Annual Report & Accounts
for the year ended 31 December 2023
Company Number: 07535869
Stock Code: TRIN
Financial Accounts
54 Consolidated Statement of Comprehensive Income
55 Consolidated Statement of Financial Position
56 Company Statement of Financial Position
57 Consolidated Statement of Changes in Equity
58 Company Statement of Changes in Equity
59 Consolidated Statement of Cash Flows
60 Company Statement of Cash Flows
61 Notes to the Consolidated Financial Statements
Glossary of Terms
102 Glossary of Terms
Company Information
105 Company Information
Contents
Contents
Strategic Report
1
Highlights of 2023
3 Chair & CEO Statement
4 Operations Review
7
Financial Review
14 Environmental and Social Governance
16 Risk Management and Internal Controls
Our Governance
19 Directors’ Statement s172
21 Corporate Governance Statement
22 QCA Principles
25 Board of Directors
27 Executive Management Team
28 Board Activities
29 Audit Committee Report
30 Technical Committee Report
31 Remuneration Committee Report
33 Directors’ Remuneration Report
42 Directors’ Report
45 Statement of Directors’ Responsibilities
46
Independent Auditor’s Report
For more information on
Trinity Exploration & Production visit
trinityexploration.com
Highlights of 2023
1
Sales (bopd)
2,790
2022 2,975 bopd
Operating Profit Before SPT,
Impairments and Exceptional Items (USD)
$9.6m
2022 19.0 USD million1
Adjusted EBITDA before hedge
costs (APM Result) (USD)
Adjusted EBITDA after hedge
costs (APM Result) (USD)
$19.2m
2022 35.1 USD million
$19.2m
2022 24.7 USD million
Adjusted EBIDA after Current Taxes
(APM Result) (USD)
Cash generated from continuing
operations (USD)
$12.9m
2022 12.3 USD million
$13.2m
2022 12.0 USD million
Cash flow used in investing activities
(USD)
Total year-end cash
(USD)
$15.4m
2022 15.6 USD million
$9.8m2
2022 12.1 USD million
Note:
1. Covid 19 expenses in prior year reclassified as operating expenses.
2. Includes overdraft balance of USD 4.0m (2022: USD 2.7m)
Note:
Refer to the Financial Review Section 7 to 13 for additional information.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
2
Highlights of 2023 (continued)
2P Reserves + 2C Resources*
Total Year End
2p
2C
Total
* 2023 Management estimates for reserves and resources.
Onshore
2p
2C
Total
East Coast
2p
2C
Total
West Coast
2p
2C
Total
2023
mmstb
12.91
38.68
51.58
2023
mmstb
4.26
3.74
8.00
2023
mmstb
7.78
31.31
39.09
2023
mmstb
0.86
3.63
4.48
2022
mmstb
17.96
48.88
66.84
2022
mmstb
6.53
8.62
15.15
2022
mmstb
9.26
36.81
46.07
2022
mmstb
2.17
3.45
5.62
Trinity Exploration & Production plc
3
and ended on 27 June 2023, having repurchased
1,549,000 shares on the open market for a total cost of
USD 2.1 million. These shares are held in treasury and
are used to settle options exercised. Trinity paid its first
interim dividend of 0.5 pence per ordinary share on
26 October 2023.
Angus Winther, having joined the Board in 2017 and
completed two full terms as a Non-Executive Director
and Chair of the Audit Committee, retired from the Board
by rotation in June. In August, we welcomed Jon Cooper
as an Independent Non-Executive Director, and the new
Chair of the Audit Committee, and Julian Kennedy as an
Executive Director, taking on the role of Chief Financial
Officer, to the Board. James Menzies has decided not to
stand for re-election at this forthcoming Annual General
Meeting which coincides with James 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 contribution to the Board since joining in 2017. The
management team was strengthened by the addition in
April 2023 of Mark Kingsley as Chief Operating Officer and
in November 2023 of Aida Shafina Abu Bakar as Executive
Manager, Subsurface.
It became clear during 2023 that the Group would
require new capital to fund its portfolio of development
opportunities. In October 2023, the Company engaged
a financial adviser, Houlihan Lokey, to assist in exploring
strategic and financing alternatives for the Company.
On 23 November 2023, Trinity received an unsolicited,
conditional non-binding proposal to acquire the issued
and to be issued share capital of Trinity from Touchstone
Exploration Inc (“Touchstone”) and following the execution
of a confidentiality agreement, Touchstone was provided
access to due diligence information.
On 1 May 2024, following a period of due diligence
and negotiation, the boards of directors of Trinity and
Touchstone announced the terms of the recommended
all share offer (the “Acquisition”). The Acquisition is to be
effected by means of a scheme of arrangement under
Part 26 of the Companies Act. Under the terms of the
Acquisition, Trinity Shareholders shall be entitled to receive
1.5 New Touchstone Shares for each Trinity share. Should
the Scheme be approved by Shareholders and sanctioned
by the Court, we believe Trinity has an exciting future as
part of the enlarged Touchstone organisation.
During what has been an exciting but also challenging
period, we would like to thank our staff, the Board and our
advisors for their continuing hard work during a particularly
busy time for the Company.
Nicholas Clayton
Non-Executive Chair
Jeremy Bridglalsingh
Chief Executive Officer
Chair & CEO Statement
Dear shareholders,
2023 was an important year for Trinity with key
developments in our ambitious growth programme
being progressed. The Company drilled the Jacobin well
in the year to test deeper prospectivity in the Lower
Cruse horizons in our core Palo Seco acreage. While the
well discovered oil in those deeper horizons, flow rates
were disappointing, and drilling complexities resulted
in significant cost overruns. The results from the well
are being incorporated into further understanding the
“Hummingbird” play with independent features still
offering future potential as well as the prospectivity of the
exploration block, Buenos Ayres. In June, the Company was
advised by the Ministry of Energy and Energy Industries
(“MEEI”) that it had been successful in its bid for the
Buenos Ayres block in the 2022 Onshore and Nearshore
Competitive Bid Round, immediately to the west of our
core Palo Seco acreage. Buenos Ayres is undrilled and
offers considerable potential.
The ABM-151 well in the Brighton Marine block, offshore
the West Coast of Trinidad, was returned to production
on 21 March 2023 following an extensive refurbishment of
surface facilities and the installation of remote surveillance
technology. Between restart and the end of the year the
well flowed at an average rate of 122 bopd, exceeding
expectations.
Group net sales for 2023 were 2,790 bopd (2022: 2,975
bopd). Trinity managed to substantially mitigate natural
production decline through a programme including six well
recompletions (“RCPs”), 98 workovers and swabbing across
its asset base. The fire on the Bravo platform in the Trintes
field, represented a significant event for the company with
valuable lessons learned arising from a comprehensive
investigation with an associated corrective actions register.
A number of safety improvements have been implemented
to date, including those that mitigate the root cause for the
fire and improved fire-fighting capabilities in the event of a
similar incident.
At Galeota, following an extensive Concept-Screening
study completed by Petrofac in Q3 2023, Trinity identified
a revised infrastructure-led development solution which
includes an initial phase of development drilling from
existing platforms. Whilst Trinity believes the revised
development solution will significantly reduce capital
requirement prior to first oil compared to the Echo Field
Development Plan, Trinity would need to secure third party
financing to take a final investment decision and fund the
development.
In parallel to progressing the Galeota asset development
plan project, Trinity assembled a pipeline of investment
projects including brownfield development opportunities
at the West Coast and onshore assets and a portfolio of
exploration prospects across Trinity’s Palo Seco assets.
Trinity believes that significant capital investment, both
debt and equity, will be required to realise the potential of
the Company’s portfolio.
Our 2023 financial results demonstrate the Company’s
resilience. Adjusted EBITDA for the year was
USD 19.2 million (2022: USD 24.7 million) and cash
resources were USD 9.8 million (2022: USD 12.1 million)
at year-end. The Company completed a share buyback
programme which commenced on 24 October 2022
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
4
Operations Review
The Group achieved net sales of 2,790 bopd in 2023
(2022: 2,975 bopd) despite no development drilling (2022
three development wells) and six RCPs, (2022 17 RCPs)
combined with operational challenges in the East Coast
Asset. Investments into production-related activities, such
as RCPs, ABM 151 reactivation, production maintenance
workovers and swabbing enabled the Company to deliver
annual production decline of 6%, below the expected
natural field decline range of 7% to 10%.
Table 1: 2023 vs 2022 Annual Sales Breakdown
Sales 2022
(Net WI bopd)
Annual
Annual
109
100
258
1,004
62
118
4
91
93
208
941
56
106
Assets
WD13
WD14
WD2
WD5/6
PS4
FZ2
TAB
Sales 2023
(Net WI bopd)
Q1
97
99
241
940
60
111
H2
89
88
193
946
59
103
H1
92
97
224
935
54
110
Q2
88
96
206
930
48
109
Q3
78
87
196
974
49
109
Q4
99
88
191
918
69
97
Onshore
1,655
1,495
1,512
1,478
1,548
1,477
1,493
1,462
TRINTES
East Coast
BRIGHTON
PGB
West Coast
1,051
1,051
158
111
269
943
943
246
107
353
1,011
1,011
230
108
338
876
876
263
105
368
1,038
1,038
204
110
314
985
985
255
107
362
843
843
268
102
370
908
908
258
107
365
TOTAL
2,975
2,790
2,861
2,721
2,899
2,824
2,705
2,736
Note TAB* was relinquished on 29 September 2023
Onshore Assets
Trinity’s onshore assets comprise the lease
operatorship (“LO”) blocks: WD-5/6, WD-2 and PS-4
(together “Palo Seco”) and FZ-2, WD-13, WD-14
(together “Forest Reserve”).
Onshore average net sales for 2023 were 1,495 bopd
(2022: 1,654 bopd) accounting for approximately 54% of
the Group’s total annual sales.
Average sales declined by approximately 10% between
2022 and 2023 due to wells drilled in H2 2022 accentuating
the decline. Trinity successfully completed six RCPs
(2022: 17) and ninety-eight workovers (2022: 87), which
contributed to the maintenance of the industry standard
decline of between 7-10% for brownfields. In WD-2, the
asset experienced a higher-than-expected decline due
to increased water production in one well (PS 570) and
declining production in the naturally flowing well (PS 571).
In 2024, Trinity intends to manage its base production
through further RCP activity, implementation of
recommendations from the 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 Jacobin well, 1PS 1524ST3, was drilled to a total depth
of 10,021 ft. Geologically, the well intersected stacked pay
potential across the PS4 block in both the development
and exploration sections of the well. However, reservoir
properties in the exploration section were poorer
than predicted and, as such, post-drill volumes for the
exploration section were below the lower end of the
predicted ranges. The rapid decline in reservoir pressures
suggests reservoir boundaries are much closer than
pre-drill estimates.
The total well cost was USD 9.6 million. An impairment
assessment was done on this well, triggered by poorer
than expected results and higher costs incurred, the entire
Jacobin costs was written off.
Data acquired from the well will be incorporated into our
regional model to de-risk and re-prioritise future drilling
candidates across our Palo Seco LOs and Buenos Ayres.
Trinity has embarked on an idle well study, with the initial
phase including technical reviews of circa 250 wells, with
field investigations having commenced on the first 30
of these, which as a result has added more wells to the
swabbing program.
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 2023 from the East Coast were
943 bopd (2022: 1,051 bopd) which accounts for
Trinity Exploration & Production plc
5
approximately 34% of Group sales for the year. A total of
22 workovers in 2023 (2022: 23) 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.
Average sales declined by approximately 10% between
2022 and 2023 due to two main events: the Bravo platform
fire in April; and the lower performance of the D9 well, the
largest producer in the Trintes field.
The Galeota licence has significant growth potential from
undeveloped reserves and resources in the Trintes field
and broader development of the Galeota block, including
exploration potential.
In July 2023, Trinity initiated a review of the approved Field
Development Plan (“FDP”) for the TGAL Echo development
to reduce capital expenditure, reduce time to first oil and
improve financial returns; a new development strategy-
concept being created envisaging the use of a mobile
operation and production unit (“MOPU”).
Trinity appointed Petrofac to undertake a Concept-
Screening study for the development of further reserves.
This study created a more holistic approach to block
development whereby Phase 1 involved drilling horizontal
infill wells in Trintes to demonstrate that such wells can
be successfully drilled and produced as to date they have
not been attempted. Phase 2 then took the learnings from
Trintes infill drilling to drill and produce horizontal wells in
the TGAL area from a lightweight structure tied back to a
leased MOPU. This concept replaces CAPEX with OPEX
in the form of lease rate payments and appears – based
on screening cost estimates to date – to improve the
overall economics of the project materially. This work is
progressing with the revision and update of the subsurface
studies in 2024.
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 353 bopd in 2023
(2022: 269 bopd) which accounted for approximately 13%
of the Group’s total annual average sales. This was a 31%
year on year increase on the 2022 average. The increase
was mainly due to the successful execution of the ABM 151
reactivation project. After placing the well on production,
ABM 151 produced at a higher initial rate than expected and
maintained a lower decline rate than predicted. A total of
five workovers in 2023 (2022: 10) were conducted across
the assets. There was increased focus on swabbing both
on land as well as the introduction of an additional offshore
swabbing unit which also assisted in increasing production
volumes.
Facilities Management
and Infrastructure
In 2023, the Facilities team focused on asset integrity,
welfare initiatives and projects supporting production.
On Trintes, the Company continued replacing and installing
planks and gratings on offshore platform production decks
and improved key electrical equipment on the Alpha, Bravo
and Delta platforms, for better use of the available space.
Automated Tank controls were also introduced.
The construction of a new 10,000 bbl sales tank to
accommodate production from the Trintes field was
completed in 2023. In 2024 the tank was certified and put
into service.
Remedial work following the Trintes Bravo generator fire
was completed and upgrades to the safety systems were
implemented. This includes upgraded fire suppression
systems, replacement of all six generator units (Q1 2024
completed) and introduction of emergency escape systems
and advanced fire-fighting training. The automated systems
on all of the Trintes platforms were also upgraded with
additional redundancy.
Onshore and West Coast operations focused on upgrading
welfare facilities, electrical systems as well as oil storage
tanks.
The project and maintenance team was reorganised
with the introduction of a dedicated maintenance team.
This team will focus on fabric maintenance and rotating
equipment. In total, the team progressed 22 projects of
which 18 were completed by end of 2023 and four rolled
over into 2024.
Facilities Management and Infrastructure capex in 2023 was
USD 4.1 million (2022 USD 4.5 million).
During 2023 a review of the decommissioning methodology
and cost estimates were undertaken. This led to a
reduction in well abandonment cost estimates and the
overall decommissioning provision to USD 44.4 million
(2022: 51.9 million).
Reserves and Resources
A comprehensive reserves and resources review of all
assets has been completed by Management and the
technical work underpinning this management estimate was
reviewed by Netherland, Sewell & Associates, Inc which
estimates Trinity’s current 2P reserves to be 12.91 mmstb at
the end of 2023, compared to the year-end 2022 reserve
estimate of 17.96 mmstb. This represents a 28% year-
on-year decrease. The largest reduction in 2P Reserves
at Year-End 2023 is from wells that were categorised as
economic 2P Reserves at Year-End 2022 which have been
reclassified to 2C Resources due to individual opportunities
being considered uneconomic at the date of review.
Additional reductions are due to the impact of earlier
economic limit truncations and revisions to the Trintes Infill
well programme.
The 2C Resources at the end of 2023 are estimated at
38.68 mmstb compared to the end of 2022 resource
estimate of 48.88 mmstb. The reduction in 2C Resources
is attributed largely to the East Coast block based on the
latest interpretation and mapping of reprocessed seismic
data which resulted in a view that the field structure is
more steeply dipping than in previous interpretations.
The Year-End 2023 total 2C for East Coast is 31.3 mmstb
(compared to 36.8 mmstb previously). While the
2C Resource estimate for East Coast has been reduced,
the impact on the development and exploration plans for
the field is minimal.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 6
Operations Review (continued)
Management considers the reserves presented in the table
below to be its best estimate as at 31 December 2023
of the quantity of reserves that can be recovered from
Trinity’s current assets. It includes forecast 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.
2023 2P Reserves
31-Dec-22
Production
Revisions
31-Dec-23
Net Oil Reserves
mmstb
mmstb
mmstb
mmstb
Asset
Onshore
West Coast
East Coast
Total
6.53
2.17
9.26
17.96
(0.55)
(0.13)
(0.34)
(1.02)
(1.72)
(1.18)
(1.14)
(4.03)
4.26
0.86
7.78
12.91
2023 2C Resources
31-Dec-22
Production
Revisions
31-Dec-23
Net Oil Resources
mmstb
mmstb
mmstb
mmstb
Asset
Onshore
West Coast
East Coast
Total
8.62
3.45
36.81
48.88
N/A
N/A
N/A
N/A
(4.88)
0.18
(5.50)
3.74
3.63
31.31
(10.20)
38.68
2023 Reserves and Resources
31-Dec-2022
2P Reserves
and 2C
Resources
Production
Revisions
31-Dec-2023
2P Reserves
and 2C
Resources
mmstb
mmstb
mmstb
mmstb
Asset
Onshore
West Coast
East Coast
Total
2P Reserves Note:
15.15
5.62
46.07
66.84
(0.55)
(0.13)
(0.34)
(6.60)
(1.00)
(6.64)
(1.02)
(14.24)
8.00
4.49
39.09
51.58
The 2023 produced volume of 1.02 mmstb accounts for 20% of the overall
2P decrease in 2023 compared to 2022. Other revisions contributing to the
overall decrease are:
-
-
-
-
(0.38) mmstb from PS4 and Tabaquite Revision
(1.1) mmstb from Base Revisions
(0.22) mmstb from RCP Revisions
(2.34) mmstb from Infill Well Revisions
2C Resources Note:
Revisions contributing to the overall decrease are:
-
-
(4.90) mmstb from Appraisal Wells Revisions (Onshore)
(8.33) mmstb from TGAL Revision and 2.83 mmstb (Trintes) from
re-categorisation and ELT
Trinity Exploration & Production plc
Financial Review
7
KPIs
During 2023 the Group saw lower realised oil prices compared with 2022. A combination of lower oil price, a six percent
reduction in net production and an increase operating break-even resulted in Adjusted EBITDA (before hedge costs)
decreasing by USD 15.9 million to USD 19.2 million (2022: USD 35.1 million). The Group delivered a resilient operating
performance as shown by its positive Adjusted EBITDA margin (after hedge costs) of 28.1% (2022: 26.8%) and IFRS
Operating Profit before SPT of USD 9.6 million (2022: USD 19.0 million) despite a 19% decrease in realised oil price.
A summary of the year-on-year operational and financial highlights are set out below:
FY 2023
FY 2022
Change %
Average realised oil price1
Average net production2
Revenues
Cash balance
IFRS Results
Operating Profit before SPT
Total Comprehensive (loss) /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
bopd
USD million
USD million
USD million
USD million
USD cents
USD million
USD million
USD/bbl
%
USD million
US cents
USD/bbl
USD million
68.6
2,790
69.8
9.8
9.6
(6.8)
0.0
19.2
19.2
18.9
27.5
12.9
32.3
38.3
8.6
84.9
2,975
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
(19)
(6)
(24)
(19)
(49)
(7,415)
(100)
(45)
(22)
(17)
3
5
5
19
(39)
1. Average realised price (USD/bbl): Actual price received for crude oil sales per barrel (“bbl”).
2. Average net production (bopd): Production sold in barrels per day in a given year.
3. Adjusted EBITDA (before hedge) (USD MM): Adjusted EBITDA for the period, before Derivative expense.
4. 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.
5. Adjusted EBITDA (USD/bbl): Adjusted EBITDA/Annual sales volume.
6. Adjusted EBITDA margin (%): Adjusted EBITDA/Revenues.
7. Adjusted EBIDA after Current Taxes: Adjusted EBIDA less Supplemental Petroleum Taxes (“SPT”), Petroleum Profits Tax (“PPT”) and Unemployment Levy (“UL”).
8. Consolidated operating break-even: The realised price/bbl where the Adjusted EBITDA/bbl for the Group is equal to zero.
9. Net cash plus working capital surplus: Current Assets less Current Liabilities (other than Derivative financial asset / liability and Provision for other liabilities).
See Note 27 to Consolidated Financial Statements – Adjusted EBITDA for further details on page 95.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
8
Financial Review (continued)
2023 Trading Summary
A five-year historical summary of realised price, sales, operating break-even, Royalties, Production Costs (“Opex”) and
General & Administrative (“G&A”) expenditure metrics is set out below.
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 – Consolidated1
Operating Break-Even2
Onshore
West Coast
East Coast
Consolidated3
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
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
2023
68.6
1,495
353
943
2,790
26.8
12.7
13.3
20.5
20.6
30.1
30.1
22.0
7.2
23.9
31.8
31.7
38.3
1. G&A/bbl – Consolidated: Excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.
2. Operating break-even: The realised price where Adjusted EBITDA (before hedge) for the respective asset or the entire Group (Consolidated) is equal to zero.
3. Consolidated operating break-even: Includes G&A but excludes SOE, ILFA, Derivative FV gain/loss and FX gain/loss.
Trinity Exploration & Production plc
9
Increased capex investment programme to drive
growth:
USD 17.1 million (2022: USD 15.5 million) invested to drive
future production growth. This comprised:
y
y
y
y
y
USD 9.1 million Exploration and Evaluation (“E&E”)
asset.
USD 5.0 million infrastructure Capex including facilities
(USD 4.1 million) and ICT (USD 0.9 million).
USD 1.1 million production capex comprising, 6 RCP’s
and production equipment (USD 0.2 million) and the
ABM-151 reactivation project (USD 0.9 million).
USD 1.6 million subsurface costs.
USD 0.3 million in Exploration and Evaluation (“E&E”)
Environmental Impact Assessment (EIA) to the Buenos
Ayres Block.
Refer to Notes to Financial Statements: Note 13 Property,
Plant and Equipment – Additions (USD 6.9 million) on
page 82 and Note 15 – Intangible Assets – E&E Additions
(USD 10.2 million) inclusive of accruals on page 84.
Rebuilding the balance sheet:
The Group’s cash balances at year end were
USD 9.8 million (2022: USD 12.1 million), primarily
reflecting positive cash generated from operations of
USD 13.2 million, Capex spend of USD (15.4) million and
Financing activities of USD (0.2) million. In aggregate,
despite these significant cash outflows, the Group’s net
cash plus working capital surplus stood at USD 8.6 million
(2022: USD 14.2 million) and the Group’s current ratio
was 1.4x (2022: 2.1x). Elements of spend relating to 2023
activities, principally drilling of the Jacobin well, will be
settled in 2024. The Company is focused on managing its
cost base and activities in 2024 in order to build-back cash
on its balance sheet.
Review of Financial Statements
Trinity and its subsidiaries’ (“the Group”) consolidated
financial information has been prepared on a going
concern basis, in accordance with International Accounting
Standards (“IAS”) 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 61 to 77.
Throughout this report, reference is made to adjusted
results and measures. The Board believes 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 IAS 1 “Presentation of
financial statements”.
In particular, the Alternative Performance Measure (“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.
Summary of Results for the Year
Lower revenue driven by lower average realised oil
price and sales volume in 2023:
The combined impact of a 19% decrease in average oil price
realisations to USD 68.6/bbl (2022: USD 84.9/bbl), and a
modest 6% decrease in average annual sales 2,790 bopd
(2022: 2,975 bopd), resulted in a 24% decrease in revenues
to USD 69.8 million (2022: USD 92.2 million).
Maintained robust operating profits despite inflationary
pressures:
The Group continued to deliver strong operating profits
despite the inflationary pressures on goods and services.
Operating profit before taxes was USD 9.6 million
(2022: USD 19.0 million) and consolidated operating
break-even moved up to USD 38.3/bbl (2022: USD 32.1/bbl)
demonstrating the Group’s ability to be profitable across a
broad range of oil prices.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 10
Financial Review (continued)
Statement of Comprehensive Income
2023 Financial Highlights
Average realisation of USD 68.6/bbl (2022: USD 84.9/bbl).
was mainly due to lower operating revenues resulting lower
oil prices despite inflationary pressures on cost.
Operating Revenues
Operating revenues down 24% to USD 69.8 million
(2022: USD 92.2 million).
Operating expenses
Operating expenses decreased by 18% in 2023 to USD
(60.2) million reflecting a reduction in crude oil price
environment and no hedge costs (2022: USD (73.3) million)
and comprised:
Operating Expenses (excluding non-cash
items): USD 50.6 million (2022: (67.6) million):
y
y
y
y
y
Royalties of USD (20.9) million (2022: USD
(30.1) million), this decrease being driven by lower
average realised oil price and sales production.
Opex of USD (22.4) million (2022: USD (19.2) million),
the increase mainly due to inflationary costs on
goods and services seen in increased repairs and
maintenance, vessel, swabbing and workover cost in
the year.
G&A expenses of USD (7.4) million (2022: USD
(7.2) million), the increase mainly due to comprehensive
reserve review being commenced during the year and
build out of the Management Team net of reduced
levies and administrative costs including professional
fees.
Derivative expense of nil (2022: Derivative expense of
USD (10.4) million) being the cash impact of derivative
instruments paid out for 2022.
Covid 19 expense of nil (2022: USD (0.6) million) being
the costs associated with accommodation, testing and
sanitisation related to our prevention and response.
y
Cash FX loss USD (0.0) million (2022: USD (0.1) million).
Non-Cash Operating Expenses: USD 9.5 million
(2022: USD (5.7) million):
y
y
y
y
y
DD&A of USD (8.9) million (2022: USD (7.6) million).
SOE of USD (0.5) million (2022: USD (0.7) million).
ILFA USD (0.1) million (2022: USD 0.0 million).
FX loss USD (0.0) million (2022: USD (0.3) million).
Derivative credit of nil (2022: Derivative expense of
USD 2.9 million) being the movement in the FV of
derivative instruments held at the beginning and end of
the financial year.
Operating Profit Before SPT, Impairment, Exceptional
Items and Decommissioning Reduction
The operating profit before SPT, impairment, exceptional
items and decommissioning reduction for the year
amounted to USD 9.6 million (2022: USD 19.0 million) and
SPT
SPT of USD (5.7) million (2022: USD (9.0) million) mainly
due to lower realised oil prices in relation to the Group’s
operations in 2023. Only offshore assets were subject to
SPT in 2023 as the realised oil price throughout the year
was lower than USD 75/bbl.
Operating Profit before Impairment and Exceptional
items
The Group’s reported operating profit before
impairment and exceptional items was USD 3.9 million
(2022: USD 10.0 million). Adjusting for non-cash expenses,
the Group’s Adjusted EBIDA after Current Taxes was
USD 12.9 million (2022: USD 12.3 million) (further details
below).
Impairment charge
Impairment charges taken were USD (13.5) million
(2022: USD (6.1) million) relating to the impairment of
Jacobin E&E well and other E&E costs USD (11.8) million and
property, plant, and equipment USD (1.7) million.
See Note 3(d and e) to Consolidated Financial Statements
- Impairment of Property, Plant and Equipment and
Exploration and Evaluation Assets on pages 75 to 76 for
further details.
Exceptional items
Exceptional items were USD (0.3) million cyber incident
costs USD (0.2) million (2022: USD (0.2)) and Bravo
fire-incident costs USD (0.1) million.
See Note 7 to Consolidated Financial Statements –
Exceptional items for further details on page 78.
Decommissioning reduction
In 2023, there was a reduction of decommissioning
provision costs due to revision in decommissioning well
cost estimates and the surrender of Tabaquite Block. This
resulted in a gain of USD 2.5 million.
See Note 3(b) to Consolidated Financial Statements
further details on page 74.
Finance Income
Finance income is solely related to bank interest income
received on short term investments with financial
institutions of USD 0.1 million (2022: 0.1 million).
Trinity Exploration & Production plc 11
Finance Costs
Finance costs amounted to USD (2.2) million (2022: USD
(1.3) million) and comprised:
y
y
y
Unwinding of the discount rate related to the
decommissioning liability USD (2.1) million (2022: USD
(1.1) million).
Interest on Leases USD (0.1) million (2022: USD
(0.1) million).
Bank overdraft interest USD 0.0 million
(2022: (0.1) million).
See Note 9 to Consolidated Financial Statements –
Finance Costs for further details on page 79.
Income Taxation
Income Taxation net credit for 2023 of USD 2.7 million
(2022: USD (2.3) million), comprising the following:
y
Current Taxes:
— Petroleum Profit Tax (“PPT”) USD (0.4) million
(2022: (2.4) million).
— Unemployment Levy (“UL”) USD (0.2) million
(2022: USD (1.0) million).
Increase in Deferred Tax Assets (“DTA”) recognised on
available tax losses of USD 3.2 million (2022: Increase
in DTA of USD 1.0 million).
Decrease in Deferred Tax Liabilities (“DTL”)
USD 0.1 million due to accelerated accounting
impairments/depreciation (2022: USD 0.1 million
decrease).
y
y
See Note 10 to Consolidated Financial Statements –
Income Taxation for further details on pages 79 to 80.
Total Comprehensive (loss)/income
Total Comprehensive loss for the period was USD
(6.8) million (2022: USD 0.1 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, gain
or loss on the sale of assets, SOE, ILFA, FX and FV of
Derivative Instruments.
The Group presents Adjusted EBITDA after hedge expense
at USD 19.2 million and Adjusted EBIDA after Current Taxes
at USD 12.9 million as it is used by Management and judged
to be a better measure of underlying performance.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 12
Financial Review (continued)
Statement of Cash Flows
Cash inflow from operating activities
Cash (outflow) from financing activities
Operating Cash Flow was USD 13.2 million (2022: USD
12.0 million) comprising:
Cash outflow from financing activities was USD (0.2) million
(2022: USD (2.2) million):
y
y
y
Operating cash flow before working capital and income
taxes of USD 13.1 million (2022: USD 15.5 million).
Changes in working capital resulted in a net increase of
USD 0.9 million (2022: USD (0.1) million decrease).
Income taxes, PPT and UL paid USD (0.8) million
(2022: USD (3.4) million paid) resulting from lower oil
price and production.
Cash (outflow) from investing activities
Cash outflow from investing activities was USD (15.4) million
(2022: USD (15.6) million):
y
y
y
y
Expenditure on exploration and evaluation assets and
other intangible assets USD (9.0) million (2022: USD
(0.4) million) which includes costs incurred Jacobin well
and Galeota.
Property, plant and equipment for the year totaling
USD (5.9) million (2022: USD (15.0) million).
Computer software USD (0.5) million (2022: USD
(0.1) million).
Performance bond related to the onshore lease
operatorship assets nil (2022: USD (0.1) million).
Net Cash Plus Working Capital Surplus
(All figures in USD million)
A:
Current Assets
Cash and cash equivalents
Trade and other receivables (including taxes)
Inventories
Derivative Financial Instrument
Total Current Assets
B:
Current Liabilities
Trade and other payables
Bank overdraft
Lease liability
Taxation payable
Dividend payable
C:
D:
Derivative Financial Instrument
Provision for other liabilities
Total Current Liabilities
(A-B+C+D): Cash plus working capital surplus
y
y
y
y
y
Increase in Bank overdraft drawdown USD 1.3 million
to match outstanding VAT refunds filed as at
31 December 2023 (2022: nil).
Principal paid on lease liability USD (0.6) million
(2022: (0.5) million).
Share buyback of USD (0.6) million (2022: (1.5)).
Dividends paid of USD (0.2) million
Interest paid on lease liability USD (0.1) million
(2022: (0.1) million).
y
Net Finance cost of nil (2022: (0.1) million).
Closing Cash Balance
Trinity’s cash balance at 31 December 2023 was
USD 9.8 million (31 December 2022: USD 12.1 million).
FY 2019
Audited
FY 2020
Audited
FY 2021
Audited
FY 2022
Audited
FY 2023
Audited
13.8
9.4
5.2
0.1
28.5
10.4
–
0.6
0.1
–
–
11.1
17.3
20.2
7.2
5.3
0.3
33.0
7.8
2.7
0.6
0.2
–
–
11.3
21.4
18.3
10.8
3.8
–
32.9
8.8
2.7
0.6
–
–
2.9
0.1
15.1
20.8
12.1
10.7
4.6
–
27.4
9.9
2.7
0.6
–
–
–
0.2
13.4
14.2
9.8
12.2
3.9
–
25.9
13.0
4.0
0.2
0.1
0.0
–
0.6
17.9
8.6
Note: Net cash plus working capital surplus: Current Assets less Current Liabilities (other than Derivative financial asset/liability and Provision for other liabilities).
Trinity Exploration & Production plc
13
Events since year end
1. Subsequent to 31 December 2023, the Group received
VAT refunds of USD 0.8 million. As at 22 May 2024, the
Group had USD 5.1 million in VAT refunds recoverable.
2. On 13 June 2023, Trinity announced its successful bid
for the onshore Buenos Ayres block. Subsequent to
31 December 2023, the Group is awaiting finalisation of
the exploration and production licence with the MEEI.
3. Fiscal reforms (Finance Act) – Effective 1 January 2024,
SPT rates for Small Shallow Marine Area Producers
were introduced. It becomes applicable when the
weighted average realised crude oil price exceeds
USD 75/bbl, starting at a rate of 18% and goes up to
40% depending on the price.
A Small Shallow Marine Area Producer is defined as
a person who carries out petroleum operations in
shallow marine areas under a licence, sub-licence or
contract and produces less than 4,000 barrels of crude
oil per day.
4. On 1 May 2024, the board of directors of each of
Touchstone and Trinity announced that they have
reached agreement on the terms of a recommended all
share offer pursuant to which Touchstone will acquire
the entire issued and to be issued ordinary share
capital of Trinity (the “Acquisition”). The Acquisition is
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act. Under the terms
of the Acquisition, Trinity Shareholders shall be entitled
to receive 1.5 New Touchstone Shares for each Trinity
share. Further information on the transaction can be
found on our website at https://trinityexploration.com/.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
14
Environmental Social Governance (ESG)
Environmental Social Governance continues to be
an area of focus for Trinity. We continue to progress
several initiatives as part of our ESG Strategy which as
a responsible employer and corporate citizen comprises
three core areas of focus: Emissions & Transition;
Community; and Environment which are all interconnected
and interdependent and were developed to further
integrate our core values of Behaviour, Rigour, Purpose,
and our business model as we continue to engage with all
stakeholders.
In late 2022 we defined our ESG initiatives to be undertaken
as we continued with the execution of our strategy
towards attaining our goals. Initiatives were identified
based on available resources as we continue to recognise
that our ESG ambition will take time, effort and funding.
Management agreed that Trinity’s near-term priorities
should be to focus on establishing a proper baseline for all
of our Scope 1 and the main sources of Scope 2 emissions
while continuing with our social initiatives and improving on
our already robust governance structure.
In 2023 we continued to advance our ESG Strategy by
executing on various initiatives which include:
ENVIRONMENTAL
SOCIAL
GOVERNANCE
Initial measurement of all Scope 1 and
main Scope 2 emissions. Engaging a
3rd party to conduct verification of the
results.
2023 HSSE Improvement Plan
successfully implemented: Contractor
engagement enhanced, 100% Planned
Training delivered, Zero Regulatory
Infractions, Improved internal HSSE
Communication
Sponsorship of awards for educational
excellence: Awards for top performing
students residing in the East Coast
communities and further sponsorship
of university students via the Bruce
Dingwall Scholarship Fund.
Social Calendar events
included: Inaugural Long Service
Awards Ceremony; Stakeholder Cocktail
Reception; Sports and Family Day; and
Annual Toy Drive.
Two Crisis and Emergency Management
benchtop drills including a simulation
exercise conducted with key lessons
learned assimilated.
Employee benefits (Pension, Medical,
Life Insurance) and flexible working
arrangements for Corporate Staff
formalised.
HSE training expanded to include
Contractor employees.
Regular Lunch & Learn sensitisation
sessions held e.g. International Women’s
Day, Men’s Health.
Awarded the Trinidad and Tobago
Energy Chamber’s Excellence in
STOW Award for our efforts pre-
December 2023.
Robust and active HSSE Governance
Structure sustained with additional
focus on incident investigation lessons
learnings and internal communication.
Compliance:
y
Annual Compliance Rollouts
effected: 100% Staff compliance.
y Whistleblowing Policy reviewed and
in place.
Established a Grievance Procedure.
Corporate risk register refreshed and
approved by the Board.
Sustainable HSSE Management
System
Trinity remains focused on sustaining and continuously
improving its robust HSSE Management Framework.
Efforts continue to be placed on continuous strengthening
of existing processes and systems relevant to UN
SDG 3: Good Health and Well Being. Trinity recorded
1,065,735 manhours (2022: 1,043,780) with no fatalities
(2022: nil) and one Lost Time Incident in 2023 (2022: two)
a pinch point incident in which the employee subsequently
regained full fitness and has returned to work. Our many
HSSE achievements are highlighted above. In developing
our 2024 Annual HSSE Improvement Plan we have included
specific initiatives to mitigate against the root causes of
incidents experienced during 2023 and to monitor that
lessons learnt are being implemented and sustained
throughout the Organisation.
Environment
Energy Transition & Innovation
Trinity remains committed to the fulfillment of the UN
Sustainable Development Goal 13 of Climate Action: Take
urgent action to combat climate change and its impacts
by embarking on its own energy transition journey and
in so doing becoming a more environmentally conscious
operator.
We have embarked on establishing a baseline for our
Scope 1 and the main Scope 2 emissions as the first step
towards being able to develop an emissions reductions
plan. Scope 1 emissions were measured at all producing
wellheads using a vane anemometer and internally a
member of staff was certified as an ISO14064-3 Internal
Auditor to manage this initiative. We are currently
seeking to engage a third party to corroborate/verify
the measurements obtained. The decision was taken to
measure all wells as opposed to a sample set so as to
establish a more precise baseline. This process continues in
2024 as we try to establish a meaningful baseline based on
a sampling process using empirical data, which is novel to
the energy sector in Trinidad and Tobago.
Trinity Exploration & Production plc
15
Governance
Trinity’s core values of behaviour, rigour and purpose,
which align with the UN SDG 16: Peace, Justice and Strong
Institutions, continues to influence Management’s efforts
to maintain strong corporate governance as it conducts
its business. The Company’s robust compliance policies,
continuous sensitisation, risk management and due
diligence, guide how we realise good Governance within
the business. The Company completed an extensive update
of its Corporate risk register and implemented a process to
ensure it is kept current.
Social
During 2023, we continued with initiatives aligned to the
UN SDG 3: Good Health and Well-Being, Goal 4: Quality
Education and Goal 8: Decent Work and Economic
Growth. 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. We are also an equal opportunity
and inclusive employer with well-established sustainable
programmes for recruitment, training and recognition/
rewards. At the end of December 2023 we had 281
employees (2022: 277) with 20% being female (2022: 22%).
Other notable initiatives include:
y
Benefits to staff in the form of a non-contributory
pension, medical coverage as well as life insurance
coverage, free access to a recognised Employee
Assistance Programme and an ongoing Rewards and
Recognition Program.
y
7,689 hours of training provided to our staff and
contractors.
Trinity’s Annual Social Calendar comprised several annual
events such as a Sports and Family Day and observances
of other Global initiatives. 2023 was also the year of the
Company’s first Health Week observed in April and a Long
Service Awards Ceremony in December 2023 during which
70 members of staff with more than 15 years’ service were
recognised and rewarded.
In conjunction with the University of the West Indies,
Trinity continued to sustain the Bruce Ian Alan Dingwall
(Trinity) Memorial Scholarship for students studying for
qualifications in Geosciences. During 2023 two students
one each at the under-graduate and the post-graduate
levels received scholarships, that covered their tuition and
living expenses. For the fourth consecutive year Trinity
has partnered with the Mayaro Past Pupils Association, a
non-governmental organisation, to recognise excellence
in education by sponsoring awards to primary school
students from the Mayaro/Guayaguayare/Rio Claro
communities who excelled at the Secondary Entrance
Assessment Examinations. Over 120 students have
benefited from our support to date.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 16
Risk Management and Internal Controls
Risk Profile Matrix
The risk summary and explanatory table below represents
our current assessment of the potential impact by area and
change from 2022 for each of the principal risks.
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 manages 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 area
Risk Description
Mitigants
Asset Integrity
The Group operates mature assets and the
risk exists where the physical infrastructure
is unable to perform as intended.
Asset Integrity risks are managed through
the Group’s dedicated Facilities and
Maintenance personnel and the Group’s risk
management and internal controls:
1. An Asset Integrity Plan that covers all
Trinity’s infrastructure with emphasis
on safety critical elements (SCE’s),
protection of key production equipment
and fabric maintenance
2. Sufficient budgetary allocation
to perform critical asset integrity
remediation/improvements
Change
from 2022
HSE inclusive of
Process Safety
Exploration/Appraisal
and development
(subsurface) risk
Management of HSSE risk is of paramount
importance to the organisation. As a
participant in 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.
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.
These HSSE risks are mitigated through:
1. Current Policies and Procedures.
=
2. Ongoing training, support and
monitoring.
3. Annual HSE Improvement Plans,
including an array of drills at controlled
incident, uncontrolled incident and crisis
tiers.
4. Regular reporting and established
means of reporting.
5. Contractor safety villages.
6. Strong stakeholder management
engagement
The Group seeks to limit its exposure to any
one aspect of exploration and development
risk by:
1.
2.
Improving the quality and capacity of
the Subsurface function.
Implementation of an quality assurance
system.
3. Evolving the Technical Sub Committee
of the Board into a Quality Assurance
Oversight Committee that will ensure
the health of the internal quality
assurance system for technical Matters.
Trinity Exploration & Production plc
17
Change
from 2022
=
Risk area
Risk Description
Mitigants
Customer
concentration risk
Heritage Partner
Risk
Oil Price
Lack of Supply Chain
optionality and
inflation
Whilst oil is an internationally traded
commodity, Trinity currently sells 100% of its
oil production to Heritage under evergreen
Crude Oil Sales Agreements, which give
rise to customer concentration risk. Trinity,
like all other sub license operators, 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.
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. Mitigants
considered:
1. Maximise and increase oil price sales
agreements for E&P Licenses, and open
up sales to other parties.
2. Elevate pricing discussions to the MEEI.
The risk exists where Heritage is unable
to (i) for E&Ps – carry on in its role as
a partner, or pass on their interests to
another 3rd party and (ii) for sub licenses
– decide to extract further economic rent
or reduce contract strength, for what is an
already weak contract.
The market price of oil is affected by global
supply and demand, and therefore can
be very volatile. A prolonged fall in prices
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.
In the current market many capital and
operating costs have increased. The
increased level of cost inflation has had
a knock-on impact in increasing the
cash required to support economically
viable projects. Furthermore, the Group
experienced challenges with supply chain
disruptions including availability of suppliers
in the local industry. Reduction in quantum
and quality of supply chain participants as
well as inflationary cost pressures lead to
rises in cost structure and breakeven.
=
=
1. Key stakeholder in the Stakeholder
Engagement Plan.
2. Adhering to all partner (E&P) /
contractor (Sub-license) related
agreements.
The Group seeks to mitigate this risk as
follows:
1. Managing cost structure to keep
operating breakeven as low as possible.
2. Scenario planning.
3. Appropriate financial hedging, when
affordable.
4. Fiscal regime improves, e.g. SPT relief
due in 2024.
The Group in limiting its exposure, leverages
the following:
1.
2.
Lobbying with other operators.
Improving contracting techniques.
3. Networking.
4. Consider strategic in-sourcing of, inter
alia, swab rigs, workover rigs, cranes
etc. to reduce dependence on supply
chain where economically viable.
Break Even of
Company
A high operating breakeven, will render the
business susceptible to low oil prices
The Group seeks to reduce exposure by:
1. Proactively managing the cost structure
of the business and preparing for
downside scenarios, which allow
management to make quick but well
thought out decisions in a timely
manner.
2. Fundamental review of asset portfolio
as part of Project Gadget.
3. Complete a review of Support Functions
for rightsizing.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 18
Risk Management and Internal Controls (continued)
Risk area
Risk Description
Mitigants
Cybersecurity
Cybersecurity risks for companies have
increased significantly in recent years
due to the increasing global threat and
sophistication of cybercrime. Having
been subject to a cybersecurity breach in
December 2022, we have had first-hand
experience of the disruptive impact to
our business, which may have resulted in
uncontrolled data disclosure, and certainly
resulted significant data loss for key
information systems.
The Group has reduced its exposure to
cybersecurity attacks through the following:
1. Regular audit of ICT System.
2. Enforcement of data management
policy.
3.
4.
Independent/Isolated site for backed up
data.
Implemented a system of continuous
cybersecurity awareness training for all
employees.
Change
from 2022
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.
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.
Development
(surface) risk
Reliance on key
personnel
Strategic delivery is dependent on key
positions in the organization.
5. Cyber insurance.
The Group seeks to limit its exposure to
development risk by:
=
1.
Implementation of an Assurance Team.
2. Evolving the Technical Sub Committee
of the Board into a Quality Assurance
Oversight Committee that will ensure
the health of the internal quality
assurance system for technical matters.
1.
2.
3.
Strategic planning becoming routine.
Implementing Performance
Management System.
Identification of key personnel within
the organisation.
4. Remuneration philosophy regularly
assessed and benchmarked by
Remuneration Committee.
5. Building succession plans.
Compliance Risk
Major breach of business, ethical or
compliance standards. The Group 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.
The Group seeks to mitigate these risks
through a number of measures and
processes:
=
1. Policies and procedures in place.
2. Annual rollout programmes for key
policies.
3
Internal audit programme.
Trinity Exploration & Production plc
Our Governance
Directors’ Statement under Section 172(1)
of the CA 2006
19
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:
y
y
y
y
y
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
y
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 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
stakeholders via regular meetings and we also send
communications to key stakeholders 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.
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 2023 awards were
issued under the Company’s long term incentive plan to
certain individuals within the executive management team
(“EMT”). A 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. Feedback from employees
is sought through pulse surveys and various meetings,
including quarterly performance and ad hoc feedback
meetings, monthly departmental ‘focal points’, and
Company-wide town halls meetings.
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 2023,
and through into 2024, 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 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 20
Directors’ Statement under Section 172(1) (continued)
Community and environment
Training
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 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. Formal and ad-hoc public
consultation are held as required to understand and
discuss the local communities’ concerns and there are
also grievance mechanisms to address any concerns. The
Company is involved in community development initiatives,
including to stimulate economic development, supporting
schools, awarding university scholarships and supporting
those from less fortunate families.
Our Corporate Social Responsibility (“CSR”) philosophy is
based on our core values which stems from our vision to
achieve our business goals of:
y
y
y
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
at every Board meeting. Kaat Van Hecke, Non-Executive
Director, is the Board’s designated HSSE Champion and
is responsible for ensuring strong governance 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 Chair has assumed the
role of Whistleblowing Officer.
Although the Group is incorporated in the UK and governed
by the CA 2006, the Group’s business operations are
carried out in T&T which requires the Group to conform
to statutory and regulatory provisions of both the UK
and T&T. The Group has adopted the QCA Code, and the
Board recognises the need to maintain a high standard
of corporate governance as well as to comply with the
AIM Rules to safeguard the interests of the Group’s
stakeholders. Anti-corruption and Anti-bribery 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.
2023 and on-going performance: 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. Production levels
have been maintained in line with expected field decline,
and projects have been progressed to grow the business.
Principal decisions during 2023
Key decisions made by the Board were in relation to:
y
y
y
y
y
y
y
y
y
Share buyback programmes which as at 31 December
2023 had returned USD 0.6 million to shareholders;
Strengthening the executive management team
with three new senior appointments: Julian Kennedy
promoted to CFO in January 2023, Mark Kingsley as
Chief Operating Officer in April 2023 and Aida Shafina
Abu Bakar as Executive Manager, Subsurface in
November 2023;
Submission of a bid for the Buenos Ayres block in
January, subsequently the Company announced on
13 June 2023 that its bid had been successful;
Completing a reactivation programme for a key West
Coast well, ABM-151;
Drilling of the deep “Jacobin-1” well;
Commencement of creating a baseline for all scope 1
emissions and main sources of scope 2 emissions;
Inaugural dividend paid in October 2023;
Approval of the 2024 Budget and three-year plan; and
Completion of a Concept-Screening study for the
development of further reserves and resources in the
Galeota block.
Further details can be found in the Chair and CEO’s
Statement.
On behalf of Board
Nicholas Clayton
Non-Executive Chair
22 May 2024
Trinity Exploration & Production plc
Corporate Governance Statement
21
On behalf of the Board, I am pleased to present the
Corporate Governance Report for the year ended
31 December 2023. At Trinity we believe that strong
corporate governance is critical to achieving our strategic
goals and creating value for our shareholders. As
Non-Executive Chair 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 Chair, four
Independent Non-Executive Directors and two Executive
Directors (CEO and CFO). In June 2023, Angus Winther
decided not to stand for re-election as a Non-Executive
Director. In August 2023, Jon Cooper was appointed as an
Independent Non-Executive Director, and Julian Kennedy
appointed as an Executive Director, (CFO).
As Non-Executive Chair 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 16 to 18 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.
2023 was characterised by lower oil prices when compared
to 2022 and high inflation. The Company’s core business
continued to deliver strong operating performance during
the year, highlighting strength and resilience. The drilling
and testing of the Jacobin well was the operational focus
of the year. While the well discovered oil in the targeted
deeper horizons, flow rates were disappointing and drilling
complexities resulted in cost overruns. The results from the
well are being incorporated into further understanding the
“Hummingbird” play with independent features still offering
future potential as well as the prospectivity of Buenos
Ayres.
Operationally, the Group maintained strong operational
profitability throughout 2023, despite the Cyber incident in
late 2022 and fire on the Bravo platform in April 2023, with
plans implemented to close the gaps that were identified.
The Board has continued to work assiduously through
this period to ensure that the Company’s strategy can be
delivered safely and its goals met, whilst ensuring the risks
are monitored and a culture of support is provided to all
stakeholders including employees, suppliers and the wider
community.
As the Group addresses the next phase of development for
the business, as Non-Executive Chair, 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 Chair
22 May 2024
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
22
QCA Principles
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. In
November 2023, the Quoted Companies Alliance published
the latest version of its corporate governance code (the
“2023 QCA Code”), which will apply to financial years
beginning on or after 1 April 2024. The Company will be
taking steps to look at its compliance with the 2023 QCA
Code during the course of 2024.
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:
Principles
Trinity’s Response
Establish a strategy and business
model which promote long-term
value for shareholders
Seek to understand and
meet shareholder needs and
expectations.
Take into account wider stakeholder
and social responsibilities and their
implications for long-term success
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
through regular reviews and meetings with all stakeholders, and mitigation of risks.
The Group welcomes the opportunity to maintain an open dialogue with its
shareholders, to meet shareholder needs and expectations.
The Group engages with shareholders through its Regulatory News Flow and Annual
General Meetings. General inquiries can be submitted directly to the Group at
info@trinioil.com or via our PR advisors (Vigo Consulting Limited). Investor
presentations are arranged throughout the year.
Nicholas Clayton, Non-Executive Chair, is also available to discuss any issues or
concerns that shareholders or other stakeholders may have. Arrangements can be
made to get in direct contact with Nicholas by emailing trinity@vigoconsulting.com
The Board recognises that the long-term success of the Group is dependent on
the efforts of its Management and stakeholders. We value feedback from our
stakeholders and meet regularly with them and engage with the communities in
which the business operates. The Group is mindful of the nature of the business and
the need to ensure strong HSSE measures are in place to protect the environment.
Further details on Environmental and Social Governance can be found on
pages 14 to 15.
Embed effective risk management,
considering both opportunities and
threats, throughout the organisation
The Company has an effective risk management framework, which is subject
to oversight by the Audit Committee and the Board. The principal risk areas for
the business and the respective mitigating actions are listed in the key risks on
pages 16 to 18.
Maintain the Board as a well-
functioning balanced team led by
the Chair
Ensure that between them the
Directors have the necessary
up-to-date experience, skills and
capabilities
Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement
Refer to further discussion of the Board structure and composition on
pages 23 to 26.
The complementary skills and experience of our Board and Executive Management
team are included on pages 25 to 27.
See website disclosure https://trinityexploration.com/about-us/corporate-
governance/.
Trinity Exploration & Production plc
23
Promote a corporate culture that
is based on ethical values and
behaviours
Maintain governance structures and
processes that are fit for purpose
and support good decision-making
by the Board
Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders
The Directors are committed to promoting positive ethical values and behaviours
across the Group as a whole. The Group’s Employee Manual is in place and can be
accessed at all times. Annual Anti-corruption & Anti-Bribery training is compulsory
for all staff and contractors. The Group’s expectation of honest, fair and professional
behaviour is reflected in our values 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.
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.
Refer to further discussion of the Company’s governance structures, including
matters reserved for the Board, on page 28.
The Company’s financial and operational performance is summarised in the Annual
Report and the Interim Report, with regular updates provided to stakeholders in
other forums through the year, including its Regulatory News Flow and regular
updates to the Company’s website.
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 CEO.
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.
sub-surface teams at a working level, offering mentorship,
and enlarged the scope to include all sub surface disciplines
and facilities and engineering functions. The QA Group
comprises external experts in the relevant fields and
reports to the Company’s Executive Team.
Non-Executive Chair
The Non-Executive Chair is responsible for leading the
Board and engaging with, and providing advice to, the CEO
as required. The Non-Executive Chair also engages with
investors and other stakeholders.
Chief Executive Officer
The CEO leads the EMT to deliver the business goals and
objectives as directed by the Board.
Chief Financial Officer
The CFO’s role is to lead the Group’s financial operations
including ensuring compliance with internal and external
financial reporting; cash management and financial
planning.
Remuneration Committee
The Remuneration Committee determines and makes
recommendations to the Board on the performance
management and remuneration of the Company’s
Executive Directors 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
Directors and EMT and the performance targets to be used.
Quality Assurance Group
A Quality Assurance Group (“QA Group”) was created
during the period. The QA Group took on the previous
role of the Technical Committee, which interacted with the
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 CEO 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 24
QCA Principles (continued)
The Group’s Annual Report and Notice of AGMs are
published to all shareholders. 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 Chair 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 Chair
22 May 2024
Trinity Exploration & Production plc Board of Directors
25
Executive Directors
Non-Executive Directors
Jeremy Bridglalsingh
Chief Executive Officer
(11 January 2017 to present)
Nicholas Clayton
Non-Executive Chair
(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.
Since joining the Company, he held roles across the
Financial, ICT and Supply Chain disciplines before assuming
the role of CFO of Trinity in October 2015 and then joining
the Board in January 2017. 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.
Nick 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. Nick
brings to the Board over 39 years of experience within the
oil and gas sector both as a practitioner, a director, and as
an adviser. He has previously served as a Director of Royal
Lymington Yacht Club Limited, Active Away Ltd, Alpha
Petroleum Resources Limited, Sterling Energy plc and Circle
Oil plc.
Julian Kennedy
Chief Financial Officer
(8 August 2023 to present)
Julian is British and joined Trinity in September 2022 as
Corporate Development Manager, was appointed Chief
Financial Officer effective 1 January 2023, and joined the
Board as an Executive Director in August 2023.
Julian has over 30 years’ experience across a wide range
of roles in, and advising, the oil and gas industry. Most
recently he was Head of Business Development for NEO
Energy. Previously he was Head of Oil & Gas Acquisitions &
Divestment for BMO Capital Markets in London and has
held senior M&A, strategic and financial planning roles with
oil and gas operators including BG Group, Canadian Natural
Resources, Shell, Enterprise Oil and Amerada Hess.
James Menzies
Independent Non-Executive Director
Technical Committee Chair
(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 35 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 2005 and was the Chief Executive Officer until
its takeover by Ophir Energy that valued the business at
USD 850.0 million. James is the Executive Chairman SE Asia
for Longboat Energy plc.
James is a member of Trinity’s Audit Committee and
Quality Assurance Group.
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 is also a non-executive director of ATN International, a
telecommunications company with business in the US and
the Caribbean.
Derek worked for BG Group for over 20 years in senior
managerial positions in the UK North Sea, East Africa and
Trinidad prior to its combination with Shell in 2016, and
subsequently served as Shell’s Vice President and Country
Chairman, Trinidad and Tobago from June 2016 until
June 2019, where he was responsible for Shell’s upstream
and LNG business activities in country. After 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 Quality Assurance Group.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
26
Board of Directors (continued)
Kaat Van Hecke
Independent Non-Executive Director
Remuneration Committee Chair (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 currently holds independent Non-Executive Director
roles at Serica Energy Plc and Glover Gas & Power B.V./
Axxela Limited. Kaat was previously a Non-Executive
Director at Nostrum Oil & Gas Plc, where she spent nine
months as Interim CEO in Kazakhstan.
Kaat is the Chair of the Remuneration Committee, a
member of the Audit Committee and is responsible for the
Board’s oversight of the HSSE function.
Dr Jonathan Cooper
Independent Non-Executive Director
Audit Committee Chair (8 August 2023)
(8 August 2023 to present)
Jon is British and has more than 25 years’ experience
in mergers, acquisitions, public offerings and financings
in banking and the oil and gas industry. He is currently
Executive Director and Chief Financial Officer at Longboat
Energy plc. Previously he served as Chief Financial Officer
at Faroe Petroleum from 2013 until 2019; was CFO at
Lamprell; Finance Director at Sterling Energy; CFO of Gulf
Keystone Petroleum; Director of the Kleinwort Benson
(later Wasserstein) Oil and Gas Corporate Finance and
Advisory Team; and qualified as an accountant with KPMG.
Jon is a Fellow of the ICAEW and holds a PhD in Mechanical
Engineering.
Jon is Chair of the Audit Committee and a member of the
Remuneration Committee.
Angus Winther
Non-Executive Director
(11 January 2017 to 27 June 2023)
Trinity Exploration & Production plc Executive Management Team
27
Jeremy Bridglalsingh
Chief Executive Officer
Denva Seepersad
Executive Manager, Finance & ICT
Jeremy joined Trinity in 2012 with prior experience in the
financial services sector having advised on a number of
transactions across various jurisdictions. He is responsible
for leading the EMT to deliver on the Board agreed
strategy.
Started with Venture, Trinity’s predecessor, in 2005 as a
Certified Chartered Accountant holding various key finance
roles including Financial Controller. He is a Fellow Chartered
Certified Accountant with 18 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.
Alistair Green
Executive Manager, Corporate Development
Alistair has 15 plus years’ experience working in a wide
range of commercial and technical roles. He joined Trinity
in November 2022 and was responsible for maturing
new Developments and the Petroleum Engineering
portfolio in our operations. In November 2023 he assumed
responsibility for the Group’s Corporate Development
function.
Ronald Solomon
Executive Manager, Operations
Ronald joined Trinity in 2021. An engineer by background
with 17 plus years’ experience in oil and gas operations and
senior management. He previously held senior leadership
roles for a major oilfield service company in Russia, Caspian
countries and Caribbean areas.
Aida Shafina Abu Bakar
Executive Manager, Subsurface
Aida has 18 years industry experience building on her dual
Bachelor of Science degrees in Geology and Geophysics
and a Masters degree in Petroleum Engineering. Her recent
career has been as Malaysia Subsurface Manager for
Jadestone in Kuala Lumpur. Prior to that, she had senior
subsurface technical roles with Amerada Hess, Murphy
Oil, ADCO and Petronas, with experience in offshore
and onshore fields both in Malaysia and internationally.
Aida joined Trinity in November 2023 and is based in San
Fernando and is responsible for the Subsurface functions,
including Petroleum Engineering.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
28
Board Activities
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:
y
y
y
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;
y Material changes to the Group’s structure and
management;
y
y
y
y
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
prior to the beginning of the financial year. The Board,
Audit, and Remuneration 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 Executive Directors (CEO and CFO) are expected
to devote substantially the whole of their working time to
their duties within the Group, the Non-Executive Directors
are expected to allocate sufficient time to the Group to
discharge their responsibilities.
It is expected that all Directors attend, and devote
adequate time to prepare for, all meetings of the Board
and any Board Committees of which they are members,
as well as the AGM. 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 2023 is detailed in
the table below:
Directors’ attendance
Director Requirement
Jeremy Bridglalsingh
Angus Winther2
James Menzies
Nicholas Clayton
Derek Hudson
Kaat Van Hecke
Jon Cooper3
Julian Kennedy4
Total meetings
Notes:
Board-
Scheduled
Meeting
Board
Ad Hoc
Meeting1
Audit
Committee
Remuneration
Committee
Technical
Committee
9
9
5
9
9
9
9
3
3
9
10
10
2
9
10
9
10
4
4
10
4
4
3
3
4
4
1
1
4
6
2
6
6
6
6
Ad hoc
5
5
5
1. Ad hoc meetings: Additional meetings called for a specific matter generally of a more administrative nature not requiring full Board attendance.
2. Mr Winther retired from the Board by rotation at the AGM on 27 June 2023
3. Mr Cooper was appointed as a Non-Executive Director on 8 August 2023
4. Mr Kennedy was appointed as an Executive Director on 8 August 2023
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 is 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.
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.
Trinity Exploration & Production plc
Audit Committee Report
29
Responsibilities of the Audit Committee
External Auditors
The Committee reviews and makes recommendations to
the Board on:
y
y
y
y
y
y
y
y
y
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.
Has oversight for the risk management processes and
recommends the corporate risk register to the wider
Board.
2023 Activities
During the year, the Committee met four times and the
members’ attendance record at Committee meetings
during the financial year is set out under Board Activities on
page 28. Although not members of the Audit Committee,
the Chair, CEO, CFO 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. On 27 June 2023,
Angus Winther retired by rotation at the 2023 Annual
General meeting as Non-Executive Director and as Chair
of the Audit Committee. Jon Cooper was appointed as
Chair of the Audit Committee on his appointment as Non-
Executive Director on 8 August 2023.
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
the key subjective assumptions relating to the Group’s
activities, particularly those relating to complex calculations
including non-current asset impairments, inventory
impairments, provision for decommissioning, disputed cost
provision 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
y
y
The Group fee to BDO for the financial year
to 31 December 2023 is USD 0.3 million
(2022: USD 0.4 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 2024.
y
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. The Audit Committee also reviewed a one-off
procurement breach identified during H2 2023 and after
reviewing the facts and circumstances were satisfied that
the policies and procedures are in place to mitigate such
from recurrence. Finally, the Audit Committee reviewed the
corporate risk register, which it recommended to, and was
approved by, the Board.
Jon Cooper
Chair of the Audit Committee
22 May 2024
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
30
Technical Committee Report
The Technical Committee was replaced during the
period with the Quality Assurance (“QA”) Group. While
the Technical Committee was responsible for providing
objective and independent feedback to the Board of
Directors on opportunities being considered, the QA Group
took on the Technical Committee’s remit and broadened it
to include Engineering and Facilities as well as Subsurface
evaluation and review.
The QA Group comprises external experts from the
relevant disciplines and reports to the Executive
Management Team within Trinity.
Activities in 2023
During the year and prior to replacement by the QA Group,
the Technical Committee met on five occasions. The
Committee’s worked focused on i) The Galeota project
and in particular the subsurface definition of the structure
and its relationship to the Trintes project; and ii) Pre-well
planning and post-well evaluation of the Jacobin drilling
campaign.
James Menzies
Former Chair of the Technical Committee
22 May 2024
Trinity Exploration & Production plc
Remuneration Committee Report
31
Responsibilities of the Remuneration Committee
The Remuneration Committee is responsible for making
recommendations to the Board regarding the framework
for the remuneration of the Executive Directors and other
members of the EMT. The Committee works within its terms
of reference, and its role includes:
y
y
y
y
Review, evaluate, determine and agree with the Board,
the Remuneration Policy for the Executive Directors
and, under guidance of the CEO, 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.
y
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 2023 the salaries of the Executive Directors and other
members of the EMT were held constant.
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:
y
y
y
y
y
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 CEO 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 operating performance of the
business, modest bonuses for 2022 were paid in June 2023
shortly after publication of the audited accounts. For the
year 2023, due to the performance of the business being
below expectations and the share price showing a falling
trend, the Remuneration Committee exercised its discretion
and decided to award zero cash bonuses in 2024 to the
Executives and the EMT for the year 2023.
Our Auditors have audited aspects of this report as it
relates solely to the reported items within the financial
statements.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
32
Remuneration Committee Report (continued)
2023 Performance and Review
Corporate KPI’s:
Cash-Based Option awards:
y
Setting corporate KPI’s which are used to determine
the bonus awards of the Executive Directors and the
EMT. The EMT’s bonus awards were set according to a
mixture of Corporate KPI’s and personal performance.
y
y Mid-year/Year-end review of corporate KPI’s.
In 2022 a cash-based option scheme was introduced
to encourage and incentivise Team Leaders within
the organisation. In 2023, further cash-based awards
were issued to Team Leaders. 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:
y
Discussed UK Corporate Governance requirements
in respect of responsibilities of the Remuneration
Committee in recommending Executive Directors 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:
y
Appointment of FIT, a remuneration consultant, to
assist the Committee with a performance monitoring of
the Company’s LTIP awards.
Kaat Van Hecke
Remuneration Committee Chair
22 May 2024
Key pay outcomes:
y
y
y
y
Jeremy Bridglalsingh’s base salary for 2023 was
USD 300,000 per annum (2022: USD 300,000).
Julian Kennedy’s base salary for August to
December 2023, when joining the Board on 8th Aug
2023, was USD 98,977. This corresponds with the pro-
rata of his base salary of 200,000 GBP per annum.
Nicholas Clayton’s fees as Non-Executive Chair were
established, in pounds sterling, at the equivalent of
USD 99,512 per annum. The additional fee paid for
the support and assistance Mr Clayton provided to
the Executive Director after Bruce Dingwall’s passing
in 2021, was terminated end March 2023 as the
COO joined the Company in April 2023. In 2023, his
additional fee was USD 12,439.
Additional fees are also paid for chairing Board
Committees and for additional consultancy services,
beyond those normally provided by a Non-Executive
Director. None of these fees changed in 2023 and
the Non-Executive Director fees were agreed by
Mr Clayton and Kaat Van Hecke (as Chairs of the
Remuneration Committee in 2022) 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:
y
y
y
Reviewed performance criteria and recommended
grant of the 2022 LTIP awards. The Group granted
options of 565,000 ordinary shares on 21 August
2023 (the “2022 Award”), which represented 1.42%
of the Company’s then issued capital, in respect of
performance during 2022, including 100,000 options
to Jeremy Bridglalsingh, 175,000 options granted to
Julian Kennedy (of which 100,000 are one-off options
granted on joining the Board of Directors) and 100,000
one-off options granted to the new COO on joining the
Company in April 2023.
On 2 January 2023, 249,655 options vested from
awards granted on 25 June 2020 (the “2019 Award”)
as a result of the performance conditions being
partially satisfied. This included 55,809 options to
Jeremy Bridglalsingh.
On 2 January 2024, the 325,000 Options granted
on 12 August 2021 (the “2020 Award”) lapsed in full
as the performance conditions were not satisfied.
This included 75,000 options granted to Jeremy
Bridglalsingh.
Trinity Exploration & Production plc Directors’ Remuneration Report
33
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 Directors
and members of the EMT
the Committee takes into
consideration:
y Market data (supported
by analysis provided
by FIT, the Company’s
Remuneration Consultants);
y
y
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.
The Executive Directors
and members of the EMT
may participate in an annual
performance driven bonus
scheme.
The performance period is one
financial year.
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.
Pension
Company provided
pension, to provide
competitive levels of
retirement benefit.
Salary supplement in lieu of
pension contributions for the
Executive Directors.
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 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
34
Directors’ Remuneration Report (continued)
Element
LTIP
The LTIP seeks to
align the Executive
Directors’ and other
EMT members’
interests with those
of shareholders and
drive superior long-
term performance.
Other benefits
To provide
competitive levels of
employment benefits.
Shareholding policy
To ensure that the
Executive Directors’
interests are aligned
with those of
shareholders over a
longer time horizon.
Operation
Maximum opportunity
Performance assessment
Under the LTIP, the Executive
Directors and other members of
the EMT may be provided with
awards in the form of conditional
shares or nil-cost options.
The Committee may provide
a benefits package to the
Executive Directors 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 annual salary
within a five-year period.
Aggregate annual awards made
to the Executive Directors and
other members of the EMT will
normally be capped at 1% of
the issued share capital of the
Company, except where one-
off awards are made to new
members of the EMT, 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.
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)
(Not applicable)
(Not applicable)
Executive Directors’ service contracts
The Company’s policy on Directors’ service contracts are indicated below:
Chief Executive Officer
Chief Financial Officer
Effective term
Rolling with no fixed expiry date
Rolling with no fixed expiry date
Notice period
Six months
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 Chair
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.
Trinity Exploration & Production plc 35
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 2023.
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.
Julian Kennedy was appointed as Chief Financial Officer
1 January 2023 and subsequently he was appointed as an
Executive Director on 8 August 2023.
The table below sets out the single total figure of
remuneration and breakdown for the Executive Directors
paid for the 2023 financial year. Comparative figures for
2022 have also been provided where applicable.
All figures expressed in USD1
2023
2022
Aug – Dec 2023
2022
Jeremy Bridglalsingh
Julian Kennedy
Base Salary
Taxable Benefits2
Annual Bonus
Pension
LTIP(s)3
Gain on exercise of Share Options4
Total
Notes:
300,000
300,000
20,417
–
30,000
129,373
–
479,790
20,417
75,000
30,000
141,484
446,520
1,013,421
98,977
1,598
–
9,898
27,910
–
138,383
–
–
–
–
–
–
–
1. Foreign Exchange (“FX”) Conversions:
i. GBP fees were converted to USD using an exchange rate of 1.2439 (2022: 1: 1.2456)
ii. TTD fees were converted to USD using an exchange rate of 6.7497 (2022: 1: 6.7546)
2. Taxable benefits include: Vehicle allowance in favour of the CEO.
3. 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 37 to 41 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.
4. 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 36
Directors’ Remuneration Report (continued)
Non-Executive Directors Fees (Audited)
Non-Executive Director Fees
Chair of the Board
Audit Committee Chair
Remuneration Committee Chair
Technical Committee Chair
Other consultancy fees9
All figures expressed in USD equivalent8
203,885
99,512
11,227
12,439
12,439
97,219
Nicholas Clayton1
Angus Winther2
David Segel3
James Menzies4
Derek Hudson5
Kaat Van Hecke6
Jon Cooper7
Total
Notes:
Director
Fees
2023
99,512
26,122
–
52,244
52,244
52,244
21,032
Director
Fees
2022
Committee and
Other Fees
2023
Committee and
Other Fees
2022
Total
2023
Total
2022
99,650
52,316
7,597
52,316
52,316
44,720
12,439
6,219
–
57,219
40,000
12,439
5,007
56,053
12,456
–
57,299
40,000
6,228
–
111,951
32,341
–
109,463
92,244
64,683
26,039
155,703
64,773
7,597
109,615
92,316
50,948
–
303,398
308,915
133,323
172,036
436,721
480,951
1. 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 CEO –
following Mr. Dingwall’s passing – until end March 2023.
2. Angus Winther – Non-Executive Director effective 11 January 2017 and Audit Committee Chair effective 23 June 2017 and stepped down 27 June 2023. Fees
include Non-Executive Director and Audit Committee Chair fees.
3. David Segel _ Non-Executive Director from 11 January 2017 to 22 February 2022.
4. 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.
5. 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.
6. Kaat Van Hecke – Non-Executive Director and Remuneration Committee Chair effective from 1 July 2022. Fees include Non-Executive Director and Remuneration
Committee Chair fees.
7. Jonathan Cooper – Non-Executive Director and Audit Committee Chair effective from 8 August 2023. Fees include Non-Executive Director and Audit Committee
Chair fees.
8. Non-Executive Director Fees are paid in GBP and were converted to USD using an exchange rate of 1.2439 for 2023 (2022: 1: 2456).
9. Total Other Fees of USD 97,219, comprises of USD 12,439 Non-executive Chair additional time; USD 44,780 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 2023:
Directors &
Key Managers
Total1
2022
1,185
2023
1,093
Other
Employees
Total2
2022
2023
Total
Remuneration
2022
2023
Directors
& Key
Managers
2023
Other
Employees
2023
Directors
& Key
Managers
2023
Year-on-year change
% of Total
Directors
& Key
Managers
2022
8,391
7,132
9,484
8,317
-8%
18%
12%
14%
Notes:
1. Refer to Note 31 Related Party Transactions – Key Management and Directors’ compensation in the Financial Statements on page 98.
2. Refer to Note 35 Employee Costs on page 101.
3. All figures expressed in USD ‘000.
Trinity Exploration & Production plc
37
Statement of Executive Directors’ Shareholding (Unaudited)
The table below summarises the Executive Directors’ interests in shares at 31 December 2023:
Shareholding
Outstanding interests
Interests subject
to conditions
Current
Shareholding
(% salary)1
Beneficially
owned
shares2
Vested but
unexercised
LTIP awards
Share interests
– LTIP3
111%
52%
319,463
55,809
–
–
265,000
250,000
Total held at
31 December
2023
640,272
250,000
Director
Jeremy Bridglalsingh
Julian Kennedy4
Notes:
1. The closing share price of GBp 41.0 (USD 52.0 equiv.) as at 31 December 2023 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.
2. Beneficial interests include shares held directly or indirectly by connected persons.
3. The options of 265,000 ordinary shares held by Jeremy Bridglalsingh subject to conditions and options of 55,809 ordinary shares vested but unexercised and the
options of 250,000 ordinary shares held by Julian Kennedy subject to conditions have been included in the Current Shareholding % of Salary calculation to better
illustrate their interests in the Company.
4. Julian Kennedy Current Shareholding % of Salary assumes a 12-month pro-rated salary to current shareholding. For the period as a director, Current shareholding
% of Salary was 132%.
5. All GBP fees were converted to USD using an exchange rate of 1.2439 for 2023.
Share based payments
Refer to Note 25 – Notes to Financial Statements.
Total Shareholder Return (“TSR”) 2017-2023 ((Unaudited)
TSR factors in capital gains and dividends when measuring the total return generated per share for a Trinity shareholder.
2023
2022
2021
2020
2019
2018
2017
Note:
Average
Share price
Closing
Opening
Annual
TSR GBp
%
Cumulative
TSR since 2017
GBp
%
81
121
142
83
118
177
132
41
104
127
109
112
120
145
104
127
109
112
120
145
501
(61)
(18)
17
(3)
(7)
(17)
291
83
209
255
219
225
241
291
1. The opening figure for 2017 is the placing price of 49.8 pence, rather than the share price of 19 pence prevailing on the first trading day of 2017 (when the shares
were still suspended).
Long term incentive Share Plans (“LTIPs”) (Unaudited)
The LTIP is designed to provide long-term incentives for
the Executive Directors and EMT members to deliver long-
term shareholder returns. Under the plan, participants are
granted options which only vest if certain performance
conditions are met. Participation in the plan is at the
Remuneration Committee’s discretion and no individual has
a contractual right to participate in the plan or to receive
any guaranteed benefits.
In accordance with the announcement to the market on
25 August 2017, the current rules of the LTIP provide
that the aggregate number of ordinary shares issued or
reserved for issuance under awards granted pursuant to
the LTIP may not exceed 15% of the Company’s issued
share capital (including any shares held in treasury).
Aggregate annual awards made to the Executive Directors
and other members of the EMT will normally be capped
at 1% of the issued share capital of the Company, except
where one-off awards are made to new members of the
EMT or the Board or new joiners.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
38
Directors’ Remuneration Report (continued)
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
Exercised1
At 31 December
Note:
2023
2022
Average
exercise
price per
Share Option
Number of
Options
Average
exercise
price per
Share Option
Number of
Options
GBP 0.00
1,430,360
GBP 0.00
3,381,299
GBP 0.00
(231,930)
GBP 0.00
(1,360,733)
GBP 0.00
565,000
GBP 0.00
415,000
GBP 0.00
(463,608)
GBP 0.00
(1,005,206)
GBP 0.00
1,299,822
GBP 0.00
1,430,360
1. Notice of exercise for 71,118 options were received in 2023 but the shares were not issued at the year-end.
LTIPs outstanding as at 31 December 2023 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
21/8/2023 – 31/12/2025
Note:
Expiry
date
Exercise
price
2023
2022
24/8/2027
GBP 0.00
1/1/2024
GBP 0.00
2/1/2025
GBP 0.00
2/1/2026
GBP 0.00
1/1/2027
GBP 0.00
1/1/2027
GBP 0.00
1/1/2028
GBP 0.00
–
–
–
94,822
275,000
365,000
565,000
167,037
50,858
90,879
381,586
325,000
415,000
–
(*) The departure of an EMT member during 2023 resulted in 50,000 LTIPs issued to him - as part of the “2020 Award”and the “2021 Award” - being forfeited.
2022 LTIP Award
The following LTIP awards were granted to the Executive Directors during 2023:
Name
Position
Jeremy Bridglalsingh
Julian Kennedy
Chief Executive Officer
Chief Financial Officer
The Company announces that 565,000 options have
been granted under the LTIP in respect of the Company’s
performance in the year to 31 December 2022 (the “2022
LTIP Award”), including 100,000 options granted to
Jeremy Bridglalsingh, Chief Executive Officer, 175,000
options granted to Julian Kennedy, Chief Financial Officer,
(CFO) (of which 100,000 are one-off options granted on
joining the Board), and 100,000 one-off options granted
to the new Chief Operating Officer, (COO) who joined the
Company earlier in the year. The 2022 Annual LTIP Award
represents 1.42% of the Company’s current issued share
capital. Excluding the one-off options issued to the CFO
and COO concerning their appointments, the 2022 Annual
LTIP Award represents 0.91% of the current issued share
capital of the Company.
Number of ordinary shares
subject to the Option
100,000
175,000
The performance targets set for awards made under the
2022 Annual LTIP Award will be measured considering
both the Company’s absolute TSR performance and the
Company’s relative TSR performance over a three-year
period, commencing with the current financial year of the
Company (i.e. a measurement period of 1 January 2023 to
31 December 2025). TSR calculations will be determined
by reference to the three-month average closing price
prior to the start and end of the measurement period.
The three-month average closing price at the start of the
performance period for the 2022 Annual LTIP Award was
GBP 1.15.
Trinity Exploration & Production plc
39
Vesting occurs on a straight-line basis between threshold
and maximum.
The Relative TSR Comparator Group has been determined
as follows:
y
FTSE AIM All Share Oil & Gas constituents.
y Market capitalisation of between GBP 20 million and
GBP 400 million.
y
Exploration & Production operations, excluding oil
equipment and service, pure-play exploration and
alternative energy companies.
For 2023, the same companies will be used which form a
comparator group of some 30 companies.
The performance targets provide that:
y
y
No portion of a distinct one-half of the 2022 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 2022
Annual LTIP Award (the “Relative TSR Part”) may vest
unless the Company’s TSR over the performance
period ranks at least median relative to the TSR
performance within a comparator group of companies,
for which 30% of the Relative TSR Part may vest, rising
on a straight line basis for full vesting of the Relative
TSR Part if the Company’s TSR over the performance
period ranks upper quartile or better relative to
the TSR performance within a comparator group.
However, an underpin term applies to the Relative
TSR Part which provides that, regardless of relative
TSR performance, no vesting may ordinarily accrue in
respect of the Relative TSR Part unless the Company’s
compound annual growth rate of TSR over the
performance period is at least 10% per annum.
2021 LTIP Award
The following LTIP awards were granted to the Executive Directors during 2022:
Name
Position
Jeremy Bridglalsingh
Julian Kennedy1
Note:
Chief Executive Officer
Chief Financial Officer
Number of ordinary shares
subject to the Option
90,000
75,000
1. 75,000 one-off LTIP options were granted to Julian Kennedy when he joined the Company in September 2022. Note, Julian was not a Director yet at that time.
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,
of which 75,000 options were to Julian Kennedy. 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 1 January 2022. TSR calculations will
be determined by reference to the three-month average
closing price prior to the start and end of the measurement
period. The three-month average price at the start of the
performance period for the 2021 Annual LTIP Award was
GBP 1.38.
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 lapsed in full on 1 January
2024 as the performance criteria, and more specific the
absolute TSR performance, was not met.
The performance targets set for awards made under
the 2020 LTIP Award were 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
were 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 40
Directors’ Remuneration Report (continued)
2019 LTIP Award
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
(66,422 ordinary shares) and Jeremy Bridglalsingh (47,824
ordinary shares). On 1 January 2021, 167,018 options under
this award vested (representing 66.67% of the award)
and to date all options have been exercised. There are no
remaining options available to be exercised.
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 (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.
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 Chair 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 2019 LTIP Award vested on 2 January 2023. Based
on the relative TSR performance of Trinity against the
designated comparator group of companies 249,655
Options (representing 70,53% of the award) vested on
this occasion, including 83,713 to the estate of Bruce
Dingwall, CBE and 55,809 to Jeremy Bridglalsingh, and to
date 129,781 of these options have been exercised. The
remaining 119,874 options are available to be exercised until
1 January 2026. 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.
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 (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
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 all options have been
exercised. There are no remaining options available.
Trinity Exploration & Production plc 41
The Options vested on 30 June 2022, subject to meeting
performance targets relating to:
y
y
y
In respect of 70% of the award, the Group’s share price
growth from the 2017 placing price of 49.8 pence per
share. If the three-month Volume-Weighted Average
Price (“VWAP”) at the testing date is 350 pence or
more per share, this part of the award will vest in full. If
the VWAP at the testing date is 49.8 pence per share
or less, this part of the award will not vest at all. If the
VWAP at the testing date is between 49.8 pence and
350 pence per share, this part of the award will vest on
a pro-rated straight-line basis;
In respect of 20% of the award, full repayment of the
amount due to the BIR on or before 30 September
2019, in accordance with the terms of the Creditors’
Proposal approved in 2017. The final payment to the
BIR under the Creditors’ Proposal occurred in 2018; and
In respect of 10% of the award, redemption of all
the CLNs issued in January 2017 before the second
anniversary of their issue. The CLNs were redeemed in
2018.
The Options 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:
y
y
y
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.
All options being a total of 1,362,794 options have been
exercised and there are no remaining vested options
available to be exercised.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 42
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 2023 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 18.
Going Concern
The Board adopted the going concern basis in preparing
these consolidated 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 2024 with a stable operating and
financial position; 2023 average production of 2,790 barrels
of oil per day (“bopd”), (2022 2,975 bopd), and cash and
short-term investments of $9.8 million as at 31 December
2023 (2022: $12.1 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:
y
y
y
y
y
Future oil prices are assumed to be in line with the
forward curve prevailing as at 1 May 2024. The forward
price curve applied in the cash flow forecast starts at
a realised price of $72.2/bbl in May 2024, fluctuating
each month down to $68.6/bbl in December 2024
through to $64.8/bbl in December 2025.
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;
No SPT is assumed to be incurred on both onshore
and offshore assets in 2024 or 2025, as the forecast
realised price is below $75.0/bbl;
Trinity continuing to progress various growth and
business development opportunities;
No derivative instruments being put in place for
2024; and
y
No drawdown of working capital overdraft facility.
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:
y
y
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:
y
y
Reducing non-core and discretionary opex and
administrative costs across the forecast period.
Reducing discretionary capital expenditure and capital
returns over the forecast period.
The Directors have received a letter of support from its
subsidiary, Trinity Exploration and Production Services
Limited.
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
In May 2023 the Board agreed a new Capital Allocation
Policy which included the payment of a modest but
sustainable dividend and the scope for additional
distributions in the form of share buybacks or special
dividends. The maiden interim dividend of 0.5 pence
per ordinary shares was paid on 26 October 2023 to all
shareholders on the register on 6 October 2023.
Share Buybacks
The Company announced share buyback programmes on
20 September 2022, 24 October 2022, and 28 April 2023.
Under these programmes, the Company bought back
shares which returned USD 2.1 million to shareholders. The
Company’s share capital consists of 39,899,813 ordinary
shares in issue (including treasury shares) of USD 0.01
each, with 1,171,686 shares held in treasury. The total voting
rights in the Company at 31 December 2023 was therefore
38,728,127.
Trinity Exploration & Production plc
Substantial Shareholdings
The Shareholders holding over 3% of the voting rights as at 31 March 2024 were as follows:
Shareholder
Hargreaves Lansdown private clients*
David and Monique Newlands
Angus Christian Winther
Gavin Matthew White
The CS Living Trust
The David A. Segel Trust
Inactive Investor ISA (Clients)*
Jan-Dirk Leuders**
Scott Casto**
Interactive Investor Clients*
Bruce Dingwall’s Trust
* Private Client Holdings
43
No of Shares
as at 31 March
2024
% of issued share
capital as at
31 March 2024
4,308,724
4,130,500
3,113,299
2,914,748
1,985,414
1,985,414
1,816,903
1,574,835
1,574,834
1,276,763
1,168,932
11.10
10.64
8.02
7.51
5.12
5.12
4.68
4.06
4.06
3.29
3.01
** 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
Nicholas Clayton
Jeremy Bridglalsingh
Angus Winther
James Menzies
Derek Hudson
Kaat Van Hecke
Jonathan Cooper
Julian Kennedy
Non-Executive Chair
28 November 2018 to present
Executive Director and CEO
11 January 2017 to present
Non-Executive Director
11 January 2017 to 27 June 2023
Independent Non-Executive Director
23 June 2017 to present
Independent Non-Executive Director
14 September 2021 to present
Independent Non-Executive Director
22 February 2022 to present
Independent Non-Executive Director
8 August 2023 to present
Executive Director and CFO
8 August 2023 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 1.20% of the Group’s total issued share capital:
Jeremy Bridglalsingh
James Menzies
Nicholas Clayton
TOTAL
Notes:
Shares figures shown for both 2023 and 2022 are post 2021 share consolidation.
No. of
Consolidated
Ordinary Shares
– USD 0.01
2023
No. of
Consolidated
Ordinary Shares
– USD 0.01
2022
319,463
115,000
30,000
319,463
115,000
30,000
464,463
464,463
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
44
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 21.
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 33 to 41.
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 16 to 18.
Directors’ Indemnities
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.
Political contributions
The Group has made no political contribution to any source
during both the current and preceding years.
HSSE
In 2023 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.
Likely Future Developments
Future development plans have been addressed in the
Strategic Report on pages 1 to 18.
Independent Auditors
At the AGM held in June 2023, 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:
y
y
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 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
22 May 2024
Trinity Exploration & Production plc Statement of Directors’ Responsibilities
in respect of the Financial Statements
45
The directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the group and company
financial statements in accordance with UK adopted
international accounting standards. Under company law the
directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the
state of affairs of the group and company and of the profit
or loss of the group and company for that period.
In preparing these financial statements, the directors are
required to
y
select suitable accounting policies and then apply them
consistently;
y make judgements and accounting estimates that are
reasonable and prudent;
y
y
state whether they have been prepared in accordance
with UK adopted international accounting standards
subject to any material departures disclosed and
explained in the financial statements;
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and the company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the company’s transactions and disclose with reasonable
accuracy at any time the financial position of the company
and enable them to ensure that the financial statements
comply with the requirements of the Companies Act 2006.
They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the company's website in accordance with legislation
in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary
from legislation in other jurisdictions. The maintenance and
integrity of the company's website is the responsibility of
the directors. The directors' responsibility also extends to
the ongoing integrity of the financial statements contained
therein.
On behalf of Board
Nicholas Clayton
Non-Executive Chair
22 May 2024
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 46
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:
y
y
y
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 2023 and of the Group’s loss
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
y
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
We have audited the financial statements of Trinity
Exploration & Production plc (the “Parent Company”)
and its subsidiaries (the “Group”) for the year ended
31 December 2023 which comprise the consolidated and
company statements of financial position, the consolidated
statement of comprehensive income, the consolidated and
company statement of cash flows, the consolidated and
company statement of changes in equity and notes to the
financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted
international accounting standards and, as regards
the Parent Company financial statements, as applied
in accordance with the provisions of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent
Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group
and the Parent Company’s ability to continue to adopt the
going concern basis of accounting included:
y We have obtained an understanding of the impact
of oil price on the Group to date, discussed the risks
and uncertainties with Management. We challenged
Management’s assessment of the potential risks and
uncertainties associated with the global economic
environment including the impact on the labour
force, supply chain, oil prices and access to finance,
concluding that it is accurate based on past experience
and external forecasts (oil prices).
y We have obtained Management’s assessment and
supporting cash flow forecast and performed a
detailed review of the calculation including a check of
arithmetical accuracy, as well as challenging the key
operating assumptions based on empirical data and
external data, where possible.
y
We have assessed the going concern forecast
for its consistency against approved budgets and
Field Development Plans and the consistency with
the impairment models, as applicable. We have
performed a retrospective analysis of costs and capital
expenditure for FY2023 against previous budgets to
assess forecasting accuracy and investigate variances
against budget to satisfy ourselves that the underlying
cost estimates are appropriate.
y We have performed sensitivity analysis on key
assumptions included within the cash flow forecast to
understand the impact on headroom.
y We reviewed the adequacy and completeness of
disclosures in the financial statements in respect of
going concern.
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.
Trinity Exploration & Production plc 47
Overview
Coverage
Key audit matters
Materiality
100% (2022:95%) of Group gross profit before tax
100% (2022: 100%) of Group revenue
99% (2022: 99%) of Group total assets
Carrying value of oil and gas assets
Carrying value of exploration and evaluation assets
Group financial statements as a whole
$1,040,000 (2022: $1,150,000) based on 1.5% (2022: 1.25%)
of total revenue
2023
Yes
Yes
2022
Yes
Yes
An overview of the scope of our audit
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.
In approaching the audit, we considered how the Group is
organised and managed. We assessed there to be three
significant components, being the Parent Company (Trinity
Exploration & Production plc), Trinity Exploration and
Production (Galeota) Limited and Oilbelt Services limited.
The Parent Company and both the significant operating
components are based in Trinidad and Tobago and were
subject to a full scope audit which is consistent with the
prior year. The audits of the Trinidad & Tobago significant
operating 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 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.
Our involvement with component auditors
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:
y
y
y
y
Detailed Group reporting instructions were sent to
the component auditor, which included the significant
areas to be covered by the audits (including areas that
were considered to be key audit matters as detailed
below) and set out the information to be reported to
the Group audit team.
The Group audit team was actively involved in the
direction of the audits performed by the component
auditor for Group reporting purposes, along with
the consideration of findings and determination of
conclusions drawn.
The Group audit team reviewed the component
auditor’s work papers remotely from the UK, attended
planning and clearance meetings for the significant
components and engaged with the component auditor
during their fieldwork and completion phases.
The Group audit team performed procedures in
respect of significant risk areas that included key audit
matters in addition to procedures performed by the
component auditor.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
48
Independent Auditor’s Report (continued)
Our oversight of the component teams included maintaining a continuous and open dialogue, as well as holding formal
meetings to ensure that we were fully aware of their progress and the results of their procedures.
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.
We have determined the matters described below to be the key audit matters to be communicated in our report:
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying value of oil and gas assets
(please refer note 13)
Under IAS 36, Management is required
to carry out an assessment for any
indicators on 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
test which has culminated in an
impairment of $1.5m being recognised in
respect of the Brighton, FZ-2, and PS-4.
Given materiality of oil and gas assets in
the context of the Group’s balance sheet,
coupled with the judgements involved in
determining if indicators of impairments
exist and estimates involved in estimating
if the carrying value is supportable, also
the appropriateness of disclosures related
to the impairment charge and sensitivities
associated with alternative potential
inputs into the model, we have considered
this to be a key audit matter.
We obtained and examined Management’s impairment indicator paper to
assess the appropriateness of their conclusion that potential indicators of
impairment were 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
line with the relevant accounting standard.
We obtained Management’s discounted cash flow models (VIU) and
performed data integrity and arithmetical checks on the models.
We determined whether the basis of preparation of the models were in line
with the applicable accounting standard, our expectations and valuation
methodology.
We compared the actual performance of the CGUs during 2023 to budgets
for the period in order to assess the quality of Management’s forecasting.
We challenged the model (prepared as discounted cash flows ) focussing
on the appropriateness of estimates with reference to empirical data and
external evidence with specific emphasis on the following assumptions: oil
prices, reserves, production levels, unit costs and discount rate.
We benchmarked forecast oil prices to current price curves, 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.
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 $1.5m impairment recognised, being the difference.
between the asset carrying value and the net realisable value determined in
the impairment model.
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.
Trinity Exploration & Production plc
49
Key audit matter
How the scope of our audit addressed the key audit matter
Carrying value of exploration &
evaluation assets (refer Note 15)
For assets classed as E&E, Management
are required to perform an assessment
of whether there are any impairment
indicators in accordance with IFRS 6
Exploration for the Evaluation of Mineral
Resources. If any indicators exist then a
full impairment review will be required.
This impairment review must be in
accordance with IAS 36.
The recoverability of E&E assets depends
upon a number of factors common to the
oil and gas sector, including the extent
to which a company can establish field
development plan, the ability of the
company to obtain necessary financing
to complete the development of such
reserves and future profitable production
or proceeds from the disposal thereof.
Management has carried out an
impairment test which has culminated in
an impairment of $11.7m being recognised
in respect of PS4 – Acquisition costs as
well as PS4 – Jacobin well.
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 impairment indicator assessment and
considered whether there are any of the indicators of impairment in line with
criteria set out under IFRS 6. We checked this assessment with reference
to results of exploration work performed in the year, future planned
expenditure and publicly available information.
We verified a sample of capitalised costs and assessed the nature of the
costs capitalised under the accounting policy to evaluate whether they meet
capitalisation criteria under IFRS 6.
We reviewed the existence of licences and checked the Group’s compliance
with terms of these licences.
For Galeota, we challenged Management whether the continued delay to
development should be considered to be an indicator of impairment in itself.
We have considered the new strategy to redevelop the existing assets
and further the E&E activity and consider this appropriately held under
IFRS 6; and
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 Jacobin well and PS-4 related capitalised costs 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 carrying value of exploration and evaluation assets to be supported
by the underlying models 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
50
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
2023
2022
Parent company financial statements
2023
2022
Materiality
$1,040,000
$1,150,000
$360,000
$410,000
Basis for determining
materiality
1.5% of Total revenue
1.25% of Total revenue 1.5% of Total assets
(However capped at
35% of Group)
1.25% of Total assets
(However capped at
35% of Group)
Rationale for the
benchmark applied
Materiality has been
based on total
revenue. The Group is
in the growth phase
with primary focus on
generating revenue
reflecting the overall
performance of the
business.
The benchmark
reflects The Group’s
primary focus
on generating
sustainable growth
in revenue through
increasing production
volume.
Set at an allocation of
The Group materiality
given the assessment
of aggregation risk.
Set at an allocation of
The Group materiality
given the assessment
of aggregation risk.
Performance materiality $720,000
$750,000
$252,000
$266,500
Basis for determining
performance materiality
70% of the above
materiality level.
65% of the above
materiality level.
70% of the above
materiality level.
65% of the above
materiality level.
Rationale for the
percentage applied for
performance materiality
We considered
several factors,
including the
expected total value
of known and likely
misstatements,
and management’s
attitude towards
proposed adjustments
and our knowledge of
the Group and Parent
Company’s internal
controls.
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.
We considered
several factors,
including the
expected total value
of known and likely
misstatements and
our knowledge of the
Group and Parent
Company’s internal
controls.
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 significant component of the Group,
based on a percentage of between 35% and 100%
(2022: 36% and 90% ) of Group materiality dependent
on the size and our assessment of the risk of material
misstatement of that component. Component materiality
ranged from $360,000 to $1,040,000 (2022: $410,000 to
$1,035,000). In the audit of each component, we further
applied performance materiality levels of 70% (2022: 65%)
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 $20,000
(2022: $23,000). We also agreed to report differences
below this threshold that, in our view, warranted reporting
on qualitative ground.
The directors are responsible for the other information.
The other information comprises the information included
in the annual report 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.
Trinity Exploration & Production plc 51
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:
y
y
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:
y
y
y
y
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 Directors' responsibilities
statement on page 45, the Directors are responsible for
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is
detailed below:
We obtained an understanding of the legal and regulatory
framework applicable to the Group. We considered the
associated oil & gas, environmental and taxation laws and
regulations of Trinidad & Tobago to be the most relevant
to the audit given the Geographical areas of focus of the
Group.
Non-compliance with laws and regulations
Based on:
y
y
y
Our understanding of the Group and the industry in
which it operates;
Obtaining and understanding of the Group’s policies
and procedures regarding compliance with laws and
regulations; and
Discussion with management, the Audit Committee,
the Component auditors and Component management.
We considered the significant laws and regulations to
be elements of the applicable accounting framework,
tax legislations, Companies Act 2006, Corporate and
VAT legislation, Employment Taxes, Health Safety and
the Bribery Act 2010, Petroleum Act 1969, Occupational
Safety & Health Act 2004 (Trinidad laws and regulations).
and the QCA corporate governance code.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 52
Independent Auditor’s Report (continued)
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. We identified such laws and regulations to
be environmental regulations and the health and safety
legislation.
Our procedures in respect of the above included:
y
y
y
Reviewing RNS announcements and minutes of
meeting of those charged with governance for any
instances of non-compliance with laws and regulations;
Holding discussions with Management and the Audit
Committee to consider any known or suspected
instances of non-compliance with laws and regulations,
or fraud; and
Reviewing Management’s correspondence with
regulatory and tax authorities for any instances of non-
compliance with laws and regulations.
Fraud
We assessed the susceptibility of the financial statements
to material misstatement, including fraud. Our risk
assessment procedures included:
y Making enquiries with Management and the Audit
Committee regarding any known or suspected
instances of fraud;
y
Obtaining an understanding of the Group’s policies and
procedures relating to:
— Detecting and responding to the risks of fraud;
and
y
y
y
y
— Internal controls established to mitigate risks
related to fraud.
Reviewing minutes from Board meetings of those
charged with governance and RNS announcements for
any known or suspected instances of fraud;
Performing analytical procedures to identify any
unusual or unexpected relationships that may indicate
risks of material misstatement due to fraud; and
Discussion amongst the engagement team as to
how and where fraud might occur in the financial
statements.
Considering remuneration incentive schemes and
performance targets and the related financial
statement areas impacted by these.
Based on our risk assessment, we considered the area’s
most susceptible to fraud to be management override
of controls, revenue recognition and management bias
regarding the following key accounting estimates and
judgements:
y
y
y
y
y
Provision for decommissioning costs;
Estimation of reserves
Impairment of Oil and Gas assets
Impairment of Exploration and Evaluation assets
Recoverability of deferred tax assets.
Our procedures included:
y We have reviewed the control environment
surrounding journals and assessed the posting and
approval of the journals. This included understanding
the integrity of the data as well as testing the
underlying journal data for completeness and accuracy.
y We have audited and verified specific and unusual
journal entries made during the year, agreeing these to
supporting documentation. Based on understanding of
the Group, we have determined key risk characteristics
to filter the population of journals – e.g. entries to
revenue, entries to cash, credit entries to the P&L;
y We have challenged the journal entries which were
made to unusual account combinations and those
outside the normal course of business by testing key
expenses to Group’s approved supplier list.
y We have introduced an element of random testing into
our audit strategy to introduce unpredictability in our
approach;
y We have critically reviewed the consolidation and
obtained evidence supporting the validity of significant
manual or late journals posted at consolidated level.
y We have assessed and challenged key estimates and
judgements applied by Management in the financial
statements to assess their appropriateness under
ISA 540 and the existence of any systematic bias;
y We have reported unadjusted misstatements that we
identified during the audit, that exceeded the level of
triviality. We have assessed the extent to which the
unadjusted errors indicate material bias that may be
reflective of manipulation of results or KPIs.
y We have obtained an understanding of each material
revenue stream and related controls, accounting
policies and procedures.
y We have reviewed the terms of the sales arrangement
with Heritage Petroleum Company Limited to assess
the appropriateness of revenue recognition policies
and review the Group’s accounting treatment to
ensure it is in line with IFRS 15 Revenue from Contracts
with Customers.
y We have verified existence of sales throughout the
year to cash and supporting documentation to confirm
volume and pricing, together with evidence (custody
tickets) regarding the transfer of control and ensured
the revenue is recognised in the correct period.
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members, including component engagement teams
who were all deemed to have appropriate competence and
capabilities and remained alert to any indications of fraud
or non-compliance with laws and regulations throughout
the audit. For component engagement teams, we also
reviewed the result of their work performed in this regard.
Trinity Exploration & Production plc 53
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, UK
22 May 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 54
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
(Expressed in United States Dollars)
Revenues
Crude oil sales
Other income
Operating Expenses
Royalties
Production costs
General & Administrative (“G&A”) expenses
Covid-19 expenses*
Note
2023
$’000
2022
$’000
4
69,819
92,232
7
7
69,826
92,239
(20,864)
(22,402)
(7,375)
–
(528)
(65)
(64)
–
–
(30,091)
(19,242)
(7,181)
(579)
(7,617)
(647)
(394)
46
(10,446)
2,883
(60,233)
(73,268)
9,593
(5,697)
3,896
(13,462)
(307)
2,508
(7,365)
50
(2,214)
(9,529)
2,725
(6,804)
1
(6,803)
0.0
0.0
18,971
(9,012)
9,959
(6,050)
(161)
–
3,748
48
(1,339)
2,457
(2,344)
113
(20)
93
0.0
0.0
Depreciation, Depletion & Amortisation (“DD&A”)
13-15
(8,935)
Share Option Expense (“SOE”)
Foreign exchange (“FX”) loss
Impairment losses on financial assets (“ILFA”) / net reversal
Derivative expenses
Fair value income derivative instruments
Operating Profit before Supplemental Petroleum Taxes (“SPT”)
SPT
Operating Profit before Impairment, Exceptional items and
Decommissioning reduction
Impairment
Exceptional items
Decommissioning reduction
Operating (Loss) /Profit
Finance income
Finance costs
(Loss) /Profit Before Income Taxation
Income taxation credit/(charge)
(Loss) /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 (Loss) /Income for the year
Earnings per share (expressed in dollars per share)
Basic
Diluted
*
Covid-19 expenses have been reclassified as Operating Expenses.
6
6
8
7
7
9
9
10
11
11
Trinity Exploration & Production plc
Consolidated Statement of Financial Position
at 31 December 2023
55
(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
Taxation recoverable
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
Dividend payable
Taxation payable
Total Liabilities
Total Equity and Liabilities
Note
2023
$’000
2022
$’000
13
14
15
16
17
18
19
20
22
23
25
26
24
14
18
28
29
30
14
28
21
35,188
312
31,399
4,962
606
15,703
88,170
3,916
11,709
509
9,819
25,953
114,123
44,987
838
33,537
4,511
602
12,465
96,940
4,615
10,560
231
12,131
27,537
124,477
399
2,812
399
2,990
(89,268)
(89,268)
(1,666)
(1,553)
138,321
49,045
137
1,862
(1,667)
(1,522)
145,199
56,131
341
1,940
45,076
52,460
31
23
47,106
54,764
13,094
4,000
10,045
2,700
208
622
5
43
17,972
65,078
114,123
584
249
–
4
13,582
68,346
124,477
The financial statements on pages 54 to 101 were authorised for issue by the Board of Directors on 22 May 2024 and were
signed on its behalf by:
Jeremy Bridglalsingh
Director
22 May 2024
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
56
Company Statement of Financial Position
at 31 December 2023
(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
Capital and Reserves Attributable to Equity Holders
Share capital
Share based payment reserve
Merger reserves
Treasury shares
Retained earnings
Total Equity
Current Liabilities
Trade and other payables
Intercompany
Dividend payable
Total Liabilities
Total Equity and Liabilities
Note
2023
$’000
2022
$’000
12
61,342
60,864
20
20
22
23
24
29
31
259
4,567
1,194
6,020
233
2,830
2,102
5,165
67,362
66,029
399
3,596
6,552
(1,553)
41,635
50,629
678
16,050
5
16,733
16,733
67,362
399
3,775
6,552
(1,522)
43,529
52,733
565
12,731
–
13,296
13,296
66,029
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 $1.9 million (2022: $9.4 million).
The financial statements on pages 54 to 101 were authorised for issue by the Board of Directors on 22 May 2024 and were
signed on its behalf by:
Jeremy Bridglalsingh
Director
22 May 2024
Trinity Exploration & Production plc
Registered Number: 07535869
Trinity Exploration & Production plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
57
Year ended 31 December 2022
At 1 January 2022
Issue of shares
LTIPs lapsed (Note 25)
Share based payment expense
(Note 25)
Treasury shares acquired (Note 24)
Translation adjustment
Profit for the year
Other comprehensive income/
(expense)
Exchange differences on translation of
foreign operations
Total comprehensive income for the
year
Share Capital
$’000
Share Based
Payment
Reserve
$’000
Reverse
Acquisition
Reserve
$’000
Treasury
Shares
$’000
Translation
Reserve
$’000
Retained
Earnings
$’000
Total Equity
$’000
389
10
–
–
–
–
–
–
–
3,784
(89,268)
–
(1,416)
622
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,522)
–
–
–
–
(1,650)
143,666
56,921
–
–
–
–
3
–
(20)
(20)
–
1,416
–
–
4
113
–
113
10
–
622
(1,522)
7
113
(20)
93
At 31 December 2022
399
2,990
(89,268)
(1,522)
(1,667)
145,199
56,131
Year ended 31 December 2023
At 1 January 2023
399
2,990
(89,268)
(1,522)
(1,667)
145,199
56,131
Share options exercised/lapsed
Share based payment expense
(Note 25)
Treasury shares acquired
Treasury shares issued
Dividends
Translation adjustment
Loss for the year
Other comprehensive income/
(expense)
Exchange differences on translation of
foreign operations
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
(698)
520
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(566)
535
–
–
–
–
–
–
–
–
–
–
1
1
698
–
–
–
(535)
(236)
(1)
520
(566)
–
(236)
(1)
(6,804)
(6,804)
–
1
(6,804)
(6,803)
At 31 December 2023
399
2,812
(89,268)
(1,553)
(1,666)
138,321
49,045
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
58
Company Statement of Changes in Equity
for the year 31 December 2023
Year ended 31 December 2022
At 1 January 2022
Issue of shares
Share based payment charge (Note 25)
Share options exercised/lapsed (Note 25)
Treasury shares (Note 24)
Total comprehensive loss for the year
Share Capital
$’000
Share Based
Payment
Reserve
$’000
Merger
Reserves
$’000
Treasury
Shares
$’000
Retained
Earnings
$’000
Total Equity
$’000
389
10
–
–
–
–
4,569
6,552
–
622
(1,416)
–
–
–
–
–
–
–
–
–
–
–
(1,522)
51,526
63,036
–
–
1,416
–
10
622
–
(1,522)
(9,413)
–
(9,413)
At 31 December 2022
399
3,775
6,552
(1,522)
43,529
52,733
Year ended 31 December 2023
At 1 January 2022
Share options exercised
Share based payment expense (Note 25)
Treasury shares acquired (Note 24)
Treasury shares issued (Note 24)
Dividends
Total comprehensive loss for the year
399
–
–
–
–
–
–
3,775
(698)
519
–
–
–
–
6,552
(1,522)
43,529
52,733
–
–
–
–
–
–
–
–
(566)
535
–
–
698
–
–
(535)
(236)
–
519
(566)
–
(236)
(1,821)
(1,821)
At 31 December 2023
399
3,596
6,552
(1,553)
41,635
50,629
Trinity Exploration & Production plc
Consolidated Statement of Cash Flows
for the year 31 December 2023
(Expressed in United States Dollars)
Operating Activities
(Loss)/Profit before taxation
Adjustments for:
Foreign exchange (“FX”) loss
Finance cost – loans and interest
Finance income
Finance cost – decommissioning provision
Share-based payment expense
DD&A
Loss on disposal
Impairment/ (net reversal) of financial assets
Inventory impairment
Impairment of exploration and evaluation assets
Impairment of property, plant and equipment
Fair value gain on derivative financial
instruments
Other impairments
Net release of decommissioning costs
Changes In Working Capital
Inventories
Trade and other receivables
Trade and other payables
Income taxation paid
Net Cash Inflow from Operating Activities
Investing Activities
Purchase of exploration and evaluation (“E&E”) assets and investment in
research & development
Purchase of computer software
Purchase of property, plant and equipment
Performance bond
Net Cash Outflow from Investing Activities
Financing Activities
Finance income
Finance cost
Proceeds from the issue of shares
Principal paid on lease liability
Interest paid on lease liability
Dividends paid
Acquisition of treasury shares
Bank overdraft
Net Cash Outflow from Financing Activities
59
Note
2023
$’000
2022
$’000
(9,529)
2,457
9
9
28
13-15
13
13
19
16,20
28,29
15
15
13
65
137
(50)
2,077
528
8,935
15
64
–
11,766
1,542
–
147
(2,508)
13,189
699
(1,664)
1,822
857
(831)
13,215
(8,972)
(492)
(5,917)
–
(15,381)
50
(50)
0
(589)
(86)
(231)
(566)
1,300
(172)
394
229
(48)
1,110
647
7,617
–
(46)
334
–
5,558
(2,883)
158
–
15,527
(1,129)
(376)
1,353
(152)
(3,390)
11,985
(388)
(102)
(15,016)
(130)
(15,636)
48
(94)
10
(536)
(135)
–
(1,522)
–
(2,229)
Decrease in Cash and Cash Equivalents
(2,338)
(5,880)
Cash and Cash Equivalents
At beginning of year
Effects of foreign exchange rates differences on cash
Decrease in Cash and Cash equivalents
12,131
26
(2,338)
18,312
(301)
(5,880)
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
60
Company Statement of Cash Flows
for the year 31 December 2023
At end of year
(Expressed in United States Dollars)
Operating Activities
Loss before taxation
Adjustments for:
Foreign exchange (“FX”) loss
Finance income
Share based payment charge
Impairment loss/ (net reversal) on financial assets
Fair value loss on derivative financial instruments
Changes In Working Capital
Trade and other receivables
Trade and other payables
Taxation Paid
Net Cash (Outflow) / Inflow from Operating Activities
Financing Activities
Finance income
Issue of shares
Dividends paid
Treasury shares
Net Cash Outflow from Financing Activities
Decrease In Cash and Cash Equivalents
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
22
Note
9,819
2023
$’000
12,131
2022
$’000
(1,821)
(9,413)
(22)
(164)
41
129
–
(1,837)
(1,893)
3,432
1,539
–
(298)
164
0
(231)
(566)
(633)
(931)
2,102
23
(931)
1,194
306
(156)
107
(14)
(2,883)
(12,053)
521
12,188
12,709
–
656
156
10
–
(1,522)
(1,356)
(700)
3,108
(306)
(700)
2,102
22
Trinity Exploration & Production plc
Notes to the Consolidated Financial Statements
31 December 2023
61
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 $1.9 million
(2022: $9.4 million loss) .
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 these consolidated 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 2024 with a stable operating and financial position; 2023 average production of 2,790 barrels of
oil per day (“bopd”) , (2022 2,975 bopd) , and cash and short-term investments of $9.8 million as at 31 December 2023
(2022: $12.1 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:
y
y
y
y
y
y
Future oil prices are assumed to be in line with the forward curve prevailing as at 2 April 2024. The forward price
curve applied in the cash flow forecast starts at a realised price of $75.3/bbl in April 2024, fluctuating each month
down to $69.7/bbl in December 2024 through to $65.5/bbl in December 2025.
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;
No SPT is assumed to be incurred on both onshore and offshore assets in 2024 or 2025, 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 2024.
No drawdown of working capital overdraft facility
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 62
Notes to the Consolidated Financial Statements
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:
y
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
y
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:
y
y
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.
The directors of Trinity Exploration & Production Plc have received a letter of support from Trinity Exploration and
Production Services Limited confirming that they will not recall related party balances and any loan to the Company for
a period of not less than twelve months from the date of signing of Company’s statutory accounts unless the Company
can repay the related party balances and loan.
Changes in accounting policies
(a) New standards, interpretations and amendments adopted from 1 January 2023:
The following amendments are effective for the period beginning 1 January 2023:
y
y
IFRS 17 Insurance Contracts
Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice
Statement 2 Making Materiality Judgements) ; Definition of Accounting Estimates (Amendments to IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors) ; Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes) ; and
y
International Tax Reform – Pillar Two Model Rules (Amendment to IAS 12 Income Taxes) (effective immediately upon
the issue of the amendments and retrospectively) .
These amendments to various IFRS Accounting Standards are mandatorily effective for reporting periods beginning on
or after 1 January 2023. There is no impact to the 2023 accounts.
(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 are effective for the period beginning 1 January 2024:
y
y
y
y
Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases) ;
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 Presentation of Financial Statements) ;
Non-current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements) ; and
Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures)
The following amendments are effective for the period beginning 1 January 2025:
y
Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates)
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not
believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities, as the conversion
feature in its convertible debt instruments is classified as an equity instrument and therefore, does not affect the
Trinity Exploration & Production plc 63
classification of its convertible debt as a non-current liability. The Group does not expect any other standards issued by
the IASB, but are yet to be effective, to have a material impact on the Group.
Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the subsidiaries listed in Note 12. The financial
information incorporates the financial information of the Group made up to 31 December each year. Control is achieved
where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. The results of subsidiaries acquired or disposed of during the year are included in the Consolidated
Statement of Comprehensive Income from the effective date of acquisition and up to the effective date of disposal, as
appropriate.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost
of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any
non-controlling interest. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the
difference is recognised directly in the Statement of Comprehensive Income. Costs related to an acquisition are expensed
as incurred.
Uniform accounting policies have been adopted across the Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
Share-based payments
The Group operates a number of equity-settled, share-based compensation plans comprised of 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:
y
y
y
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 or utilises shares held in Treasury. 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
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 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 64
Notes to the Consolidated Financial Statements (continued)
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
$
6.750
6.716
2023
£
8.397
8.550
$
6.754
6.742
2022
£
8.357
8.146
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:
y
y
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
y
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”.
Trinity Exploration & Production plc
65
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:
y
Licence and property acquisition costs
Exploration and property leasehold acquisition costs are capitalised within E&E assets.
y
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:
y
The period for which the Group has the right to explore in the specific area has lapsed.
y Whether substantive expenditure on further E&E in the specific area is budgeted or planned.
y 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
y 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
66
Notes to the Consolidated Financial Statements (continued)
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 and provisions
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.
Decommissioning provisions are updated at each balance sheet date for changes in the estimates of the
amount or timing of future cash flows and changes in the discount rate. Changes to provisions that relate to
the removal of an asset are added to or deducted from the carrying amount of the related asset in the current
Trinity Exploration & Production plc
67
period. However, the adjustments to the asset are restricted. The asset cannot decrease below zero and cannot
increase above its recoverable amount:
y
y
if the decrease in provision exceeds the carrying amount of the asset, the excess is recognised immediately
in profit or loss;
adjustments that result in an addition to the cost of the asset are assessed to determine if the new carrying
amount is fully recoverable or not. An impairment test is required if there is an indication that the asset may
not be fully recoverable.
(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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
68
Notes to the Consolidated Financial Statements (continued)
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.
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.
Trinity Exploration & Production plc
69
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.
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%.
The Finance Act 2023 amendment waives PT accrued for past years up to 31 December 2023, 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:
y
y
Leases of low value assets; and
Leases with a duration of 12 months or less.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 70
Notes to the Consolidated Financial Statements (continued)
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.
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.
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.
Trinity Exploration & Production plc 71
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% (2022: 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% (2022: 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/ (2022: 10%)
10% weakening of the US Dollar/ (2022: 10%)
(ii)
Price risk
2023
$’000
(253)
253
2022
$’000
(269)
269
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% (2022: 20%) increase and decrease in realised oil prices. 20% (2022: 20%)
is the sensitivity rate that best represents Management’s assessment of the possible change in the oil prices
that may affect the Group. The 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/ (2022: 20%)
20% decrease in price/(2022: 20%)
2023
$’000
2022
$’000
13,885
(13,885)
18,931
(18,931)
The Group did not implement any hedge options during the financial year.
(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 2023, there were no loan commitments to attract interest rates on foreign currency-denominated
borrowings, (2022: nil) . During 2023 there was a bank overdraft facility which incurred $0.1 million interest
(2022: $0.1 million) .
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
72
Notes to the Consolidated Financial Statements (continued)
(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
(2022: $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 (2022: $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 $9.8 million (2022: $12.1 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 2023
Non-derivatives
Trade and other payables
Lease liabilities
Bank overdraft
At 31 December 2022
Non-derivatives
Trade and other payables
Lease liabilities
Bank overdraft
Less than 1 year
$’000
1 to 2 years
$’000
2 to 5 years
$’000
Total
$’000
13,094
208
4,000
17,302
–
137
–
137
–
–
–
–
13,094
345
4,000
17,439
$’000
$’000
$’000
$’000
10,045
584
2,700
13,329
–
204
–
204
–
137
–
137
10,045
925
2,700
13,670
Trinity Exploration & Production plc
Company
At 31 December 2023
Non-derivatives
Trade and other payables
Intercompany
At 31 December 2022
Non-derivatives
Trade and other payables
Intercompany
73
Less than 1 year
$’000
Total
$’000
678
16,050
16,728
678
16,050
16,728
$’000
$’000
565
12,731
13,296
565
12,731
13,296
(d) Capital risk
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
2023
$’000
5,819
2022
$’000
9,431
(49,045)
(56,131)
(43,226)
(46,700)
(13.5) %
(20.2) %
The Group and Company have classified financial instruments into the three levels prescribed under the accounting
standards.
y
y
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.
y
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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
74
Notes to the Consolidated Financial Statements (continued)
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:
Decommissioning Cost estimates and reversals:
In 2023 there was a refresh of the well abandonment cost methodology which resulted in cost reductions for both
onshore and offshore well abandonment costs. The change resulted in a significant decrease ($6.6 million) in well
abandonment cost estimates. In addition, during 2023 the Tabaquite licence was relinquished resulting in a $3.0 million
release of decommissioning liability. There was no material change to the platform abandonment methodology. The
total reduction in decommissioning liability was $9.6 million.
The reduction in decommissioning liability resulted in a reduction in the related decommissioning asset ($ 9.6 million
– refer to Note 13) and a net impact to the statement of comprehensive income where decommissioning assets were
fully utilised ($2.5 million – refer to Note 7) .
Decommissioning rates:
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)
2023
6-11
12-18
19-21
22-23
3.84%
3.98%
4.22%
4.22%
3.20%
2022
3.96%
4.04%
4.14%
4.09%
3.20%
The following table details the Group’s sensitivity to a 1% (2022: 1%) increase and decrease in discount and inflation
rates. 1% (2022: 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 2023 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
2023
$’000
Consolidated
Statement of
Comprehensive
Income/Expense
2023
$’000
(6,310)
7,595
7,592
(6,419)
106
(273)
343
(346)
Trinity Exploration & Production plc
75
(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 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:
y
y
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:
y
y
y
y
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.
(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 2023 an
impairment charge of $1.5 million was recognised on the Group’s property, plant and equipment (2022: $5.6 million)
see Note 8. The impairment charge resulted in the carrying amount of the respective CGUs being written down to
their recoverable amount.
Oil & Gas Assets $1.5 million (2022: $5.6 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, 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
76
Notes to the Consolidated Financial Statements (continued)
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
2024
64.8
2025
62.1
2026
60.1
2027
58.7
2028
57.8
2029
57.4
If the price deck used in the impairment calculation had been 10% lower than Management’s estimates at 31 December
2023, the Group would have a $4.1 million increase on impairment of Oil & Gas Assets (2022: $16.1 million increase) . If
the price deck used in the impairment calculation had been 10% higher than Management’s estimates at 31 December
2023, the Group would have a $0.1 million decrease on impairment of the Oil & Gas Assets (2022: $0.6 million
decrease) . The valuation is considered to be a level 3 in the fair value hierarchy due to unobservable inputs used in
the valuation.
For the year ended 31 December 2023, Management’s estimate of the Group’s cost of capital was 14.4% (2022:15.0%) .
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 $0.1 million increase (2022: $0.0 million) change to the impairment
position for 2023 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 $0.1 million decrease to the impairment
position for 2023 (2022: $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 2023 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.
y
Impairment of Jacobin Well Cost
Impairment triggers were identified on this asset as at 31 December 2023. An impairment assessment was performed
resulting in an impairment of $9.6 million.
y
Impairment of PS 4 E&E costs
In 2022, an E&E asset (reclassified from Oil and Gas developed asset) was recognised for costs relating to the PS-4
acquisition costs. At 31 December 2023, impairment triggers were identified mainly related to the reduction in 2C
resources. An assessment was performed and resulted in the impairment of $2.1 million.
(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 Amendments to the Act requires the Board of Inland Revenue to issue a
Notice of Assessment on or before 31 March each year. The amendment in the Finance Act 2023 waives the tax up
to 31 December 2023.
The collection of the tax will be effective from 2024 for residential properties only, until the valuation roll has been
completed and the Notice of Assessment given for the other property types. 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 2023.
Trinity Exploration & Production plc
77
(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.
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
2023
$’000
2022
$’000
8,168
533
233
9,484
66
6,890
534
193
8,317
174
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
2023
$’000
2022
$’000
358
106
18
37
519
220
107
16
29
372
All fees in 2023 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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
78
Notes to the Consolidated Financial Statements (continued)
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 (unrealised)
7
Decommissioning Release/Reduction
Reduction of Decommissioning costs estimates
Release of Decommissioning Liablilty- Tabaquite field
Decommissioning release/reduction Total
31 December
2023
$’000
31 December
2022
$’000
–
–
–
(10,446)
2,883
(7,563)
(114)
(2,394)
(2,508)
–
–
–
y
y
Reduction of Decommissioning cost estimates $0.1 million
Release of Decommissioning cost estimate: $2.4 million in relation to Tabaquite Field surrendered.
See Note 3(b) : Critical Accounting Estimates and Judgement
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
Bravo Fire costs
Exceptional Items Total
31 December
2023
$’000
31 December
2022
$’000
161
146
307
161
–
161
y
y
Charges relating to ICT incident: $0.2 million charge in relation to costs incurred in relation to the cyber incident
Charges relating to Bravo Fire incident: $0.1 million charge in relation to costs incurred for the Bravo Fire in April 2023
Trinity Exploration & Production plc
8
Impairment
Impairment of Inventory
Impairment of Jacobin Well Costs
Impairment of PS4 E&E costs
Impairment of property, plant and equipment
Other impairment of property, plant and equipment
Total expense
79
31 December
2023
$’000
31 December
2022
$’000
–
9,634
2,132
1,549
147
13,462
334
–
–
5,558
158
6,050
y
y
y
y
y
Impairment of inventory – No charge in relation to inventory impairment. In 2022 $0.3 million on moving inventory
items.
Impairment of Jacobin Well Costs – $9.6 million charge on Exploration and Evaluation costs relating to the Jacobin
Well (See Note 3(e) : Critical Accounting Estimates and Judgement)
Impairment of E&E assets – $2.1 million charge on PS4 Exploration and Evaluation costs (See Note 3(e) : Critical
Accounting Estimates and Judgement)
Impairment of property, plant and equipment – $1.5 million charge in relation to property, plant and equipment and
cash generating units (See Note 3(d) : Critical Accounting Estimates and Judgement)
Other impairment of property, plant and equipment – $0.1 million charge in other property, plant equipment costs.
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 (credit) / expense
2023
$’000
2022
$’000
50
48
2023
$’000
2022
$’000
(2,077)
(86)
(51)
(2,214)
(1,110)
(135)
(94)
(1,339)
2023
$’000
2022
$’000
422
169
2,404
960
(3,238)
(78)
(2,725)
(935)
(85)
2,344
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
80
Notes to the Consolidated Financial Statements (continued)
The Group’s effective tax rate varies from the statutory rate for UK companies of 19% (2022:19%) as a result of the
differences shown below:
Loss/ (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
Tax (credit) / charge
2023
$’000
(9,529)
(3,101)
17,005
(2,327)
(11,064)
(3,238)
(2,725)
2022
$’000
2,457
4,836
13,448
(5,671)
(9,334)
(935)
2,344
Corporate income tax is calculated at 19% (2022: 19%) of the assessable profit for the year for the UK Parent Company,
55% for the operating subsidiaries in Trinidad and Tobago (2022: 55%) and 30% (2022: 30%) for the corporate subsidiaries
in Trinidad and Tobago.
Taxation losses at 31 December 2023 available for set off against future taxable profits amounts to approximately
$224.4 million (2022: $227.5 million) , with tax losses recognised of $31.4 million at the end of 2023. These losses do not
have an expiry date. While Management have filed Returns, these 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 in a year of in a year of income 75% of
the otherwise chargeable profits.
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 2023
Basic
Diluted
Year ended 31 December 2022
Basic
Diluted
(Loss)/Profit
for the year
$’000
Weighted
Average Number
of Shares
’000
Earnings Per
Share
$
(6,804)
(6,804)
38,687
38,687
113
113
39,094
40,524
0.0
0.0
0.0
0.0
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.
There was no impact on the weighted average number of shares outstanding during 2023 as LTIP’s were excluded from
the weighted average dilutive share calculation because their effect would be anti-dilutive and therefore both basic and
diluted earnings per share are the same in 2023.
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 2023 (See notes 23 and 24) .
Trinity Exploration & Production plc
12 Investment In Subsidiaries
Opening balance
Share based payment forfeiture
Share based payment
Closing balance
81
Company
2023
$’000
2022
$’000
60,864
60,347
(69)
547
–
517
61,342
60,864
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.
Listing of Subsidiaries
The Group’s subsidiaries at 31 December 2023 are listed below:
Name
Bayfield Energy Limited
Trinity Exploration &
Production (UK) Limited
Trinity Exploration and
Production Services (UK) Limited
Bayfield Energy do Brasil Ltda
Trinity Exploration &
Production (Barbados) Limited
Trinity Exploration and
Production (Trinidad and
Tobago) Limited
Trinity Exploration and
Production (Galeota) Limited
Oilbelt Services Limited
Trinity Exploration and
Production Services Limited
Trinity Midstream Limited
Trinity Exploration and
Production (Erin 1) Limited
Trinity Exploration and
Production (Erin 2) Limited
Trinity Exploration and
Production (Forest 1) Limited
Trinity Exploration and
Production (Forest 2) Limited
Trinity Exploration and
Production (Forest 3) Limited
Registered Address/Country of
Incorporation
Nature of Business
% Shares held
by the Group
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
Ground Floor, One Welches,
Welches, St. Thomas BB22025,
Barbados
3rd Floor Southern Supplies
Limited Building,
40-44 Sutton Street,
San Fernando, Trinidad &
Tobago (“Trinidad address”)
Holding Company
99.99998%
Holding Company
100%
Service Company
100%
Dormant
100%
Holding Company
100%
Holding Company
100%
Trinidad address
Oil and Gas
Trinidad address
Trinidad address
Trinidad address
Trinidad address
Oil and Gas
Service Company
Oil and Gas
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
Trinidad address
Oil and Gas
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Trinity Renewable Resources Limited
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
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
82
Notes to the Consolidated Financial Statements (continued)
13 Property, Plant and Equipment
Year ended 31 December 2023
Opening net book amount at 1 January 2023
Additions
Transfers (Note 15)
Disposals
Tabaquite decommissioning asset relinquishment
Reduction to decommissioning estimate (Note 3(b) )
Impairment charge
DD&A charge for year
Closing net book amount at 31 December 2023
At 31 December 2023
Cost
Accumulated DD&A and impairment
Closing net book amount
Year ended 31 December 2022
Opening net book amount at 1 January 2022
Additions
Transfers (Note 3(h) )
Adjustment to decommissioning estimate (Note 28)
Impairment charge
DD&A charge for year
Closing net book amount at 31 December 2022
At 31 December 2022
Cost
Accumulated DD&A and impairment
Closing net book amount
Plant & Equipment
$’000
Leasehold &
Buildings
$’000
Oil & Gas Assets
$’000
4,255
1,573
–
(21)
–
–
(36)
(630)
5,141
1,271
27
–
–
–
–
–
(192)
1,106
39,461
5,306
319
(6)
(632)
(6,508)
(1,653)
(7,346)
28,941
Total
$’000
44,987
6,906
319
(27)
(632)
(6,508)
(1,689)
(8,168)
35,188
19,709
(14,568)
5,141
3,510
327,454
350,673
(2,404)
(298,513)
(315,485)
1,106
28,941
35,188
Plant & Equipment
$’000
2,919
1,999
–
–
(62)
(601)
4,255
Leasehold &
Buildings
$’000
1,388
71
–
–
–
(188)
1,271
Oil & Gas Assets
$’000
45,200
13,062
(2,451)
(4,595)
(5,654)
(6,101)
Total
$’000
49,507
15,132
(2,451)
(4,595)
(5,716)
(6,890)
39,461
44,987
18,193
(13,938)
4,255
3,483
323,497
345,173
(2,212)
(284,036)
(300,186)
1,271
39,461
44,987
1
An impairment loss of $1.7 million (2022: $5.7 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.
Trinity Exploration & Production plc
83
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
2023
$’000
31 December
2022
$’000
312
208
137
345
838
584
341
925
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
Interest expense (including finance cost)
2023
$’000
(533)
(86)
2022
$’000
(534)
(135)
The total cash outflow for leases in 2023 was $0.7 million (2022: $0.7 million)
(iii) The Group’s leasing activities and how these are accounted.
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 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
84
Notes to the Consolidated Financial Statements (continued)
15 Intangible Assets
The carrying amounts and changes in the year are as follows:
Year ended 31 December 2023
Opening net book amount at 1 January 2023
Additions
Transfers
Impairment charge
Amortisation charge for year
Closing net book amount at 31 December 2023
At 31 December 2023
Cost
Accumulated amortisation
Closing net book amount
Year ended 31 December 2022
Opening net book amount at 1 January 2022
Additions
Transfers (Note 3(h) )
Amortisation charge for year
Closing net book amount at 31 December 2022
At 31 December 2022
Cost
Accumulated amortisation
Closing net book amount
Exploration and
Evaluation assets
$’000
Computer
software
$’000
Research and
Development
$’000
32,903
9,421
(319)
(11,766)
–
30,239
30,239
–
30,239
405
492
–
–
(233)
664
1,471
(807)
664
229
267
–
–
–
496
496
–
496
Exploration and
Evaluation assets
$’000
Computer
software
$’000
Research and
Development
$’000
30,217
235
2,451
–
32,903
32,903
–
32,903
496
102
–
(193)
405
979
(574)
405
46
183
–
–
229
229
–
229
Total
$’000
33,537
10,180
(319)
(11,766)
(233)
31,399
32,206
(807)
31,399
Total
$’000
30,759
520
2,451
(193)
33,537
34,111
(574)
33,537
y
y
y
E&E assets: Represents the cost for the TGAL 1 exploration well. The Group tests whether E&E assets have suffered
any impairment triggers on an annual basis and there was an impairment loss of $11,766 (2022: nil) . See reference
3 (e) (impairment of intangible E&E assets).
Computer Software: In 2023, costs incurred in connection with the acquisition of software.
Research and Development: In 2023, there were costs associated for various initiatives in connection with reducing
carbon emissions.
16 Abandonment fund
At 1 January
Additions
At 31 December
2023
$’000
4,511
451
4,962
2022
$’000
4,021
490
4,511
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.
Trinity Exploration & Production plc
17 Performance bond
At 1 January and 31 December
85
2023
$’000
606
2022
$’000
602
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:
2023
$’000
2022
$’000
(11,507)
(4,196)
(7,774)
(4,691)
1,862
1,940
(13,841)
(10,525)
2023
$’000
(10,525)
(3,238)
(78)
2022
$’000
(9,505)
(935)
(85)
(13,841)
(10,525)
2021
$’000
Movement
$’000
2022
$’000
Movement
$’000
2023
$’000
(33,436)
(49,182)
Acquisition
Tax losses recognised
Tax losses derecognised
(33,436)
(45,009)
66,915
(11,530)
–
(33,436)
–
(935)
(45,944)
(3,238)
66,915
–
66,915
(935)
(12,465)
(3,238)
(15,703)
DLT
Accelerated tax depreciation and non-
current asset impairment
Acquisitions
Fair value uplift
2021
$’000
Movement
$’000
2022
$’000
Movement
$’000
2023
$’000
(19,375)
19,580
1,820
2,025
–
–
(85)
(85)
(19,375)
19,580
1,735
1,940
–
–
(78)
(78)
(19,375)
19,580
1,657
1,862
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
86
Notes to the Consolidated Financial Statements (continued)
DTA are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future
taxable profits are probable. Deferred tax assets of $3.2 million have been recognised (2022: $0.9 million was recognised)
based on estimated future taxable profits. The Group has unrecognised deferred tax assets amounting to $82.5 million
which have no expiry date.
DTL have decreased by $0.1 million related to unwinding of assets.
y
y
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 2023 the Group had gross tax losses carried forward of $224.4 million (2022: $227.5 million)
represented by corporate tax losses in the UK of $34.7 million (2022: $33.2 million) and PPT and Corporate tax
losses in Trinidad and Tobago of $189.7 million (2022: $194.3 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 2023
Net inventory movement
At 31 December 2023
At 1 January 2022
Impairment (see note 8)
Net inventory movement
At 31 December 2022
Crude oil
$’000
Materials and
supplies
$’000
125
25
150
96
–
29
125
3,851
(85)
3,766
3,724
(334)
1,100
4,490
Total
$’000
3,976
(60)
3,916
3,820
(334)
1,129
4,615
(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 no impairment of inventory items (2022: $0.3 million) .
20 Trade and Other Receivables
Group
Company
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Due within 1 year
Amounts due from related parties (Note 31 (d) )
4,567
2,830
Trade receivables
4,393
4,643
Less: provision for impairment of trade and intercompany
receivables
Trade receivables: net
Prepayments
VAT recoverable
Other receivables
Less: provision for Impairment of other receivables
(26)
4,367
1,005
6,015
420
(98)
(4)
4,639
969
4,657
351
(56)
–
–
–
–
4,567
2,830
158
101
–
–
198
29
6
–
11,709
10,560
4,826
3,063
Trinity Exploration & Production plc
87
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 2023 of $0.1 million (31 December 2022: $0.1 million)
against Other receivables.
VAT recoverable (gross) – As at 31 December 2022 the VAT recoverable amount was $4.7 million. During the period
ending 31 December 2023, the Group generated future refunds of $5.2 million, refunds received amounted to $3.9 million.
All trade receivables are with the Group’s only customer, Heritage. Ageing analysis of these trade receivables as at
31 December 2023 is as follows:
Up to 30 days
>60 days
>180 days
2023
$’000
4,313
–
54
2022
$’000
4,544
–
95
4,367
4,639
The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
USD
GBP
TTD
Group
Company
2023
$’000
3,378
260
8,071
11,709
2022
$’000
3,381
260
6,919
2023
$’000
4,724
102
–
2022
$’000
2,873
190
–
10,560
4,826
3,063
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:
Group
Company
2023
$’000
2022
$’000
2023
$’000
2022
$’000
Trade receivables
Counterparties without external credit rating:
Existing customers with no defaults in the past
11,709
10,560
–
–
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 2023, trade receivables of $4.4 million
(2022: $4.6 million) were therefore considered to be fully performing.
At the end of 2023 a total of $0.1 million was outstanding from Petrotrin (2022: $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 (2022: $0.1 million) was calculated.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
88
Notes to the Consolidated Financial Statements (continued)
21 Dividend Payable
The Company declared dividends of US$ 0.2 million (2022: nil) for the six months ended 30 June 2023. As at 31 December
2023, US$ 0.0 million remains payable to shareholders.
Dividend declared
Dividend paid
Dividend payable
22 Cash and Cash Equivalents
Short term investment
Cash and cash equivalents
As at
31 December
2023
$’000
As at
31 December
2022
$’000
236
(231)
5
Group
Company
2023
$’000
245
9,574
9,819
2022
$’000
1,033
11,098
12,131
2023
$’000
245
949
1,194
–
–
2022
$’000
1,033
1,069
2,102
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 2023
Shares Issued at Nominal value
As at 31 December 2023
24 Treasury Shares
Number
of shares
39,884,637
15,176
39,899,813
Ordinary
shares
$’000
Share premium
$’000
399
0
399
–
–
–
Total
$’000
399
0
399
Treasury shares are shares in the Company that are held by the Company. From September 2022 to June 2023, three
share buyback programmes were executed.
Group and Company
As at 1 January 2023
Share buybacks
Shares issued out of Treasury
As at 31 December 2023
Number
of shares
1,072,000
477,000
(377,313)
1,171,687
Cost
$’000
1,522
566
(535)
1,553
Total
$’000
1,522
566
(535)
1,553
25 Share Based Payment Reserve
The share-based payments reserve is used to recognise:
y
y
y
y
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.
Trinity Exploration & Production plc
89
During 2023 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
Share based payment expense:
Exercised/lapsed options realised to retained earnings
LTIP expense
At 31 December
Share Option Plan
2023
$’000
2,990
(698)
520
2,812
2022
$’000
3,784
(1,416)
622
2,990
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
Expiry Date
Share Options
Exercise
price per
Number of
Options
Exercise
price per
Number of
Share Options
Share Options
2022
2021
2022
2023
–
GBP8.60
28,954
28,954
GBP12.00
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
14 February 2013
GBP 11.90
GBP 12.00
GBP 12.00
GBP 8.90
55%
4.5%
0%
78%
4.5%
0%
3 years
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:
y
y
y
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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
90
Notes to the Consolidated Financial Statements (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
30 June 2020
GBP 107.50p
GBP 79.00p
GBP 0.00
GBP 0.00
73.3%
0.44%
0%
30 June 2020
30 June 2021
84.9%
(0.07%)
0%
–
–
30 June 2022
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 Award
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 the May 2019 awards vested on 2 January 2022 subject to meeting the performance
criteria set out in the table below and continued employment with the Company.
Performance
Below the Median
Median (50th percentile)
Vesting
None of the award will vest
30% of the maximum award will vest
Between Median and Upper Quartile
Straight Line basis between these points
Upper Quartile (75%)
Above the Upper Quartile
100% of the maximum award will vest.
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
9 May 2019
GBP167.7p
GBP146.6p
GBP0.00
GBP0.00
113.9%
0.73%
0%
113.9%
0.73%
0%
1 January 2021
2 January 2022
Trinity Exploration & Production plc
91
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
Below the Median
Median (50th percentile)
Vesting
None of the award will vest
30% of the maximum award will vest
Between Median and Upper Quartile
Straight Line basis between these points
Upper Quartile (75%)
Above the Upper Quartile
100% of the maximum award will vest.
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 30 October 2020
GBP79.0
GBP0.00
84.9%
(0.07%)
0%
GBP77.0
GBP0.00
84.9%
(0.07%)
0%
2 January 2023
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:
y
y
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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
92
Notes to the Consolidated Financial Statements (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:
y
y
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
Trinity Exploration & Production plc
93
2022 LTIP Award
On 22 August 2023, the Company announces that 565,000 options have been granted under the LTIP in respect of the
Company’s performance in the year to 31 December 2022 (the “2022 LTIP Award”) , including 100,000 options granted
to Jeremy Bridglalsingh, Chief Executive Officer, 175,000 options granted to Julian Kennedy, Chief Financial Officer,
(CFO) (of which 100,000 are one-off options granted on joining the Board) , and 100,000 one-off options granted to
the new Chief Operating Officer, (COO) who joined earlier this year. The 2022 Annual LTIP Award represents 1.42% of
the Company’s current issued share capital. Excluding the one-off options issued to the CFO and COO concerning their
appointments, the 2022 Annual LTIP Award represents 0.91 per cent of the current issued share capital of the Company.
The performance targets set for awards made under the 2022 Annual LTIP Award will be measured considering both
the Company’s absolute TSR performance and the Company’s relative TSR performance over a three-year period,
commencing with the current financial year of the Company (i.e. a measurement period of 1 January 2023 to 31 December
2025) . TSR calculations will be determined by reference to the three-month average closing price prior to the start and
end of the measurement period. The three-month average closing price at the start of the performance period for the
2022 Annual LTIP Award was £1.15.
The performance targets provide that:
y
y
No portion of a distinct one-half of the 2022 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 2022 Annual LTIP Award (the “Relative TSR Part”) may vest unless
the Company’s TSR over the performance period ranks at least median relative to the TSR performance within a
comparator group of companies, for which 30% of the Relative TSR Part may vest, rising on a straight line basis for
full vesting of the Relative TSR Part if the Company’s TSR over the performance period ranks upper quartile or better
relative to the TSR performance within a comparator group. However, an underpin term applies to the Relative TSR
Part which provides that, regardless of relative TSR performance, no vesting may ordinarily accrue in respect of the
Relative TSR Part unless the Company’s compound annual growth rate of TSR over the performance period is at
least 10% per annum.
The total fair value at grant date of the LTIP awards granted in the period ended 31 December 2023 was $0.8 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 2023 included:
Grant Date
Share price at grant dates
Exercise price
Expected volatility
Risk-free interest rates
Expected dividend yields
Vesting dates
2022 LTIP Award
August 2023
GBP 90p
GBP0.00
52%
5.01%
0%
1 January 2026
Movements in the number of LTIPs outstanding and their related weighted average exercise prices are as follows:
At 1 January
Forfeited/Lapsed
Granted1
Exercised
At 31 December
1 Weighted average fair value of LTIPs granted GBP 1.15
2023 Average
exercise price per
Share Option
Number of
Options
2022 Average
exercise price per
Share Option
Number of
Options
GBP 0.00
1,430,360
GBP 0.00
3,381,299
GBP 0.00
(231,930)
GBP 0.00
(1,360,733)
GBP 0.00
565,000
GBP 0.00
415,000
GBP 0.00
(463,608)
GBP 0.00
(1,005,206)
GBP 0.00
1,299,822
GBP 0.00
1,430,360
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
94
Notes to the Consolidated Financial Statements (continued)
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
22/8/2023 – 1/1/2026
26 Merger and Reverse Acquisition Reserves
At 1 January 2023
Capital re-organisation/reduction
Translation differences
At 31 December 2023
At 1 January 2022
Capital re-organisation/reduction
Translation differences
At 31 December 2022
Expiry date
Exercise price
2023
2022
24/08/2027
GBP 0.00
1/1/2024
GBP 0.00
2/1/2025
GBP 0.00
2/1/2026
GBP 0.00
2/1/2027
GBP 0.00
1/1/2027
GBP 0.00
1/1/2028
GBP 0.00
–
–
–
94,822
275,000
365,000
565,000
Reverse
Acquisition
Reserve
$’000
(89,268)
–
–
(89,268)
(89,268)
–
–
(89,268)
Merger
Reserve
$’000
–
–
–
–
–
–
–
–
167,037
50,858
90,879
381,586
325,000
415,000
–
Total
$’000
(89,268)
–
–
(89,268)
(89,268)
–
–
(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.
Trinity Exploration & Production plc
95
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
Loss on disposal
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
Adjusted EBITDA per share – diluted
Adjusted EBIDA after Current Taxes (the impact of SPT and PPT/UL) is calculated as follows:
Adjusted EBITDA
SPT
PT
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
2023
$’000
9,593
8,935
64
528
65
15
–
19,200
2022
$’000
18,971
7,617
(46)
647
394
–
(2,883)
24,700
’000
’000
38,867
39,987
$
0.50
0.48
2023
$’000
19,200
(5,697)
(591)
12,912
39,094
40,524
$
0.64
0.61
2022
$’000
24,700
(9,012)
(3,365)
12,323
’000
’000
38,687
39,987
$
0.33
0.32
39,094
40,524
$
0.32
0.31
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
96
Notes to the Consolidated Financial Statements (continued)
28 Provision for Other Liabilities
(a) Non-current:
Year ended 31 December 2022
Opening amount as at 1 January 2023
Unwinding of discount (Note 9)
Revision to estimates (Note 13)
Additions
Translation differences
Decommissioning
provision
$’000
51,857
2,077
(9,638)
–
137
Closure
of pits
$’000
603
–
–
40
–
Total
$’000
52,460
2,077
(9,638)
40
137
Closing balance at 31 December 2023
44,433
643
45,076
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
Decommissioning provision
55,220
1,110
(4,595)
–
122
51,857
470
–
–
138
(5)
603
55,690
1,110
(4,595)
138
117
52,460
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% (2022: 3.20%)
b.
Risk free rate – 3.84% – 4.22% (2022: 3.96% – 4.14%)
c.
Estimated market value/decommissioning cost
d.
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.
Trinity Exploration & Production plc
97
Total
$’000
249
(127)
500
622
46
203
249
2022
$’000
136
429
–
–
565
(b) Current:
Year ended 31 December 2023
Opening amount as at 1 January 2022
Payments
Additions
Closing balance at 31 December 2023
Year ended 31 December 2022
Opening amount as at 1 January 2021
Additions
Closing balance at 31 December 2022
Litigation claims
Other provisions
Litigation
claims
$’000
Other
provisions
$’000
137
(15)
–
122
46
91
137
112
(112)
500
500
–
112
112
There was a provision of $0.5 million in relation to drilling costs for the Jacobin well.
29 Trade and Other Payables
Current
Trade payables
Accruals
VAT payable
Other payables
SPT
30 Bank overdraft
Bank Overdraft
Group
Company
2023
$’000
3,154
5,747
245
2,560
1,388
2022
$’000
2,605
4,661
113
500
2,166
13,094
10,045
2023
$’000
256
422
–
–
678
31 December
2023
$’000
31 December
2022
$’000
4,000
4,000
2,700
2,700
An on-demand operating (overdraft) line of $8.0 million exists with FirstCaribbean International Bank (Trinidad & Tobago)
Limited (“CIBC”) . Details of the overdraft facility:
y
y
y
y
Description: Demand revolving credit.
Interest Rate: United States dollar prime rate minus 6.50% per annum, effective rate 7.75%. 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.
y
Covenant: Current Ratio not less than 1.25:1.
The credit limit on the facility is $8.0 million of which $4.0 million was drawn as at 31 December 2023.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
98
Notes to the Consolidated Financial Statements (continued)
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
Bayfield Energy Limited
Trinity Exploration and Production (Trinidad and Tobago) Limited
Trinity Exploration and Production Services Limited (UK) Limited
(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
Company
2023
$’000
2022
$’000
4,600
1
–
35
4.636
10,510
80
1,800
1,100
13,490
Company
2023
$’000
2022
$’000
(1,000)
(75)
(2,079)
(3,154)
–
–
(1,265)
(1,265)
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.
(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
Group
2023
$’000
857
40
196
1,093
2022
$’000
876
30
279
1,185
Trinity Exploration & Production plc
(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 Services (UK) Limited
Total intercompany receivables
(Provision for impairment) /Reversal of provision for impairment
Closing intercompany receivables (Note 20)
99
Company
2023
$’000
2022
$’000
80
15
204
4,384
4,683
(116)
4,567
40
2
122
2,652
2,816
14
2,830
Company
y
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 (2022: 0.1 million) .
Payables to related parties:
Trinity Exploration and Production Services Limited
Trinity Exploration and Production (Trinidad & Tobago) Ltd
Oilbelt Services Limited
Total intercompany payables
32 Taxation Payable
Taxation payable
PPT
UL
Company
2023
$’000
2022
$’000
14,135
1,779
136
16,050
10,683
1,779
269
12,731
2023
$’000
2022
$’000
31
12
43
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.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
100
Notes to the Consolidated Financial Statements (continued)
33 Financial Instruments by Category
At 31 December 2023 and 2022, the Group held the following financial assets at amortised cost:
Trade and other receivables – current*
Abandonment fund – non current
Intercompany
Cash and cash equivalents
Group
Company
2023
$’000
5,199
4,962
–
9,819
19,980
2022
$’000
5,165
4,511
–
12,131
21,807
2023
$’000
–
–
4,567
1,194
5,761
Note (*) : Excludes prepayments and VAT recoverable
At 31 December 2023 and 2022, the Group held the following financial liabilities at amortised cost:
Accounts payable and accruals
Intercompany
Bank overdraft
Group
Company
2023
$’000
8,901
–
4,000
12,901
2022
$’000
9,932
2023
$’000
677
–
16,050
2,700
12,632
–
16,727
2022
$’000
6
–
2,830
2,102
4,938
2022
$’000
565
12,731
–
13,296
At 31 December 2023 and 2022, the Group held no financial liabilities at fair value through profit or loss.
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)
Parent Company Guarantee:
a)
b)
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.
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.
Jacobin drilling disputed cost: There is a disputed drilling cost of $2.4 million with a supplier in relation to the
Jacobin well, where Management has included a provision for $0.5 million which it believes is appropriate based
on external advice obtained. $1.9 million is disclosed as a contingent liability.
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.
ii)
iii)
Trinity Exploration & Production plc
101
35 Employee Costs
Employee costs for the Group during the year
Wages and salaries
Other pension costs
Share based payment expense
Group
Company
2023
$’000
2022
$’000
2023
$’000
2022
$’000
8,489
467
528
9,484
7,245
425
647
8,317
432
70
41
543
483
–
107
590
Average monthly number of people
(including Executive and Non-Executive Directors’) employed by the Group
Executive and Non-Executive Directors
Administrative staff
Operational staff
36 Events after the Reporting Period
2023
number
2022
number
2023
number
2022
number
5
107
170
282
6
102
168
276
6
–
–
6
6
–
–
6
1.
2.
3.
4.
Subsequent to 31 December 2023, the Group received VAT refunds of USD 0.8 million. As at 22 May 2024, the Group
had USD 5.1 million in VAT refunds recoverable.
On 13 June 2023, Trinity announced its successful bid for the onshore Buenos Ayres block. Subsequent to
31 December 2023, the Group is awaiting finalisation of the exploration and production licence with the MEEI.
Fiscal reforms (Finance Act) – Effective 1 January 2024, SPT rates for Small Shallow Marine Area Producers were
introduced. It becomes applicable when the weighted average realised crude oil price exceeds US$75/bbl, starting
at a rate of 18% and goes up to 40% depending on the price.
A Small Shallow Marine Area Producer is defined as a person who carries out petroleum operations in shallow marine
areas under a licence, sub-licence or contract and produces less than 4,000 barrels of crude oil per day.
On 1 May 2024, the board of directors of each of Touchstone and Trinity announced that they have reached an
agreement on the terms of a recommended all share offer pursuant to which Touchstone will acquire the entire
issued and to be issued ordinary share capital of Trinity (the “Acquisition”) . The Acquisition is to be effected by
means of a scheme of arrangement under Part 26 of the Companies Act. Under the terms of the Acquisition, Trinity
Shareholders shall be entitled to receive 1.5 New Touchstone Shares. Further information on the transaction can be
found on our website at https://trinityexploration.com/.
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
102
Glossary
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
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
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
EIA
ECL
EMA
EMT
ESG
EUR
FDP
FID
FOA
FRC
FVLCD
FX
G&A
GBP or £
GHG
Group
H
Heritage
Delegation of Authority
Deferred Tax Asset
Deferred Tax Liabilities
Exposure at Default
Exploration and Evaluation
Environmental Impact Assessment
Expected Credit Loss
Environmental Management Authority
Executive Management Team
Environmental Social Governance
Estimated Ultimate Recovery
Field Development Plan
Final Investment Decision
Farmout Agreement
Financial Reporting Council
Fair Value less Costs of Disposal
Foreign Exchange
General and Administrative expenses
Great British Pound
Green House Gases
Trinity and its Subsidiaries
Half Year i.e. H1 means first half
Heritage Petroleum Company Limited
Trinity Exploration & Production plc
103
Abbreviation
Meaning
HMRC
HSSE
IP
IAS
IFRS
IFRS IC
ILFA
JOA
KPI(s)
LGD
LLP
LNG
LO
LOA
LTI
LTIP
MEEI
MM
Management
mmbbls
mmstb
mt
MWh
NOC
NOS
Her Majesty Revenue and Customs of the United Kingdom
Health, Safety, Security & Environment
Initial Production
International Accounting Standards
International Financial Reporting Standards
IFRS Interpretations Committee
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
Ministry of Energy and Energy Industries of Trinidad & Tobago
million
Board and EMT
million barrels
million stock tank barrels
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
Operating Expenses
Opex
Operating Profit
Net Cash Flow from Operating Activities
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
Production costs
Operating Profit from business operations (Operating Revenues less Operating Expenses less
SPT & PT less Exceptional items)
ORR
PD
Petrotrin
PGB
Plc
PPE
PPT
PRMS
PT
Q
RNS
RCP(s)
Overriding Royalties
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
Petroleum Profits Tax
Petroleum Resource Management System
Property Tax
Year quarter (3 months) i.e. Q1 means first quarter
Regulatory News Service
Recompletion(s)
Realised price
Actual price received per bbl. A discount is normally applied to the WTI price by Heritage to
derive the realised price received by Trinity.
ROU
SOE
SPT
Right-of-Use
Share Option Expense
Supplemental Petroleum Tax
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information 104
Glossary
Abbreviation
START Card
STOIIP
STOW
TEPUKL
TEPGL
Meaning
See Think Act Reinforce Track Card
Stock Tank Oil Initially in Place
Safe to Work
Trinity Exploration & Production (UK) Limited
Trinity Exploration and Production (Galeota) Limited
Trinity/Company/Parent
Trinity Exploration & Production plc
TOG
TPH
TSR
TTD
T&T
UK
UL
UN SDG
USA
USD or US$ or $
UWI
VAT
VIU
vs
VWAP
WTI
WO(s)
YE
Total Oil and Gas
Total Petroleum Hydrocarbons
Total Shareholder Return
Trinidad & Tobago Dollars
Trinidad & Tobago
United Kingdom
Unemployment Levy
United Nations Sustainable Development Goals
United States of America
United States Dollars
University of the West Indies
Value Added Tax
Value in Use
versus
Volume-Weighted Average Price
West Texas Intermediate – is a grade of crude oil used as a benchmark in oil pricing
Workover(s)
Year-end
Trinity Exploration & Production plc Company Information
105
Company addresses
Corporate Secretarial
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
Company Secretary
AMBA Secretaries Limited
400 Thames Valley Park Drive
Thames Valley Park
Reading RG6 1PT
Registrar
Link Group
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
Advisers
NOMAD
SPARK Advisory Partners Limited
5 St. John’s Lane
London EC1M 4BH
Broker
Cavendish Capital Markets Ltd
One Bartholomew Close
London UK
EC1A 7BL
Independent Auditors
BDO LLP
55 Baker Street
London W1U 7EU
Tax Advisers
EY LLP
4th Floor
2 Marischal Square
Broad Street,
Aberdeen AB10 1BL
Legal Advisers & Solicitors
Pinsent Masons LLP
1 Park Row
Leeds
England
LS1 5AB
Public Relations Adviser
Vigo Consulting
Sackville House
40 Piccadily
London W1J ODR
Annual Report & Financial Statements 2023Strategic ReportGovernanceFinancial AccountsGlossaryCompany Information
Printed by
london@blackandcallow.com
www.blackandcallow.com
020 3794 1720
Trinity Exploration & Production plc
c/o Pinsent Masons LLP
1 Park Row
Leeds LS1 5AB
United Kingdom
E: info@trinioil.com
www.trinityexploration.com