Her­itage Pe­tro­le­um, the com­pa­ny that ac­quired the ex­plo­ration and pro­duc­tion as­sets of the failed Petrotrin, has made an af­ter-tax prof­it for the first four months of its op­er­a­tions of ap­prox­i­mate­ly $565 mil­lion.

In its pitch to in­vestors, the com­pa­ny not­ed that it has been prof­itable up to March 2019, al­though in De­cem­ber 2018, the first month of its op­er­a­tions, it lost $25 mil­lion.

In­vestors were told that ac­cord­ing to unau­dit­ed fig­ures, last month alone the com­pa­ny made an af­ter-tax prof­it of $222 mil­lion.

The fig­ures did not in­clude a break­down of the tax­es that were paid, and there­fore one can­not be cer­tain if all the tax­es owed to the Gov­ern­ment were paid, in­clud­ing Sup­ple­men­tal Pe­tro­le­um Tax­es(SPT) and Pe­tro­le­um Prof­its Tax (PPT).

Last week, Fi­nance Min­is­ter Colm Im­bert told a news con­fer­ence that Her­itage was ex­pect­ed to make its first roy­al­ty pay­ment to the Gov­ern­ment soon and the com­pa­ny’s Chief Ex­ec­u­tive Of­fi­cer Mike Wylie told in­vestors that Her­itage was ex­pect­ed to pro­vide 8.7 per cent of Gov­ern­ment rev­enue.

Wylie said with suf­fi­cient in­vest­ment and prop­er man­age­ment the com­pa­ny will be able to gen­er­ate cash flow to cov­er its bills and re­pay the debt that its lega­cy com­pa­ny Petrotrin was ow­ing.

He posit­ed that Her­itage has sig­nif­i­cant re­serves and pro­duc­tion, with sig­nif­i­cant up­side po­ten­tial.

“As of Sep­tem­ber 30, 2018, lega­cy Petrotrin had 223 mil­lion bar­rels of oil equiv­a­lent in proved and prob­a­ble oil and gas re­serves (2P) this is bro­ken down in­to 143.7 mil­lion bar­rels of oil equiv­a­lent in proved re­serves of which 110.9 boo/e is de­vel­oped and pro­duc­ing and 15.7 mil­lion are de­vel­oped non pro­duc­ing while 17.1 mil­lion bar­rels are un­de­vel­oped,” Wylie re­port­ed to in­vestors.

He said based on to­day’s prices and with a dis­count­ed rate of 10 per cent, it is es­ti­mat­ed that the proven re­serves of Her­itage are val­ued at US$1.6 bil­lion while the proved and prob­a­ble re­serves com­bined are worth US$2.3 bil­lion.

Wylie ar­gued that this coun­try’s low rates of re­cov­ery are way be­low in­dus­try stan­dard and over the years this has left hun­dreds of mil­lions of bar­rels of valu­able crude in the ground.

“Based on our es­ti­mates Her­itage ex­ist­ing land as­sets we have over 4 bil­lion bar­rels of re­main­ing oil in place. With av­er­age re­cov­ery rates to­day of 20 per cent, we be­lieve these as­sets en­joy sig­nif­i­cant up­side po­ten­tial that can be tapped by cor­rect­ing in­ef­fi­cien­cy in the de­vel­op­ment and pro­duc­tion,” the Her­itage Pe­tro­le­um CEO re­vealed.

Wylie said the com­pa­ny had ma­ture and high­ly-pre­dictable as­sets that will al­low it to de­vel­op more re­serves with the rel­a­tive­ly low cap­i­tal re­quire­ment.

He said al­ready the com­pa­ny had tak­en ma­jor steps to im­prove its ef­fi­cien­cy and was ex­pect­ing to op­er­ate with a quar­ter of the staff that Petrotrin had in its E&P op­er­a­tions.

He al­so said Her­itage will Im­ple­ment glob­al best prac­tices to en­sure it achieves its goal as a ma­ture field, low-cost pro­duc­er.

In its pre­sen­ta­tion to in­vestors, the com­pa­ny’s CEO point­ed to a num­ber of mea­sures that he felt will quick­ly boost pro­duc­tion and re­serves.

Wylie said there was a need for greater field de­ple­tion plan­ning on the part of Her­itage, which he es­ti­mates will lead to the bet­ter use of mon­ey and the abil­i­ty to re­cov­er more oil and gas.

He said: “We be­lieve that field de­ple­tion plan­ning will re­sult in both an in­crease in cap­i­tal ef­fi­cien­cy and re­source re­cov­ery.”

With re­spect to work over pro­grammes, Wylie is promis­ing an in­crease which he ex­pects will im­prove pro­duc­tion rates by 10 to 20 per cent by re­duc­ing scant and clean­ing out well bores on pre­vi­ous­ly iden­ti­fied high op­por­tu­ni­ty wells.

This should lead to more ac­tiv­i­ty in the south of the coun­try which has been hit hard by the clo­sure of Petrotrin.

Wylie in­di­cat­ed that re­cov­ery rates in oth­er ju­ris­dic­tions have been as high as be­tween 40 and 60 per cent when com­pared with the low of 20 per cent in T&T. With this in mind, the Her­itage CEO told in­vestors the pro­duc­tion po­ten­tial was sig­nif­i­cant.

“Through state of the art tech­nolo­gies, we be­lieve we can im­prove the yield.

“Her­itage will ap­ply a num­ber of tech­nolo­gies to en­hance yield, along with a more-dis­ci­plined cap­i­tal al­lo­ca­tion to fur­ther en­hance pro­duc­tion,” Wi­ley promised.

He said 3D seis­mic will be­come the norm and he ex­pect­ed it will help op­ti­mise in­fill drilling pro­grammes to max­imise re­cov­er­ies and in­crease re­cov­er­able re­serves. It will al­so re­duce risk in ex­plo­ration and de­vel­op­ment drilling.

En­hanced oil re­cov­ery is al­so part of the strat­e­gy with the use of wa­ter flood­ing. He es­ti­mat­ed that can in­crease re­serves by about 100 mil­lion bar­rels and re­cov­ery fac­tors by up to 35 per cent. Wa­ter flood­ing will be pri­mar­i­ly used in what used to be the Trin­mar as­set.

On the land fields, Her­itage plans to use steam in­jec­tion or wa­ter and chem­i­cal flood­ing. This Wylie ex­pects would in­crease re­serves by be­tween 800 mil­lion bar­rels and 1.6 bil­lion bar­rels. To in­crease flow rates Wylie said hor­i­zon­tal drilling will be done on land.

Wi­ley re­vealed that last year’s earth­quake had dam­aged some of the fa­cil­i­ties off­shore and the com­pa­ny is de­fer­ring ap­prox­i­mate­ly 2300 bar­rels of oil per day but that work is on the way to bring back up that pro­duc­tion.

He al­so called for the use of best prac­tice in pro­cure­ment, in­clud­ing the use of in­ter­na­tion­al ten­ders and max­imis­ing the sale of its in­ven­to­ry, which he felt will im­prove.

One of the changes Wylie wants to see is a low­er lev­el on in­ven­to­ry which he felt would free up work­ing cap­i­tal. The in­ven­to­ry of 1.6 mil­lion bar­rels he felt was too high.

To re­duce debt and short term bor­row­ing, Wylie said Trinidad Pe­tro­le­um Hold­ings Lim­it­ed may sell sev­er­al as­sets, in­clud­ing de­vel­oped and un­de­vel­oped land, sports club, a golf course, and a hos­pi­tal.