2022 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 evaluating alternative energy projects, including an
assessment of solar and wind power options for its East
Coast asset.
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 29.
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. The going concern
assessment has considered the current operating
environment and the potential impact of the volatility of
the oil price.
The Group started 2023 with a stable operating and
financial position; 2022 average production of 2,975
barrels of oil per day (“bopd”), (2021 3,006 bopd), and
cash and short-term investments of USD 12.1 million as at
31 December 2022 (2021: USD 18.3 million). The Group’s
base case going concern assessment is based upon
management’s best estimate of forward commodity price
curves and uses production in line with approved asset
plans. The base case forecast was prepared with
consideration of the following:
•
•
Future oil prices are assumed to be in line with the
forward curve prevailing as at 3 May 2023. The
forward price curve applied in the cash flow forecast
starts at a realised price of USD 67.3/bbl in January
2023, fluctuating each month down to USD 64.8/bbl
in December 2023 through to USD 62.0/bbl in
December 2024.
Average forecast production for the year to
December 2023 and December 2024 are in line with
the Group’s asset development plans, with
production being maintained by RCPs, WOs and
swabbing activities.
• Whilst the estimated full cost of drilling the deeper
Jacobin well is included, a prudent assumption is
utilised in the forecast whereby the production from
Jacobin is assumed to be no greater than that of an
onshore conventional well.
No SPT is assumed to be incurred on the onshore
assets in 2023 or 2024, as the forecast realised price
is below USD 75.0/bbl.
Trinity continuing to progress various growth and
business development opportunities.
No derivative instruments being put in place for 2023.
•
•
•
Management considers this is a reasonable base scenario,
reflecting a prudent outlook for the future oil price,
production profile and costs. The cash flow forecast
showed that the Group will remain in a healthy 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 a separate stressed
scenario including:
•
•
the effect of reductions in Brent oil prices at USD
60.0/bbl being sustained across the forecast period,
noting that the base case pricing is in line with market
prices; and
the compounded impact of a reducing production
by 10%
The stressed case cash flow forecast, allows for the
impact of mitigating actions that are within the Group’s
control which include:
•
•
Reducing non-core and discretionary opex and
administrative costs across the forecast period.
Reducing discretionary Capital Expenditure and
Capital Returns over the forecast period.
All reasonably plausible forecasts demonstrate that the
Group’s cash balances are maintained under such
scenarios and as such are sufficient to meet the Group’s
obligations as they fall due.
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. 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 in respect of the year ended 31
December 2022.
In May 2023 the Board agreed a new Capital Allocation
Policy which includes the expected payment of a modest
but sustainable dividend and the scope for additional
distributions in the form of share buybacks or special
dividends. Further details of the Capital Allocation Policy
are set out in the Chairman and CEO’s Statement. It is
expected that the maiden interim dividend will be declared
following publication of the 2023 interim results, in Q3
2023, followed by a final dividend being declared following
publication of the 2023 preliminary results in Q2 2024.
Annual Report & Financial Statements 2022
55
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l Governance
Financial Accounts
Glossary
Company Information
Share Buybacks
The Company announced share buyback programmes on
20 September 2022 and 24 October 2022. Under these,
during 2022 and continuing into 2023, the Company has
undertaken a share buyback programme which, to 26
April 2023, had returned USD 2.0 million to shareholders.
The Company’s share capital consists of 39,884,637
ordinary shares in issue (including treasury shares)
of USD 0.01 each, with 1,432,000 shares held in treasury.
The total voting rights in the Company at 28 April 2023
was therefore 38,452,637. On 28 April 2023, the
Company announced a further USD 1.0 million buyback
programme.
Substantial Shareholdings
The Shareholders holding over 3% of the voting rights
as at 26 April 2023 were as follows:
Shareholder
David and Monique Newlands
Hargreaves Lansdown private clients*
Angus Winther
Gavin White
The CS Living Trust
The David A. Segel Trust
Jan-Dirk Leuders**
Scott Casto**
Interactive Investor ISA (Clients)*
The estate of Bruce Dingwall, CBE
Interactive Investor Clients*
HSBC Private Bank, London clients*
No of Shares
as at
26 April 2023
4,014,000
3,575,684
3,113,299
2,909,748
1,985,414
1,985,414
1,610,317
1,574,834
1,533,169
1,486,141
1,353,227
1,286,197
% of
issued Share
Capital as at
26 April 2023
10.44
9.30
8.10
7.57
5.16
5.16
4.19
4.10
3.99
3.86
3.52
3.34
*
**
Private Client Holdings
Includes 111,460 shares held jointly between Scott Casto and Jan-Dirk Lueders through CMT Investments LLC
Directors
The Directors who served during the period and at the date of this Report are as follows:
Name Role Appointment Date
1 Nicholas Clayton Non-Executive Chairman 28 November 2018 to present
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 Derek Hudson Independent Non-Executive Director 14 September to present
7 Kaat Van Hecke Independent Non-Executive Director 22 February 2022 to present
The Directors who held office at 31 December 2023 had the following interests in the ordinary shares in the capital of the
Company which amounted to 8.97% of the Group’s total issued share capital:
Jeremy Bridglalsingh
James Menzies
Angus Winther
Nicholas Clayton
Total
Notes:
Shares figures shown for both 2022 and 2021 are post 2021 share consolidation.
No. of
Consolidated
Ordinary Shares
– USD 0.01
2022
No. of
Consolidated
Ordinary Shares
– USD 0.01
2021
319,463
115,000
3,113,299
30,000
52,836
115,000
3,113,299
10,000
3,577,762
3,291,135
56
Trinity Exploration & Production plc
Directors’ Report (continued)
With regard to the appointment and replacement of
Directors, the Company 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 32.
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.
Directors’ share options/LTIPs
Details of Directors’ share options/LTIPs are provided in
the Directors’ Remuneration Report on pages 50 to 53.
Directors’ Indemnities
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 24 to 29.
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.
Likely Future Developments
Future development plans have been addressed in the
Strategic Report on pages 1 to 29.
Political contributions
The Group has made no political contribution to any
source during both the current and preceding years.
HSSE
In 2022 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.
Independent Auditors
At the AGM held in June 2022, 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
Company Secretary
31 May 2023
Annual Report & Financial Statements 2022
Statement of Directors’ Responsibilities
in respect of the Financial Statements
57
Strategic Report
l Governance
Financial Accounts
Glossary
Company Information
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 IFRS in conformity with
the Companies Act 2006. 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:
•
•
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.
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.
On behalf of Board
Nicholas Clayton
Non-Executive Chairman
31 May 2023
58
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 2022 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 and Production Plc (the ‘Parent Company’)
and its subsidiaries (the ‘Group’) for the year ended 31
December 2022 which comprise the consolidated
statement of comprehensive income, the consolidated
and company statements of financial position, the
consolidated and company statements of changes in
equity, the consolidated and company statement of cash
flows 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 an understanding of how the Directors
considered the ongoing impact of the
macroeconomic climate, 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 2022 and 2023 year to date actual results
and external data where possible.
• 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
liquidity breaks 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
Management, 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 and consistency of the
Going Concern disclosures in the financial statements
with reference to the Director’s going concern
assessment.
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 2022
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Company Information
Overview
Coverage 95% (2021: 95%) of Group profit before tax
100% (2021: 100%) of Group revenue
99% (2021: 99%) of Group total assets
Key audit matters 2022 2021
Carrying Value of the Producing Oil and Gas assets Yes Yes
Carrying Value of Exploration & Evaluation assets Yes Yes
Materiality Group financial statements as a whole
£1,150,000 (2021: £780,000) based on 1.25% (2021: 1.25%) 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), this was consistent with the prior year.
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 group audit team also travelled
to Trinidad to review the component auditors work and to
be able to perform work on certain risk areas while with
the local Management team.
The remaining components of the Group were considered
non-significant and 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 while in Trinidad and also
remotely from the UK, attended planning and
clearance meetings for the significant components
and engaged with the component auditor during their
fieldwork and completion phases.
60
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 the Producing Oil and
Gas assets (refer Note 13 & 1)
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.
Management carried out an impairment
assessment which has culminated in an
impairment of $5.6m being recognised in
respect of the WD-13 CGU and PS-4
assets.
The appropriateness of judgments and
estimates applied in the determination of
the recoverable amount represented a
significant focus area for our audit,
including forecast commodity prices,
operating costs, capital costs and discount
rates.
Given the estimation and judgment
required to be applied by Management
and the appropriateness of disclosures
related to the impairment charge and
sensitivities associated with alternative
potential inputs into the model this
represented a key audit matter.
We obtained and examined Management’s impairment indicator paper to
assess the appropriateness of their conclusion that a potential indicator of
impairment was present. We then obtained Management’s impairment paper
and models and challenged these as below.
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 (VIU) 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 2022 to budgets
for the period in order to assess the accuracy of Management’s forecasting.
We challenged the model (prepared as fair value less costs of disposal),
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 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 analysed the production profile on a field / well basis and compared the
trend analysis to capital expenditure forecasts to identify and investigate
anomalies. The production profiles were materially in line with previous reserve
statements. We also reviewed year to date production data and made inquiries
with Management regarding the status of current development.
With the assistance of our internal valuation experts we reperformed the
WACC calculation received
from Management and assessed the
reasonableness of key inputs. These included the risk premiums which could
be tied to third party data and wider equity analysis.
We recalculated the $5.6m impairment recognised, being the difference
between the asset carrying value and the value determined in the impairment
model.
We visited the key assets and physically inspected them while speaking with
the local Management team.
We reviewed the disclosures in the financial statements 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 2022
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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 Note 15 & 1)
For assets classed as exploration and
evaluation (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.
E&E costs are capitalised on a CGU basis
upon discover of commercially viable
mineral reserve. If commercial viability is
not achievable these costs are written off.
Management do not consider there to be
any indicators of impairment.
Given the significant degree of judgment
involved in assessing E&E assets for
impairment indicators we consider this a
key audit matter for our audit.
We reviewed Management’s
indicator assessment and
considered whether there are any of the indicators of impairment in
accordance 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 also reviewed the accounting treatment of the transfer of the PS-4 asset
against the requirements of the accounting standards.
We agreed a sample of capitalised costs to supporting documentation such
as invoices and assessed the nature of the costs capitalised under the
accounting policy to consider whether they meet capitalisation criteria under
IFRS 6.
We reviewed the existence of licences and checked the Groups compliance
with terms of these licences.
We reviewed the board minutes during the year, as well as post year-end,
assessing Management’s intention to continue the Galeota Development and
the budget for future capital expenditure. This included challenging
Management on whether the re-assessment of the field development plan
was considered to be an indicator of impairment. We also reviewed the
strategic plans for the PS-4 CGU for any indicators of impairment.
We reviewed and considered the proposed disclosure in the financial
statements in accordance with the requirements of IFRS 6.
Key observations:
Based on the procedures performed, we found Management’s assessment
of the indicators of impairment in respect of carrying value of exploration
and evaluation assets to be appropriate and the judgements and estimates
applied reasonable.
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.
62
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
2022 2021 2022 2021
Materiality $1,150,000 $780,000 $410,000 $270,000
Basis for determining 1.25% of 1.25% of 35% of Group 35% of Group
materiality Total revenue Total revenue materiality materiality
Rationale for the The benchmark reflects the Group’s Set at an allocation of Group
benchmark applied primary focus on generating sustainable materiality given the assessment of
growth in revenue through increasing aggregation risk.
production volume.
Performance materiality $750,000 $590,000 $266,500 $202,500
Basis for determining
performance materiality
75% of the above
materiality level,
based on expected
level of known and
likely misstatements
and management’s
attitude towards
proposed
adjustments.
65% of the above
materiality level based
on expected level of
known and likely
misstatements and
management’s
attitude towards
proposed
adjustments.
Performance
materiality was
reduced to reflect an
increased risk as the
Group was subjected
to a Cyber attack
during the year.
75% of the above
materiality level,
based on expected
level of known and
likely misstatements
and management’s
attitude towards
proposed
adjustments.
65% of the above
materiality level based
on expected level of
known and likely
misstatements and
management’s
attitude towards
proposed
adjustments.
Performance
materiality was
reduced to reflect an
increased risk as the
Group was subjected
to a Cyber attack
during the year.
Component materiality
Other information
For the purposes of our Group audit opinion, we set
materiality for each component of the Group based on a
percentage of between 36% and 90% (FY21: 35% and
63%) of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that
component. Component materiality ranged from
$410,000 to $1,035,000 (FY21: $270,000 to $770,000).
In the audit of each component, we further applied
performance materiality levels of 65% (FY2021: 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
£23,000 (2021: £15,000). 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 2022
63
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:
Non-compliance with laws and regulations
Based on our understanding of the Group and the
industry in which it operates and discussion with
discussion with Management and those charged with
governance, 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.
The Group is also subject to laws and regulations where
the consequence of non-compliance could have a
material effect on the amount or disclosures in the
financial statements, for example through the imposition
of fines or litigations.
64
Trinity Exploration & Production plc
Independent Auditor’s Report (continued)
Our procedures in respect of the above included:
•
Discussion with the Management and those charged
with governance;
•
Testing the financial statement disclosures to
supporting documentation;
• 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
• We involved 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.
Fraud
We assessed the susceptibility of the financial statements
to material misstatement, including fraud. Our risk
assessment procedures included:
•
Enquiry with management and those charged with
governance regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Group’s policies
and procedures relating to:
-
-
Detecting and responding to the risks of fraud;
and
Internal controls established to mitigate risks
related to fraud.
Review of minutes of meeting of those charged with
governance for any known or suspected instances of
fraud;
Discussion amongst the engagement team as to how
and where fraud might occur in the financial
statements;
Performing analytical procedures to identify any
unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
Considering remuneration incentive schemes and
performance targets and the related financial
statement areas impacted by these
•
•
•
•
Based on our risk assessment, we considered the areas
most susceptible to fraud to regarding the completeness
of revenue, management bias to key estimates and
judgements 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;
•
•
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;
•
•
•
Assessed 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; and
Directing the auditors of the significant components
to ensure an assessment is performed on the extent
of the components compliance with the relevant local
and regulatory framework. Reviewing this work and
holding meetings with relevant internal Management
and external third parties to form our own opinion on
the extent of Group wide compliance.
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
31 May 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Annual Report & Financial Statements 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
(Expressed in United States Dollars)
Revenues
Crude oil sales
Other income
Operating Expenses
Royalties
Production costs
General & Administrative (“G&A”) expenses
Covid-19 expenses*
Depreciation, Depletion & Amortisation (“DD&A”)
Share Option Expense (“SOE”)
Foreign exchange (“FX”) loss
Net reversal of Impairment losses on financial assets (“ILFA”)
Derivative expenses
Fair value income/(expense) derivative instruments
Operating Profit before Supplemental Petroleum Taxes (“SPT”)
& Property Taxes (“PT”)
SPT
PT net reversal
Operating Profit before Impairment and Exceptional items
Impairment
Exceptional items
Operating Profit
Finance income
Finance costs
Profit Before Income Taxation
Income taxation (charge)/ credit
Profit for the year
Other Comprehensive Income/(Expense)
Items that may be subsequently reclassified to profit or loss
Exchange differences on translation of foreign operations
Total Comprehensive Income for the year
Earnings per share (expressed in dollars per share)
Basic
Diluted
*Covid-19 expenses have been reclassified as Operating Expenses.
Notes
4
13-15
6
6
8
7
9
9
65
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
2022
$’000
2021
$’000
92,232
7
66,257
1
92,239
66,258
(30,091)
(19,242)
(7,181)
(579)
(7,617)
(647)
(394)
46
(10,446)
2,883
(19,828)
(17,625)
(7,030)
(669)
(7,428)
(626)
(14)
754
(1,293)
(3,149)
(73,268)
(56,908)
18,971
(9,012)
-
9,350
(5,074)
1,516
(9,012)
(3,558)
9,959
(6,050)
(161)
3,748
48
(1,339)
2,457
10
(2,344)
113
5,792
(1,316)
(113)
4,363
94
(1,475)
2,982
4,744
7,726
(20)
–
93
7,726
11
11
0.00
0.00
0.20
0.18
66
Trinity Exploration & Production plc
Consolidated Statement of Financial Position
at 31 December 2022
(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
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Capital and Reserves Attributable to Equity Holders
Share capital
Share based payment reserve
Reverse acquisition reserve
Translation reserve
Treasury shares
Retained earnings
Total Equity
Non-current Liabilities
Lease liability
Deferred Tax Liabilities (“DTL”)
Provision for other liabilities
Employee benefits
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
2022
$’000
2021
$’000
13
14
15
16
17
18
19
20
22
23
25
26
24
14
18
28
29
30
14
28
21
44,987
838
33,537
4,511
602
12,465
49,507
616
30,759
4,021
473
11,530
96,940
96,906
4,615
10,678
12,131
3,820
10,747
18,312
27,424
32,879
124,364
129,785
399
2,990
(89,268)
(1,667)
(1,522)
145,199
389
3,784
(89,268)
(1,650)
–
143,666
56,131
56,921
341
1,940
52,460
23
97
2,025
55,690
–
54,764
57,812
9,932
2,700
584
249
–
4
8,814
2,700
609
46
2,883
–
13,469
15,052
68,233
72,864
124,364
129,785
The financial statements on pages 65 to 113 were authorised for issue by the Board of Directors on 31 May 2023 and were
signed on its behalf by:
Jeremy Bridglalsingh
Director
31 May 2023
Annual Report & Financial Statements 2022
Company Statement of Financial Position
at 31 December 2022
(Expressed in United States Dollars)
ASSETS
Non-current Assets
Investment in subsidiaries
Current Assets
Trade and other receivables
Intercompany
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Share capital
Share based payment reserve
Merger reserves
Treasury shares
Retained earnings
Total Equity
Current Liabilities
Trade and other payables
Intercompany
Derivative financial liabilities
Total Liabilities
Total Equity and Liabilities
67
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Company Information
Notes
2022
$’000
2021
$’000
12
60,864
60,347
20
20
22
23
24
29
31
21
233
2,830
2,102
5,165
200
3,372
3,108
6,680
66,029
67,027
399
3,775
6,552
(1,522)
43,529
389
4,569
6,552
–
51,526
52,733
63,036
565
12,731
–
13,296
327
781
2,883
3,991
13,296
3,991
66,029
67,027
The Company has elected to take the exemption under section 408 of the Companies Act 2006, to not present the
Statement of comprehensive income. The net loss for the parent company was $9.4 million (2021: $6.4 million).
The financial statements on pages 65 to 113 were authorised for issue by the Board of Directors on 31 May 2023 and were
signed on its behalf by:
Jeremy Bridglalsingh
Director
31 May 2023
Trinity Exploration & Production plc
Registered Number: 07535869
68
Trinity Exploration & Production plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Share
Based Reverse
Share Share Payment Acquisition Merger Treasury Translation Retained Total
Capital Premium Reserve Reserve Reserves Shares Reserve Earnings Equity
Year ended 31 December 2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 January 2021 97,692 139,879 14,764 (89,268) 75,467 – (1,650) (188,332) 48,552
Capital reorganisation (97,303) (139,879) (11,485) – (75,467) – – 324,134 –
LTIPs exercised1 – – – – – – – 47 47
Share based payment
expense (Note 25) – – 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
Year ended 31 December 2022
At 1 January 2022 389 – 3,784 (89,268) – – (1,650) 143,666 56,921
Issue of shares 10 – – – – – – – 10
LTIPs lapsed (Note 25) – – (1,416) – – – – 1,416 –
Share based payment
expense (Note 25) – – 622 – – – – – 622
Treasury shares (Note 24) – – – – – (1,522) – – (1,522)
Translation adjustment – – – – – – 3 4 7
Profit for the year – – – – – – – 113 113
Other comprehensive
income/ (expense)
Exchange differences
on translation of
foreign operations – – – – – – (20) – (20)
Total comprehensive
income for the year – – – – – – (20) 113 93
At 31 December 2022 399 – 2,990 (89,268) – (1,522) (1,667) 145,199 56,131
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 2022
Company Statement of Changes in Equity
for the year 31 December 2022
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Share Retained
Based Earnings/
Share Share Payment Merger Treasury Accumulated Total
Capital Premium Reserve Reserves Shares Losses Equity
Year ended 31 December 2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000
At 1 January 2021 97,692 139,879 4,064 56,652 – (229,422) 68,865
Capital Reorganisation (97,303) (139,879) – (50,100) – 287,282 –
Share based payment charge (Note 25) – – 505 – – – 505
LTIPs exercised1 – – – – – 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
Year ended 31 December 2022
At 1 January 2022 389 – 4,569 6,552 – 51,526 63,036
Issue of shares 10 – – – – – 10
Share based payment charge (Note 25) – – 622 – – – 622
LTIPs lapsed (Note 25) – – (1,416) – – 1,416 –
Treasury shares (Note 24) – – – – (1,522) – (1,522)
Total comprehensive loss for the year – – – – – (9,413) (9,413)
At 31 December 2022 399 – 3,775 6,552 (1,522) 43,529 52,733
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.
70
Trinity Exploration & Production plc
Consolidated Statement of Cash Flows
for the year 31 December 2022
(Expressed in United States Dollars)
Operating Activities
Profit before taxation
Adjustments for:
Foreign exchange (“FX”) loss/(gain)
Finance cost – loans and interest
Finance income
Finance cost – decommissioning provision
Share-based payment expense
DD&A
Net reversal of impairment on financial assets
Inventory impairment
Impairment of property, plant and equipment
Fair value (gain)/ loss on derivative financial instruments
Other non-cash items
Changes In Working Capital
(Decrease)/increase in inventories
Decrease in trade and other receivables
Increase in trade and other payables
Income taxation paid
Net Cash Inflow from Operating Activities
Notes
2022
$’000
2021
$’000
2,457
2,982
9
9
28
13-15
8
19
16,20,21
21,28,29
394
229
(48)
1,110
647
7,617
(46)
334
5,558
(2,883)
158
(39)
254
(94)
1,222
626
7,428
(754)
1,220
96
3,149
47
15,527
16,137
(1,129)
(376)
1,353
228
(3,019)
909
(152)
(1,882)
(3,390)
(1,700)
11,985
12,555
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
Net Cash Outflow from Investing Activities
15
15
13
(388)
(102)
(15,016)
(130)
(3,262)
(401)
(9,957)
(220)
(15,636)
(13,840)
Financing Activities
Finance income
Finance cost
Proceeds from the issue of shares
Principal paid on lease liability
Interest paid on lease liability
Acquisition of treasury shares
Net Cash Outflow from Financing Activities
48
(94)
10
(536)
(135)
(1,522)
(2,229)
94
(153)
–
(480)
(101)
–
(640)
Decrease in Cash and Cash Equivalents
(5,880)
(1,925)
Cash and Cash Equivalents
At beginning of year
Effects of foreign exchange rates differences on cash
Decrease in Cash and Cash equivalents
18,312
(301)
(5,880)
20,237
19
(1,944)
At end of year
22
12,131
18,312
Annual Report & Financial Statements 2022
Company Statement of Cash Flows
for the year 31 December 2022
(Expressed in United States Dollars)
Operating Activities
Loss before taxation
Adjustments for:
Foreign exchange (“FX”) loss
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
Increase in trade and other receivables
Increase in trade and other payables
Taxation Paid
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Company Information
Note
2022
$’000
2021
$’000
(9,413)
(6,381)
306
(156)
107
(14)
(2,883)
–
28
(152)
178
(28)
3,149
(13)
(12,053)
(3,219)
521
12,188
12,709
1,537
354
1,891
–
–
Net Cash Inflow/(Outflow) from Operating Activities
656
(1,328)
Financing Activities
Finance income
Issue of shares
Treasury Shares
Net Cash (Outflow)/Inflow from Financing Activities
156
10
(1,522)
(1,356)
147
–
–
147
Decrease In Cash and Cash Equivalents
(700)
(1,181)
Cash and Cash Equivalents
At beginning of year
Effects of foreign exchange rates differences on cash
Decrease Cash and Cash equivalents
At End of Year
3,108
(306)
(700)
2,102
4,317
(28)
(1,181)
3,108
22
72
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements
31 December 2022
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 Trinidad & Tobago (“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 $9.4 million
(2021: $6.4 million loss) driven mainly by the derivative expenses incurred in 2022.
Basis of measurement
The consolidated financial statements have 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 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. The going concern assessment has considered the current operating environment and the
potential impact of the volatility of the oil price.
The Group started 2023 with a stable operating and financial position; 2022 average production of 2,975 barrels of oil
per day (“bopd”), (2021 3,006 bopd), and cash and short-term investments of $12.1 million as at 31 December 2022
(2021: $18.3 million). The Group’s base case going concern assessment is based upon management’s best estimate of
forward commodity price curves and uses production in line with approved asset plans. The base case forecast was
prepared with consideration of the following:
•
•
Future oil prices are assumed to be in line with the forward curve prevailing as at 3 May 2023. The forward price
curve applied in the cash flow forecast starts at a realised price of $67.3/bbl in May 2023, fluctuating each month
down to $64.8/bbl in December 2023 through to $62.0/bbl in December 2024.
Average forecast production for the years to December 2023 and December 2024 are in line with the Group’s
asset development plans, with production being maintained by RCPs, WOs and swabbing activities;
• Whilst the estimated full cost of drilling the deeper Jacobin well is included, a prudent assumption is utilised in the
forecast whereby production from Jacobin is assumed to be no greater than that of an onshore conventional well.
•
•
•
No SPT is assumed to be incurred on the onshore assets in 2023 or 2024, as the forecast realised price is below
$75.0/bbl;
Trinity continuing to progress various growth and business development opportunities; and
No derivative instruments being put in place for 2023.
Annual Report & Financial Statements 2022
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Management considers this is a reasonable base scenario, reflecting a prudent outlook for the future oil price, production
profile and costs. 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 a separate stressed scenario including:
•
•
the effect of reductions in Brent oil prices at $60.0/bbl being sustained across the forecast period, noting that the
base case pricing is in line with market prices; and
the compounded impact of a reduction in production by 10%.
The stressed case cash flow forecast allows for the impact of mitigating actions that are within the Group’s control
which include:
•
•
Reducing non-core and discretionary opex and administrative costs across the forecast period.
Reducing discretionary Capital Expenditure and Capital Returns over the forecast period.
All reasonably plausible forecasts demonstrate that the Group’s cash balances are maintained under such scenarios
and as such are sufficient to meet the Group’s obligations as they fall due.
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. 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 2022:
The following amendments are effective for the period beginning 1 January 2022:
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37).
•
•
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41).
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 2023:
•
•
•
•
IFRS 17 Insurance Contracts (effective 1 January 2023)
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 (Amendment – Disclosure of
Accounting Policies)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Accounting
Estimates)
IAS 12 Income Taxes (Amendment – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction)
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.
74
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
1 Background and Summary of significant accounting policies (continued)
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, the
trust transfers the appropriate amount of shares to the employee. The proceeds received, net of any directly attributable
transaction costs, are credited directly to equity.
Cash-settled share-based payments
The Group operates a cash-settled share-based plan comprised of reference shares as consideration for services
rendered by the Group’s employees.
Cash-settled share-based payments result in the recognition of a liability, which is an obligation to make a payment in
cash or other assets, based on the price of the underlying equity instrument. At each reporting date, and ultimately at
the settlement date, the fair value of the recognised liability is remeasured. Remeasurement applies to the recognised
portion of the liability through to vesting date. The full amount is remeasured from vesting date to settlement date. The
cumulative net cost and amounts recognised in profit or loss that will ultimately be recognised in respect of the
transaction will be equal to the amount paid to settle the liability.
Annual Report & Financial Statements 2022
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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
United States dollars 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
$
6.754
6.742
2022
£
8.357
8.146
$
6.765
6.763
2021
£
9.006
9.151
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”.
76
Trinity Exploration & Production plc
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. Upon discovery of commercial reserves capitalisation is recognised within Property, Plant and
Equipment.
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, although 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.
Where development costs have been capitalised and Management has determined a strategic change to focus
on E&E activities in an asset, these costs are transferred from development costs to E&E assets in the period
the strategic change was made. An Impairment assessment is performed prior to the transfer in accordance
with IFRS 6 impairment guidance noted below.
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&Es 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. Acquisitions of oil and gas properties are accounted
for under the acquisition method where the transaction meets the definition of a business combination.
Transactions involving the purchases of an individual field interest, or a group of field interests, that do not
meet the definition of a business (and therefore do not apply business combination accounting) are treated as
asset purchases, irrespective of whether the specific transactions involve the transfer of the field interests
directly, or the transfer of an incorporated entity. Accordingly, the consideration is allocated to the assets and
liabilities purchased on a relative fair value basis.
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.
78
Trinity Exploration & Production plc
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 loss 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. 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 positions. 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, DTLs 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.
80
Trinity Exploration & Production plc
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”)
From 2018 until 2020, 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%.
PT accrued for past years is now considered unlikely to be charged and paid, and so no liability is now being recognised.
Refer to note 3 (f).
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 2022 the Group revised its estimates due to additional vehicles and copier assets included in lease agreements and
the extension of staff house leases in December 2022. As a result, there was a revision to the carrying amount of the
lease liability to reflect the payments to being 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.
Treasury Shares
Where any Group company purchases the Company’s equity instruments, for example as the result of a share buy-
back or a share-based payment plan, the consideration paid is deducted from equity attributable to the owners of the
Company as treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently
reissued, any consideration received is included in equity attributable to the owners of the Company. Shares held by
the Company are disclosed as treasury shares and deducted from equity.
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.
82
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% (2021: 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% (2021: 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/ (2021: 10%)
10% weakening of the US Dollar/ (2021: 10%)
(ii) Price risk
2022
$’000
(269)
269
2021
$’000
(247)
247
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% (2021: 20%) increase and decrease in realised oil prices. 20% (2021:
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/ (2021: 20%)
20% decrease in price/ (2021: 20%)
2022
$’000
2021
$’000
18,931
(18,931)
13,168
(13,168)
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 2022, there were no loan commitments to attract interest rates on foreign currency-
denominated borrowings, (2021: nil). During 2022 there was a bank overdraft facility which incurred $0.1 million
interest (2021: $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 and experience to minimise risk.
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 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
(2021: $0.1 million). 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 (2021: $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 $12.1 million (2021: $18.3 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 2022
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
9,932
2,700
584
13,216
–
–
204
204
–
–
137
137
9,932
2,700
925
13,557
At 31 December 2021
$'000
$'000
$'000
$'000
Non-derivatives
Trade and other payables
Bank overdraft
Lease liabilities
8,814
2,700
609
12,123
–
–
50
50
–
–
47
47
8,814
2,700
706
12,220
84
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
2 Financial Risk Management (continued)
(c) Liquidity risk
Company
At 31 December 2022
Non-derivatives
Trade and other payables
Intercompany
At 31 December 2021
Non-derivatives
Trade and other payables
Intercompany
(d) Capital risk
Less than 1 year
$'000
Total
$'000
565
12,731
565
12,731
13,296
13,296
$'000
$'000
327
781
1,108
327
781
1,108
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 Cash/(Debt).
Net cash
Total equity
Total capital
Gearing ratio
(e) Fair value estimation
2022
$’000
9,431
(56,131)
2021
$’000
15,612
(56,921)
(46,700)
(41,309)
(20.2)% (37.8)%
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 on key estimates of future cost, production volumes, price and
is 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 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 28: Provision for other liabilities.
Risk free rates
Inflation rate
Bands (years)
2022
2021
7-12
13-18
19-21
22-23
3.96%
4.04%
4.14%
4.09%
3.20%
1.80%
1.96%
2.20%
2.20%
2.40%
The following table details the Group’s sensitivity to a 1% (2021: 1%) increase and decrease in discount and inflation
rates. 1% (2021: 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 2022 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
2022
$’000
Consolidated
Statement of
Comprehensive:
Income/Expense
2022
$’000
(7,642)
9,246
9,234
(7,769)
259
(415)
222
(189)
86
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 depreciated 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 28.
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 2022 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 relate 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 2022 an impairment charge of $5.6 million was recognised on the Group’s property, plant and equipment
(2021: $0.1 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 $5.6 million (2021: $0.1 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 7-24 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,
Annual Report & Financial Statements 2022
87
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Company Information
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.
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.
Realised price
2023
69.8
2024
65.5
2025
62.5
2026
60.2
2027
58.5
2028
57.7
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 $16.1 million increase on impairment of Oil & Gas Assets (2021: $0.6 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 $0.6 million decrease on impairment of the Oil & Gas Assets (2021:
$0.1 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 2022, Management’s estimate of the Group’s cost of capital was 15% (2021:13.0%).
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 a $0.0 million decrease (2021: $0.0 million) change to the
impairment position for 2022 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 have a $0.0 million increase to the
impairment position for 2022 (2021: $0.0 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 2022 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
PT is assessed on property owned by the Group in T&T governed by the Property Tax Act 2009 and later Property
Tax 2018 amendment of T&T. The calculation of the PT is described in note 1 Background and Summary of
significant accounting policies.
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 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 periods 2018-2021. Whilst there remains some ambiguity within the interpretation of the law, industry practice
within T&T indicates that it is appropriate to not recognise a PT liability.
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 not
recognised any PT liabilities to 31 December 2022.
88
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
3. Critical Accounting Estimates and Judgements (continued)
(g) Share based payments
The Company has in place a share-based compensation plan (the LTIP) for the Executive Director 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 25 for details.
(h) Transfer of PS-4 development costs to E&E assets
The Group acquired the PS-4 asset on 1 December 2021 for $3.8 million and accounted for the full cost as
development capital expenditure based on the available data when purchased. Subsequent to acquiring the asset,
the subsurface work matured allowing the technical team to demonstrate that multiple contingent and prospective
resource areas exist in PS-4 and the seismic interpretations in 2022 have identified at least three
exploration/appraisal prospects, one of which is planned to be drilled in 2023; the 2P and Infill wells in this asset
have not been drilled due to supply chain costs and inflationary pressures.
These key developments in 2022 resulted in a strategic change by Management to focus on E&E activities as the
findings confirm that the PS-4 asset has significant exploration potential.
Management applied judgement based on the specific facts and circumstances and considered the underlying
nature of the asset and determined it was appropriate to transfer $2.5 million of development costs to E&E capital
expenditure effective 31 December 2022. Judgment was required in determining the date at which such cost
capitalisation commenced considering the timing of the strategic review being sufficiently concluded. In concluding
that the costs met the cost capitalisation criteria under the Group’s accounting policy for E&E assets, Management
considered the nature of the activities, its objective and contribution to the E&E activities.
Prior to the strategic change, an impairment assessment was performed on PS-4 development costs and an
impairment was recognised (refer to 3(d)). No impairment indicators were identified on the costs transferred to
E&E asset.
4 Segment Information
Management has determined the operating segments which are Onshore, West Coast and East Coast 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 includes the Chief
Executive Officer, Chief Financial Officer, 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 revenue is generated at a point in
time. All non-current assets of the Group are located in T&T.
5 Operating Profit Before Impairment and Exceptional Items
Operating profit before impairment 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 35)
Inventory recognised as expense, charged to operating expenses
2022
$’000
2021
$’000
6,890
534
193
8,317
174
6,756
505
166
9,670
322
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Company Information
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
2022
$’000
2021
$’000
220
107
16
29
372
161
84
16
32
293
2022
$’000
2021
$’000
–
1
All fees in 2022 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
The net (loss)/gain in fair value is recognised in the Consolidated Statement of Comprehensive Income during the year:
Derivative expenses (realised)
Movement in FV of derivative financial instruments (unreaslised)
31 December
2022
$’000
31 December
2021
$’000
(10,446)
2,883
(1,293)
(3,149)
(7,563)
(4,442)
7 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.
ICT incident costs
Fees relating to Capital Reorganisation
Exceptional items
Exceptional items:
31 December
2022
$’000
31 December
2021
$’000
161
–
161
–
113
113
•
Charges relating to ICT incident: $0.2 million charge in relation to costs incurred in relation to the cyber incident
(refer to Note 36 (4)).
90
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
8 Impairment
Impairment of Inventory
Impairment of property, plant and equipment
Other impairment of property, plant and equipment
Total expense
31 December
2022
$’000
31 December
2021
$’000
334
5,558
158
6,050
1,220
96
–
1,316
•
•
Impairment of inventory – $0.3 million charge in relation to inventory impairment. In 2021 $1.2 million on slow moving
inventory items.
Impairment of property, plant and equipment – $5.6 million charge in relation to property, plant and equipment and
cash generating units. In 2021 the impairment of property, plant and equipment related to charges for impairment
losses on cash generating units (refer to Note 3(d)).
• Other impairment of property, plant and equipment – $0.1 million charge in other property, plant and equipment
relates to expense incurred on unsuccessful recompletion cost on wells.
9 Finance income and costs
Recognised in the consolidated statement of comprehensive income:
Finance income
Interest Income
Finance costs
Decommissioning – Unwinding of discount (Note 28)
Interest on Leases (Note 14)
Interest and other expenses on overdraft
10 Income Taxation
Current Taxes
Petroleum profits tax
Unemployment levy
Deferred Taxes
Current year
Movement in asset due to tax losses recognised (Note 18)
Movement in liability due to accelerated tax depreciation (Note 18)
Income tax expense/(credit)
2022
$’000
2021
$’000
48
94
2022
$’000
2021
$’000
(1,110)
(135)
(94)
(1,222)
(101)
(152)
(1,339)
(1,475)
2022
$’000
2,404
960
2021
$’000
982
393
(935)
(85)
(5,533)
(586)
2,344
(4,744)
Annual Report & Financial Statements 2022
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Company Information
The Group’s effective tax rate varies from the statutory rate for UK companies of 19% (2021:19%) 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
2022
$’000
2,457
4,836
13,448
(5,671)
(9,334)
(935)
–
2021
$’000
2,982
3,441
9,037
(2,595)
(9,087)
(5,533)
(7)
Tax charge/ (credit)
2,344
(4,744)
Corporate income tax is calculated at 19% (2021: 19%) of the assessable profit for the year for the UK parent company,
55% for the operating subsidiaries in Trinidad and Tobago (2021: 55%) and 30% (2021: 30%) for the corporate subsidiaries
in Trinidad and Tobago.
Taxation losses at 31 December 2022 available for set off against future taxable profits amounts to approximately $227.5
million (2021: $234.6 million), with tax losses recognised of $24.9 million at the end of 2022. These losses do not have
an expiry date and have not yet been confirmed by the Board of Inland Revenue (“BIR”) or His Majesty's Revenue and
Customs (“HMRC”). Tax losses carried forward by companies engaged in petroleum production business in Trinidad
and Tobago are restricted to set off against 75% of the otherwise chargeable profits in a year.
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 2022
Basic
Diluted
Year ended 31 December 2021
Basic
Diluted
Profit for
the year
$’000
113
113
Weighted
Average
Number Of
Shares
’000’
38,813
40,243
Earnings
Per
Share
$
0.00
0.00
7,726
7,726
38,879
42,260
0.20
0.18
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 25) are considered potential ordinary shares. Share Options of 28,954 are
considered potential ordinary shares and have not been included as the exercise hurdle would not have been met.
The basic shares balance was amended through the net effect of the issuance of new shares (following exercise of
Options) and the repurchase of shares through the share buyback programme in 2022 (See notes 23 and 24).
92
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
12 Investment In Subsidiaries
Company
Opening balance
Share based payment reserve revision
Share based payment
Closing balance
2022
$’000
60,347
–
517
2021
$’000
60,021
(121)
447
60,864
60,347
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, in 2021 there was a revision to the Share
based payment reserves as it relates to employees that no longer work for the Group.
Listing of Subsidiaries
The Group’s subsidiaries at 31 December 2022 are listed below:
Name
Bayfield Energy Limited
Trinity Exploration &
Production (UK) Limited
Trinity Exploration and
Production Services (UK) Limited
Bayfield Energy do Brasil Ltda
Registered Address/
Country of Incorporation
c/o Pinsent Masons LLP,
1 Park Row, Leeds,
LS1 5AB, UK
13 Queen’s Road,
Aberdeen,
AB15 4YL, UK
c/o Pinsent Masons LLP,
1 Park Row, Leeds,
LS1 5AB, UK
Av. Presidente Vargas 509,
Rio de Janeiro, 20071-003,
Brazil
Nature of Business
Holding Company
Holding Company
Service Company
Dormant
Trinity Exploration &
Production (Barbados) Limited
Ground Floor, One Welches,
Welches, St. Thomas BB22025,
Barbados
Holding Company
Trinity Exploration and
Production (Trinidad and
Tobago) Limited
Holding Company
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
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
% Shares held
by the Group
99.99998%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Annual Report & Financial Statements 2022
Name
Trinity Exploration and
Production (Forest 2) Limited
Trinity Exploration and
Production (Forest 3) Limited
Trinity Renewable Resources
Limited
93
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Company Information
Registered Address/
Country of Incorporation
Nature of Business
% Shares held
by the Group
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
13 Property, Plant and Equipment
Year ended 31 December 2022
Plant &
Equipment
$'000
Leasehold
& Buildings
$'000
Oil &
Gas Assets
$'000
Other
$'000
Opening net book amount at 1 January 2022
Additions
Transfers (Note 3(h))
Adjustment to decommissioning estimate (Note 28)
Impairment charge1
DD&A charge for year
2,919
1,999
–
–
(62)
(601)
1,388
71
–
–
–
(188)
45,200
13,062
(2,451)
(4,595)
(5,654)
(6,101)
Closing net book amount
at 31 December 2022
At 31 December 2022
4,255
1,271
39,461
–
–
–
–
–
–
–
100%
100%
100%
100%
Total
$'000
49,507
15,132
(2,451)
(4,595)
(5,716)
(6,890)
44,987
Cost
Accumulated DD&A and impairment
18,193
(13,938)
3,483
(2,212)
323,161
(283,700)
336
(336)
345,173
(300,186)
Closing net book amount
4,255
1,271
39,461
–
44,987
Year ended 31 December 2021
Plant &
Equipment
$'000
Leasehold
& Buildings
$'000
Oil &
Gas Assets
$'000
Other
$'000
Opening net book amount at 1 January 2021
Additions
Adjustment to decommissioning estimate (Note 28)
Impairment charge1
DD&A charge for year
Translation differences
2,028
1,328
–
–
(437)
–
1,481
74
–
–
(167)
–
34,247
8,794
8,407
(96)
(6,153)
1
Closing net book amount
at 31 December 2021
At 31 December 2021
2,919
1,388
45,200
–
–
–
–
–
–
–
Total
$'000
37,756
10,196
8,407
(96)
(6,757)
1
49,507
Cost
Accumulated DD&A and impairment
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
1 An impairment loss of $5.7 million (2021: $0.1 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.
94
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
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
2022
$’000
31 December
2021
$’000
838
616
584
341
925
609
97
706
The ROU assets relate to motor vehicles, office building, rental house 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
Depreciation
2022
$’000
2021
$’000
(534)
(505)
Interest expense (including finance cost)
(135)
(101)
The total cash outflow for leases in 2022 was $0.7 million (2021: $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.
Annual Report & Financial Statements 2022
15 Intangible Assets
The carrying amounts and changes in the year are as follows:
95
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Company Information
Exploration and
Evaluation assets
$'000
Computer
software
$'000
Research and
Development
$'000
Year ended 31 December 2022
Opening net book amount at 1 January 2022
Additions
Transfers (Note 3(h))
Amortisation charge for year
30,217
235
2,451
–
Closing net book amount at 31 December 2022
32,903
At 31 December 2022
Cost
Accumulated amortisation
Closing net book amount
32,903
–
32,903
496
102
–
(193)
405
979
(574)
405
46
183
–
–
229
–
229
229
33,537
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
Exploration and
Evaluation assets
$'000
Computer
software
$'000
Research and
Development
$'000
27,042
3,175
–
30,217
307
355
(166)
496
–
46
–
46
•
•
•
E&E assets: Represents the cost for the TGAL 1 exploration well and transfer of PS-4 Development cost to E&E
costs of USD 2.5 million (refer to Note 3(h)). The Group tests whether E&E assets have suffered any impairment
triggers on an annual basis and there were no impairment triggers identified (2021: nil).
Computer Software: In 2022, costs incurred in connection with the acquisition of software.
Research and Development: In 2022, there were costs associated for various initiatives in connection with reducing
carbon emissions.
16 Abandonment fund
At 1 January
Additions
At 31 December
2022
$’000
4,021
490
4,511
2021
$’000
3,490
531
4,021
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.
Total
$'000
30,759
520
2,451
(193)
34,111
(574)
33,537
Total
$'000
27,349
3,576
(166)
30,759
96
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
17 Performance bond
At 1 January and 31 December
2022
$’000
602
2021
$’000
473
The Group’s Lease Operatorship Assets (“LOA”) licences were renewed in June 2021. New Performance Bonds for each
of the LOA were put in place totaling $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. A performance bond of $0.13 million for PS-4 block was also
executed with First Citizens Bank Trinidad and Tobago Limited in 2022 effective 31 December 2030 at a bond fee of
1.75%. 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:
Acquisition
Tax losses recognised
Tax losses derecognised
DTL
Accelerated tax depreciation and
non-current asset impairment
Acquisitions
Fair value uplift
2022
$’000
2021
$’000
(7,774)
(4,691)
(5,130)
(6,400)
1,940
2,025
(10,525)
(9,505)
2022
$’000
(9,505)
(935)
(85)
2021
$’000
(3,386)
(6,041)
(78)
(10,525)
(9,505)
2020
$’000
Movement
$’000
2021
$’000
Movement
$’000
2022
$’000
(33,436)
(39,476)
66,915
–
(5,533)
–
(33,436)
(45,009)
66,915
(5,997)
(5,533)
(11,530)
–
(935)
–
(935)
(33,436)
(45,944)
66,915
(12,465)
2020
$’000
Movement
$’000
2021
$’000
Movement
$’000
2022
$’000
(18,867)
19,580
1,898
2,611
(508)
–
(78)
(586)
(19,375)
19,580
1,820
2,025
–
–
(85)
(85)
(19,375)
19,580
1,735
1,940
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Glossary
Company Information
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. Deferred tax assets of $0.9 million have been recognised (2021: $5.5 million was recognised)
based on estimated future taxable profits. The Group has unrecognised deferred tax assets amounting to $87.2 million
which have no expiry date.
DTL have decreased by $0.1 million related to unwinding of assets.
•
•
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). The Group has no legal right to offset any DTA and DTL.
Tax losses – At the end of 2022 the Group had gross tax losses carried forward of $227.5 million (2021: $234.6
million) represented by corporate tax losses in the UK of $33.2 million (2021: $23.7 million) and PPT and Corporate
tax losses in Trinidad and Tobago of $194.3 million (2021: $210.9 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. As of 1 January 2020, however, PPT losses can only be utilised to
shelter a maximum of 75 percent of PPT per annum.
19 Inventories
At 1 January 2022
Impairment (see note 8)
Net inventory movement
At 31 December 2022
At 1 January 2021
Impairment (see note 8)
Net inventory movement
At 31 December 2021
Crude oil
$’000
Materials
and supplies
$’000
96
–
29
125
67
–
29
96
3,724
(334)
1,100
4,490
5,200
(1,220)
(256)
3,724
Total
$’000
3.820
(334)
1,129
4,615
5,267
(1,220)
(227)
3,820
(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 $0.3 million of impairment of inventory items (2021: $1.2 million).
20 Trade and Other Receivables
Due within 1 year
Amounts due from related parties (Note 31 (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
Group
Company
2022
$’000
–
4,643
(4)
4,639
969
4,544
582
(56)
2021
$’000
–
4,641
(6)
4,635
895
4,550
767
(100)
10,678
10,747
2022
$’000
2,830
–
–
2,830
198
29
6
–
3,063
2021
$’000
3,372
–
–
3,372
175
25
–
–
3,572
98
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
20 Trade and Other Receivables (continued)
The fair value of trade and other receivables approximate their carrying amounts.
The Group applies the IFRS 9 simplified model for measuring ECL which uses a lifetime expected loss allowance and are
measured on the days past due criterion.
Trade receivables – Heritage net sales receipts have been collected on a timely basis. Since the Joint Interest Billing
(“Jibs”) balances are outstanding, an ECL was calculated at 31 December 2022 of $0.1 million (31 December 2021: $0.1
million) against Other receivables.
VAT recoverable – As at 31 December 2022 the VAT recoverable was $4.5 million. During 2022, the Group generated
Net VAT refunds of $3.1 million and received Net VAT refunds of $3.2 million.
All trade receivables are with the Group’s only customer, Heritage. Ageing analysis of these trade receivables as at 31
December 2022 is as follows:
Up to 30 days
>60 days
>180 days
2022
$’000
4,544
–
95
4,639
2021
$’000
4,495
–
140
4,635
The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
USD
GBP
TTD
Group
Company
2022
$’000
3,381
260
7,037
2021
$’000
3,292
169
7,286
10,678
10,747
2022
$’000
2,873
190
–
3,063
2021
$’000
3,416
156
–
3,572
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
2022
$’000
2021
$’000
2022
$’000
2021
$’000
10,678
10,747
–
–
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, WTI crude oil price 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 2022, trade receivables of $4.6
million (2021: $4.6 million) were therefore considered to be fully performing.
At the end of 2022 a total of $0.1 million was outstanding from Petrotrin (2021: $0.1 million). An ECL of $0.0 million was
applied to the outstanding $0.1 million receivables amount due from Petrotrin.
For other Joint Interest Billing receivable amounts from Heritage, an ECL of $0.1 million (2021: $0.1 million) was calculated.
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Company Information
21 Derivative financial instruments
The following table compares the carrying amounts and fair values of the Group’s financial liabilities as at 31 December
2022.
Derivative liability
Total
31 December
2022
$’000
31 December
2021
$’000
–
–
2,883
2,883
By 31 December 2022 all crude derivative contracts expired.
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
Derivative expense (loss in fair value)
Closing balance
As at
31 December
2022
$'000
As at
31 December
2021
$'000
(2,883)
2,883
–
266
(266)
(2,883)
–
(2,883)
100
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
22 Cash and Cash Equivalents
Short term investment
Cash and cash equivalents
Group
Company
2022
$’000
1,033
11,098
12,131
2021
$’000
2,449
15,863
18,312
2022
$’000
1,033
1,069
2,102
2021
$’000
2,449
659
3,108
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 2022
Shares Issued at Nominal value
As at 31 December 2022
24 Treasury Shares
Number
of shares
38,879,431
1,005,206
39,884,637
Ordinary
shares
$'000
389
10
399
Share
premium
$'000
–
–
–
Total
$'000
389
10
399
Treasury shares are shares in the Company that are held by the Company. In September 2022, the Group announced
a share buyback programme to return up to $1 million to shareholders, which was completed with 672,000 ordinary
shares having been repurchased. The Group subsequently announced a second tranche of its share buyback programme
to return up to an additional $1 million to shareholders, and as at 31 December 2022, this programme was still ongoing
with 400,000 shares having been repurchased for approximately $0.5m during 2022.
Group and Company
Share buyback – 1st tranche
Share buyback – 2nd tranche
As at 31 December 2022
Number
of shares
672,000
400,000
Cost
$’000
994
528
Total
$’000
994
528
1,072,000
1,522
1,522
25 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.
Annual Report & Financial Statements 2022
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Glossary
Company Information
During 2022 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:
Lapsed options released to retained earnings
LTIP expense
At 31 December
Share Option Plan
2022
$’000
3,784
–
(1,416)
622
2,990
2021
$’000
14,764
(11,485)
–
505
3,784
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 expiry dates in 2022 and 2023. The table below gives details:
Grant-Vest
2012-2015
2013-2016
Exercise
price per
Share Option
Expiry
Date
2022
2023
2022
Number of
Options
–
28,954
28,954
Exercise
price per
Share Option
GBP8.60
GBP12.00
2021
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
Share price
Average Exercise price
Expected volatility
Risk-free rates
Expected dividend yields
Vesting period
LTIP
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 Executive Directors and other members of the EMT to
deliver long-term shareholder returns. Under the plan, participants are granted options which only vest if certain
performance standards 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.
2017 One Off Award
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 One Off Award”). The 2017 One Off Award vested in full on 30 June 2022, 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.
102
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
25 Share Based Payment Reserve (continued)
The total fair value of the 2017 One Off Award was $2.6 million and was expensed over the vesting period with the full
charge pro-rated over the period up to 30 June 2022. However, the 2017 One Off Award could vest in full or in part on
30 June 2020 or 2021 with the appropriate charge being taken over that vesting period. The fair value at grant date
was 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 the 2017 One Off Award 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
24 August 2017
GBP 107.50p
GBP 0.00
73.3%
0.44%
0%
30 June 2020
30 June 2021
30 June 2022
30 June 2020
GBP 79.00p
GBP 0.00
84.9%
(0.07%)
0%
–
–
30 June 2022
The final vesting of the 2017 One Off Award was due to occur on 30 June 2022. However, as the three-month average
VWAP to 30 June 2022 of 130.0p was below that prevailing at 30 June 2021, the remaining 1,214,744 unvested options
lapsed.
2017 and 2018 LTIP Awards
In January 2019 Options over 282,400 ordinary shares and in May 2019 Options over 383,282 ordinary shares were
granted under the LTIP awards in accordance with the policy announced to the market on 25 August 2017 in respect of
the performance of the Company in the financial years ended 31 December 2017 and 2018 respectively. These awards
vested on 1 January 2021 and 2 January 2022 respectively, subject to meeting the performance criteria set out in the
table below and continued employment with 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
These awards were 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.
The total fair value at grant date of the LTIP awards granted during the period ended 31 December 2019 was $0.9 million
and this was 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 LTIP awards granted during the period ended 31 December 2019 included:
Grant Dates
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting period
2017 LTIP Award
2018 LTIP Award
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
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103
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Glossary
Company Information
2019 LTIP Award
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 in respect of the performance of the Company
in the financial year ended 31 December 2019. These LTIP awards vested on 2 January 2023, subject to meeting the
performance criteria set out in the table below and continued employment with 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
These Awards are subject to the achievement of relative 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 LTIP awards granted during the period ended 31 December 2020 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 LTIP awards granted during the period ended 31 December 2020 included:
Grant Dates
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
2020 LTIP Award
2019 LTIP Award
2019 LTIP Award
25 June 2020
GBP79.0
GBP0.00
84.9%
(0.07%)
0%
2 January 2023
30 October 2020
GBP77.0
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”) 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.
The performance targets set for awards made under the Revised LTIP during the period ended 31 December 2021 will
be measured considering both the Company's absolute TSR performance and the Company's relative TSR performance
over a three-year period, commencing with the current financial year of the Company (i.e. a measurement period of 1
January 2021 to 31 December 2023). 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 was
88p (adjusted for the Share Consolidation).
The performance targets provide that:
•
•
No portion of a distinct one-half of the 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 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.
104
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
25 Share Based Payment Reserve (continued)
The total fair value at grant date of the LTIP awards granted during the period ended 31 December 2021 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 LTIP
awards granted during the period ended 31 December 2021 included:
Grant Date
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
2021 LTIP Award
2020 LTIP Award
13 August 2021
GBP146.00p
GBP0.00
6.3%
(0.20%)
0%
1 January 2024
On 6 June 2022, 24 October 2022 and 9 December 2022 Options over a total of 415,000 ordinary shares were granted
in accordance with the Revised LTIP in respect of the performance of the Company in the financial year ended 31
December 2021. The earliest vesting date for the Award will be 1 January 2025, subject to meeting the performance
criteria set and continued employment in the Company.
The performance targets set for awards made under the Revised LTIP during the period ended 31 December 2022 will
be measured considering both the Company's absolute TSR performance and the Company's relative TSR performance
over a three-year period, commencing with the current financial year of the Company (i.e. a measurement period of 1
January 2022 to 31 December 2024). 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 was
£1.38 (adjusted for the Share Consolidation).
The performance targets provide that:
•
•
No portion of a distinct one-half of the 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 20% p.a.
No portion of the other distinct one-half of the 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 LTIP awards granted in the period ended 31 December 2022 was $0.6 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 LTIP
awards granted during the period ended 31 December 2022 included:
Grant Date
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
2021 LTIP Award
Jun/Oct/Dec 2022
GBP135p/120p/108p
GBP0.00
79%
1.83%/3.59%/3.28%
0%
1 January 2025
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105
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Glossary
Company Information
Movements in the number of LTIPs outstanding and their related weighted average exercise prices are as follows:
At 1 January
Forfeited/Lapsed
Granted1
Exercised2
At 31 December
1 Weighted average fair value of LTIPs granted GBP 1.38
2 Weighted average share price at the date of exercise GBP 1.00
2022
2021
Average
exercise
price per
Share Option
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
Number of
Options
3,381,299
(1,360,733)
415,000
(1,005,206)
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
–
GBP 0.00
1,430,360
GBP 0.00
3,381,299
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 – 2/1/2021
25/6/2020 – 2/1/2023
13/8/2021 – 31/12/2023
6/6/2022 – 1/1/2025
Expiry date
Exercise price
2022
2021
24/08/2027
1/1/2024
2/1/2025
2/1/2026
2/1/2027
1/1/2027
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
GBP 0.00
167,037
50,858
90,879
381,586
325,000
415,000
2,103,032
252,510
319,171
381,586
325,000
-
26 Merger and Reverse Acquisition Reserves
At 1 January 2022
Capital re-organisation/reduction
Translation differences
At 31 December 2022
At 1 January 2021
Capital re-organisation/reduction
Translation differences
At 31 December 2021
Reverse
Acquisition
Reserve
$’000
(89,268)
–
–
(89,268)
(89,268)
–
–
(89,268)
Merger
Reserve
$’000
–
–
–
–
Total
$’000
(89,268)
–
–
(89,268)
75,467
(75,467)
–
(13,801)
(75,467)
–
–
(89,268)
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.
106
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
27 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 the movement in the FV of Derivative Financial Instruments.
The Group presents Adjusted EBITDA as it is used in assessing the Group’s growth and operational efficiencies 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, Impairment and Exceptional Items
DD&A (note 13 - 15)
ILFA (note 20)
SOE (note 24)
FX (loss)/gain
Movement in FV of Derivative Financial 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)
Adjusted EBITDA after Current Taxes (the impact of SPT and PPT/UL) is calculated as follows:
Adjusted EBITDA
PT
SPT
PPT/UL
Adjusted EBIDA After Current Taxes
Weighted average ordinary shares outstanding - basic
Weighted average ordinary shares outstanding - diluted
Adjusted EBIDA After Current Taxes per share - basic
Adjusted EBIDA After Current Taxes per share - diluted
2022
$’000
18,971
7,617
(46)
647
394
(2,883)
2021
$’000
9,350
7,428
(754)
626
14
3,149
24,700
19,813
$'000
$'000
38,813
40,243
38,879
41,969
$
0.64
0.61
$
0.51
0.47
2022
$’000
24,700
–
(9,012)
(3,365)
2021
$’000
19,813
1,516
(5,074)
(1,375)
12,323
14,880
'000
'000
38,813
40,243
38,879
41,969
$
0.32
0.31
$
0.38
0.35
Annual Report & Financial Statements 2022
28 Provision for Other Liabilities
(a) Non-current:
Year ended 31 December 2022
Opening amount as at 1 January 2022
Unwinding of discount (Note 9)
Revision to estimates (Note 13)
Additions
Translation differences
Closing balance at 31 December 2022
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
Decommissioning cost
107
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
Closure
of pits
$’000
470
–
–
138
(5)
603
470
–
–
–
–
470
Total
$’000
55,690
1,110
(4,595)
138
117
52,460
45,875
1,222
8,407
195
(9)
55,690
Decommissioning
provision
$’000
55,220
1,110
(4,595)
–
122
51,857
45,405
1,222
8,407
195
(9)
55,220
The Group operates oil fields and this cost represents an estimate of the amounts required for abandonment of
the Group’s wells, platforms, gathering station 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 – 3.20% (2021: 2.40%)
b. Risk free rate – 3.96% - 4.14% (2021: 1.80% - 2.20%)
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.
Closure of Pits
Closure of pits relate to the 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.
108
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
28 Provision for Other Liabilities (continued)
(b) Current:
Year ended 31 December 2022
Opening amount as at 1 January 2021
Additions
Closing balance at 31 December 2022
Year ended 31 December 2021
Opening amount as at 1 January 2021
Closing balance at 31 December 2021
Litigation
claims
$’000
Other
provisions
$’000
46
91
137
46
46
–
112
112
–
–
Total
$’000
46
203
249
46
46
Litigation claims
There was an increase in the provisions for $0.1 million to reflect the best estimate of litigation claims as at 31 December
2022.
Other provisions
There was a provision of $0.1 million arising from the ICT downtime due to the cyber incident arising in December 2022
(Note 36 (4)).
29 Trade and Other Payables
Current
Trade payables
Accruals
Other payables
SPT
Group
Company
2022
$’000
2,605
4,661
500
2,166
9,932
2021
$’000
2,274
4,486
492
1,562
8,814
2022
$’000
136
429
–
–
565
2021
$’000
88
239
–
–
327
Annual Report & Financial Statements 2022
30 Bank overdraft
Bank Overdraft
109
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
31 December
2022
$’000
31 December
2021
$’000
2,700
2,700
2,700
2,700
An on-demand operating (overdraft) line of $5.0 million exists 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 6.50% per annum, effective rate 6.75%. 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
The credit limit on the facility is $5.0 million of which $2.7 million was drawn as at 31 December 2022.
31 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 Limited
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
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 Limited
Bayfield Energy Limited
Trinity Exploration and Production Services Limited (UK) Limited
2022
$’000
10,510
–
–
80
–
1,800
1,100
–
Company
2021
$’000
856
8
659
19
1,659
393
30
73
13,490
3,697
Company
2022
$’000
2021
$’000
–
–
(1,265)
(70)
(100)
(2,063)
(1,265)
(2,233)
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.
110
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
31 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 & Production (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Bayfield Energy 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
2022
$’000
876
30
279
1,185
2022
$’000
40
2
122
–
2,652
–
2,816
Group
2021
$’000
1,337
27
305
1,669
Company
2021
$’000
28
–
192
22
3,129
73
3,443
Reversal of provision for impairment/ (provision for impairment)
Closing intercompany receivables (Note 20)
14
(71)
2,830
3,372
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 (2021: 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
Trinity Exploration and Production (Trinidad & Tobago) Ltd
Oilbelt Services Limited
Total intercompany payables
Company
2022
$’000
2021
$’000
10,683
–
–
1,779
269
12,731
167
7
112
–
495
781
Annual Report & Financial Statements 2022
32 Taxation Payable
Taxation payable
PPT
UL
111
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
2022
$’000
2021
$’000
4
–
4
–
–
–
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.
33 Financial Instruments by Category
At 31 December 2022 and 2021, 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
2022
$’000
5,165
4,511
–
12,131
2021
$’000
5,302
4,021
–
18,312
21,807
27,635
2022
$’000
6
–
2,830
2,102
4,938
2021
$’000
200
–
3,372
3,108
6,680
At 31 December 2022 and 2021, the Group held the following financial liabilities at amortised cost:
Accounts payable and accruals
Intercompany
Bank overdraft
Group
Company
2022
$’000
9,932
–
2,700
12,632
2021
$’000
8,814
–
2,700
11,514
2022
$’000
565
12,731
–
13,296
2021
$’000
327
781
–
1,108
At 31 December 2022 and 2021, the Group held the following financial liabilities at fair value through profit or loss:
Derivative financial liability
Group
Company
2022
$’000
–
–
2021
$’000
2,883
2,883
2022
$’000
–
–
2021
$’000
2,883
2,883
112
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements (continued)
34 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 28: 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.) was expired as at 31 December 2022.
Subsequent to the year-end the PGB licence was renewed to 17 December 2037 (Note 36 (7)). There were no
additional liabilities and commitments arising from the renewed agreement.
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.
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 consolidated financial statements.
35 Employee Costs
Employee costs for the Group during the year
Wages and salaries
Other pension costs
Share based payment expense
Group
Company
2022
$’000
7,245
425
647
8,317
2021
$’000
8,625
372
673
9,670
2022
$’000
483
–
107
590
2021
$’000
1,170
–
94
1,264
Average monthly number of people
(including Executive and Non-Executive Directors’) employed by the Group
Executive and Non-Executive Directors
Administrative staff
Operational staff
2022
number
2021
number
2022
number
2021
number
6
102
168
276
6
95
144
245
6
–
–
6
6
–
–
6
Annual Report & Financial Statements 2022
113
Strategic Report
Governance
l Financial Accounts
Glossary
Company Information
36 Events after the Reporting Period
1.
Subsequent to 31 December 2022, the Group has received further VAT refunds of $2.6 million as at 31 May 2023.
On 10 May 2023, the Government of Trinidad and Tobago announced that it intends to settle outstanding VAT
refunds via interest bearing bonds in order to meet VAT arrears of those registrants who are owed in excess of
$0.03 million in VAT refunds. At the end of May 2023, the Group had $2.0 million in VAT refunds recoverable in VAT
bonds.
2. On 31 December 2022, the FZ-2 Lease Operating Agreement (LOA) expired. Trinity obtained an interim renewal of
the LOA to 31 March 2023 and obtained a further extension to 30 June 2023 to execute the LOA for the period 1
January 2023 to 30 September 2031.
3. On 29 March 2023, the Group provided six-months’ notice to Heritage to terminate the sub-licence Farm-Out
agreement for the Tabaquite block. The new sub-licencee requirements proposed to the Group makes this licence
uneconomic to operate.
4. Cyber incident – The Group was the subject of a sophisticated cyber incident in December 2022 and immediately
took precautionary measures to protect its IT infrastructure. The Group engaged with external specialists to
investigate the nature and extent of the incident and implement its systems recovery plan. Trinity moved quickly to
notify relevant regulators and law enforcement agencies. Trinity's production facilities continued to operate safely
throughout. In 2023, the Group continues to execute its recovery plan. Trinity's IT team and its external advisers
continue to support the business in returning its administrative systems to full capacity incorporating learnings from
the incident and embedding more resilient IT infrastructure, cyber security systems and procedures.
5.
6.
Trintes Field Incident - On the evening of 10 April 2023, a fire occurred in one of the two generators on the Trintes
Bravo platform. Production across the field was halted and the fire was contained. Production restarted from Alpha
and Delta platforms on 11 April 2023. Four operators, all Trinity staff, were on Bravo at the time of the incident and,
having suffered minor injuries, all are now recovered and resume work. Following approval from the Ministry of
Energy and Energy Industries, received on 17 April 2023, the Company successfully restored oil production from all
previously producing wells on the Bravo platform on 18 April 2023. Production from the field is in-line with pre-
incident levels at approximately 1,010 bopd.
Share buyback – As at 31 December 2022, the second tranche of the share buyback programme was still ongoing
with 400,000 shares repurchased to 31 December 2022 utilising $0.5 million of the $1 million tranche. On 26 April
2023, the second tranche of the share buyback programme was completed and a third tranche was announced on
28 April 2023 for up to a further $1 million. This tranche will be funded from the Group’s existing cash resources
and will, unless terminated at an earlier date, expire at the conclusion of the 2023 AGM, or 30 June 2023, whichever
is earlier.
7. Renewal of PGB Exploration and Production Licence – On 3 May 2023, the MEEI provided confirmation of the
renewal of the PGB Licence for an additional 25 years from the Effective Date of 18 December 2012. Consequently,
the PGB Licence expires on 17 December 2037. There were no additional liabilities and commitments arising from
the renewed Licence.
114
Glossary
Trinity Exploration & Production plc
Abbreviation
Meaning
2P
2C
Adjusted EBITDA
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) and fair value Gains/Losses on Derivative Financial Instruments
AGM
AIM
APM
bbl
BDO
BIR
BM
Board
bopd
boepd
c.
CA 2006
Capex
CGU
CIBC
CIMA
CLN
COSA
CSR
COVID-19
Annual General Meeting
Alternative Investment Market of the London Stock Exchange plc
Alternative Performance Measures Guidelines
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
First Caribbean International Bank (Trinidad & Tobago) Limited
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
DD&A
Derivatives
Depreciation, depletion and amortisation
Oil Price Derivative Financial Instruments
DOA
DTA
DTL
EAD
E&E
ECTT
EIA
ECL
EMA
EMT
ESG
ESP
EU
EUR
FCF
FEED
FDP
FID
FOA
FRC
FVLCD
FX
Delegation of Authority
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
Electric 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
Fair Value less Costs of Disposal
Foreign Exchange
Annual Report & Financial Statements 2022
115
Strategic Report
Governance
Financial Accounts
l Glossary
Company Information
Abbreviation
G&A
GBP or £
GHG
GORTT
Group
H
HAW
Heritage
HMRC
HSSE
IP
IOR
IAS
IFRS
IFRS IC
ITC
ILFA
JOA
KPI(s)
LGD
LLP
LNG
LO
LOA
LTI
LTIP
MOU
MEEI
MM
Management
mmbbls
mmstb
MPHU
mt
MWh
NOC
NOS
Meaning
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
Heritage Petroleum Company Limited
Her Majesty Revenue and Customs of the United Kingdom
Health, Safety, Security & Environment
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)
Loss Given Default
Limited liability partnership
Liquefied Natural Gas
Lease Operator
Lease Operatorship Agreement
Lost Time Incidents
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
Mechanical Pumping Hydraulic Unit
metric tonnes
Megawatt hour
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
Paris Agreement
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
The Paris Agreement is an agreement within the United Nations Framework Convention on
Climate Change, dealing with greenhouse-gas-emissions mitigation, adaptation, and finance,
signed in 2016 including Least Developed Countries and Small Island Developing States.
116
Trinity Exploration & Production plc
Glossary (continued)
Abbreviation
Meaning
PCP
PD
Petrotrin
PGB
Plc
PPE
ppm
PPT
PRMS
PT
PwC
Q
REI
RNS
RCP(s)
Realised price
ROU
SCADA
SCN
SOE
SPE
SPT
Progressive Cavity Pumps
Probability of Default
The Petroleum Group of Trinidad and Tobago Limited
Point Ligoure-Guapo Bay-Brighton Marine Outer (West Coast Assets)
Public Limited Company
Personnel Protective Equipment
parts per million
Petroleum Profits Tax
Petroleum Resource Management System
Property Tax
PricewaterhouseCoopers LLP
Year quarter (3 months) i.e. Q1 means first quarter
Reportable Environmental Incidents
Regulatory News Service
Recompletion(s)
Actual price received per bbl. A discount is normally applied to the WTI price by Heritage to
derive the realised price received by Trinity.
Right-of-Use
Supervisory Control and Data Acquisition
Sand Control
Share Option Expense
Society of Petroleum Engineers
Supplemental Petroleum Tax
START Card
See Think Act Reinforce Track Card
STOIIP
STOW
Stock Tank Oil Initially in Place
Safe to Work
T&T based bank
First Citizens Bank Limited
TEPUKL
TEPGL
Trinity Exploration & Production (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Trinity/Company/Parent
Trinity Exploration & Production plc
TOG
TPH
TSR
TTD
T&T
Total Oil and Gas
Total Petroleum Hydrocarbons
Total Shareholder Return
Trinidad & Tobago Dollars
Trinidad & Tobago
T&T State creditors
Reference to both BIR and MEEI
UK
UL
UN SDG
USA
United Kingdom
Unemployment Levy
United Nations Sustainable Development Goals
United States of America
USD or US$ or $
United States Dollars
UWI
VAT
VIU
vs
VWAP
WFH
WHO
WTI
WO(s)
YE
University of the West Indies
Value Added Tax
Value in Use
versus
Volume-Weighted Average Price
Work From Home
World Health Organisation
West Texas Intermediate - is a grade of crude oil used as a benchmark in oil pricing
Workover(s)
Year-end
117
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
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
Vigo Consulting
Sackville House
40 Piccadily
London W1J ODR
Annual Report & Financial Statements 2022
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 & Tobago
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