Declining oil prices has impacted on the operations of one of the independent companies operating in the local energy sector. Trinity has laid off 23 employees and in a statement the company said the move was necessary to ensure it can survive in a low oil price environment.
The move comes just days after Joel "Monty" Pemberton, CEO of Trinity, commenting on the company's half-year financial results, said that the "current oil price environment and country specific fiscal regime has been difficult for companies in Trinidad to weather."
He noted, however, that with oil prices below US$50 a barrel, Trinity does not pay supplemental petroleum taxes (SPT). Pemberton said the company welcomes recent indications by Energy Minister Kevin Ramnarine that the price under which SPT becomes zero per cent may be raised to as high as US$80 a barrel.
"In conjunction with an inventory of works this provides Trinity with a portfolio of highly attractive, producing assets with good visibility on the upside potential which could be delivered when new capital can be redeployed," he said.
"We have continued a programme of cost-cutting, reducing G&A by 45 per cent year-on-year. However, in spite of these actions Trinity is unable to develop and capitalise on its portfolio organically and hence on April 8 announced a strategic review and formal sales process. This process has led to detailed discussions with a number of interested parties and we are encouraged by the progress made to date."
For the second quarter, Trinity's net production averaged 2,939 barrels of oil per day (boepd), an average of 3,085 boepd for the first half of 2015.
The company's ability to fund re-investment from internally-generated cash flow has been impacted by further weakness in the oil price. With no further capital investment beyond maintenance spend in 2015, full year average production is expected to be between 2,700�3,000 boepd.
The company's statement noted an inventory of drilling locations, recompletions and workovers that could significantly enhance production levels on the deployment of capital.
"Decline rates within Trinity's portfolio are typically relatively low, the main issue is the level of drilling, investment and pump control, with decline rates heavily influenced by pump reliability which is a core area of focus for Trinity," the company said.
The report continued: "Whilst revenues were adversely affected from low oil prices during the first half of 2015, with an average West Texas Intermediate (WTI) realised price of US$49.5/bbl, the impact at an operating level was somewhat negated due to the SPT structure which is charged against top-line revenues. At WTI oil prices below US$50.0/bbl no SPT is payable.
The company's capital spending for the year is still on track to be in the range of US$2.5 million and will be focused on minimising declines in base production levels and maintaining operations.
The aim is to protect all of the company's assets, while maintaining its future development programme and ensuring positive operational cashflow at low oil prices.