Her­itage Pe­tro­le­um, the com­pa­ny formed by Gov­ern­ment to op­er­ate what was once Petrotrin’s ex­plo­ration and pro­duc­tion as­sets, has been prof­itable in the five months it has been op­er­at­ing.

In an in­ter­view with Guardian Me­dia Lim­it­ed’s Lead Ed­i­tor – Busi­ness, Cur­tis Williams, the com­pa­ny’s re­cent­ly ap­point­ed Chief Ex­ec­u­tive Of­fi­cer Mike Wi­ley re­veals that there is sig­nif­i­cant in­ter­est in part­ner­ing with the com­pa­ny from large and small com­pa­nies op­er­at­ing in T&T.

Q: Has Her­itage Pe­tro­le­um sub­mit­ted its pro­duc­tion fig­ures to the Min­istry of En­er­gy for the months of Jan­u­ary to March 2019? If not, why not?

A: Yes, we’ve sub­mit­ted pro­duc­tion fig­ures for Jan­u­ary, Feb­ru­ary and March 2019.

Dur­ing the first six months of the op­er­a­tion of Her­itage Pe­tro­le­um, has its pro­duc­tion de­clined? If so by how much?

Her­itage has ac­tu­al­ly on­ly been op­er­at­ing for five months; we be­gan op­er­a­tions on De­cem­ber 1, 2018, and our av­er­age month­ly pro­duc­tion has steadi­ly in­creased since De­cem­ber 2018/Jan­u­ary 2019 lows.

What is to be done to re­turn pro­duc­tion to the lev­el it was at, just pri­or to the clo­sure of Petrotrin?

Petrotrin’s pro­duc­tion fig­ures were de­pressed pri­or to clo­sure in No­vem­ber 2018; the com­pa­ny had not made any sig­nif­i­cant in­vest­ment in E&P dur­ing the course of the year.

We are in the process of com­menc­ing work-over ac­tiv­i­ty to off­set the nat­ur­al de­cline and the many me­chan­i­cal fail­ures that had a neg­a­tive im­pact on pro­duc­tion dur­ing the fi­nal months of Petrotrin.

Her­itage cur­rent­ly has 12 work-over rigs run­ning on our land as­sets, and we plan to reach a to­tal of 23 rigs. Our off­shore work-over pro­grammes will be­gin with­in the next cou­ple months. Ad­di­tion­al­ly, re­pairs are un­der­way to dam­aged pro­duc­tion equip­ment caused by the Au­gust 2018 earth­quake.

Can we ex­pect a sig­nif­i­cant in­crease in ac­tiv­i­ty on land dur­ing the rest of the year?

Yes, as I said be­fore, we ex­pect an in­crease in work-over ac­tiv­i­ty with some land-based drilling. Ad­di­tion­al ac­tiv­i­ty will con­sist pri­mar­i­ly of as­set in­tegri­ty and sys­tems im­prove­ments, as we work to im­prove the re­li­a­bil­i­ty of aged as­sets. We’re al­so ad­dress­ing as­set se­cu­ri­ty is­sues to elim­i­nate lo­calised theft that dis­rupts pro­duc­tion, threat­ens peo­ple’s safe­ty, and leads to un­nec­es­sary ex­pense.

The head of ex­plo­ration at Her­itage in­di­cat­ed at a re­cent meet­ing of the En­er­gy Cham­ber that there were great prospects which the new seis­mic has iden­ti­fied. Is this cor­rect and does Her­itage have a plan to de­vel­op these re­sources?

That was ac­tu­al­ly our Off­shore Leader, not the ‘head of ex­plo­ration…’ We do be­lieve there is sig­nif­i­cant up­side to our off­shore as­sets. It is ex­pect­ed that the com­bi­na­tion of ex­ist­ing seis­mic, the po­ten­tial of new OBN (Ocean Bot­tom Node) seis­mic tech­nol­o­gy, and a fresh per­spec­tive on our ge­o­log­i­cal un­der­stand­ing will un­lock new op­por­tu­ni­ties off­shore.

Off­shore ex­plo­ration is a high risk, high cost propo­si­tion. We will ex­plore op­por­tu­ni­ties for tech­nol­o­gy and cap­i­tal part­ner­ships to de-risk these re­sources. Her­itage has a bright fu­ture with good as­sets, but there are in­tegri­ty is­sues that need in­vest­ment and we need the right tech­nol­o­gy for us to catch up and be­come com­pet­i­tive.

Does Her­itage see it­self hav­ing to find a part­ner or do joint ven­tures in an ef­fort to de­vel­op some of these re­sources or is it that the com­pa­ny may of­fer an eq­ui­ty stake in the en­tire op­er­a­tions?

Her­itage will be pri­mar­i­ly seek­ing part­ner­ships oth­er than clas­sic joint ven­ture arrange­ments—our fo­cus is ob­tain­ing the max­i­mum val­ue for the as­sets. The em­pha­sis will be on un­der­stand­ing the as­set, ac­cess­ing the tech­nol­o­gy re­quired and the cap­i­tal in­vest­ment need­ed to yield the max­i­mum val­ue.

Is there in­ter­est from any of the ma­jors al­ready op­er­at­ing in Trinidad and To­ba­go or the re­gion to part­ner with Her­itage to de­vel­op those re­sources?

There is sig­nif­i­cant in­ter­est by part­ners here in T&T—both from the large and small E&P op­er­a­tors. The as­set un­der­stand­ing will help to de­ter­mine the right part­ner or as­so­ci­a­tions that best fit the as­set’s tech­nol­o­gy and cap­i­tal needs. The large po­ten­tial/high cost de­vel­op­ments will re­quire part­ner­ships; while medi­um size/cost ac­tiv­i­ty will po­ten­tial­ly be de­vel­oped in-house, and the small­er fields/projects would be passed to small­er lo­cal com­pa­nies—there’s op­por­tu­ni­ty across the val­ue chain for every­one to par­tic­i­pate.

Is EOR (En­hance Oil Re­cov­ery) part of your strat­e­gy go­ing for­ward and if yes what will be the time frame?

EOR, is the process of re­cov­er­ing oil not al­ready ex­tract­ed from an oil reser­voir. To an­swer your ques­tion di­rect­ly, yes, EOR is a sig­nif­i­cant fac­tor in Her­itage’s strat­e­gy mov­ing for­ward. Her­itage is fo­cused on im­prov­ing cur­rent EOR op­er­a­tions and in­creas­ing op­er­a­tional scale to steam flood­ing EOR tech­nique in ad­di­tion to work­ing with part­ners on a CO2 in­jec­tion EOR project.

Has Her­itage been op­er­a­tional­ly prof­itable?

Yes, Her­itage has been op­er­a­tional­ly prof­itable. We were set up to be sus­tain­ably prof­itable, and while we have a lot of clean­ing up to do, we have main­tained our fo­cus on be­ing a safe, lean, fi­nan­cial­ly ef­fi­cient and per­for­mance-dri­ven com­pa­ny. It is very un­usu­al for a com­pa­ny that’s just four or five months old to record a prof­it (al­beit a small one), but it’s tes­ti­mo­ny to the fact that if you can fo­cus on where your in­ef­fi­cien­cies are and, at the same time, plan for the longer term and man­age to record a pos­i­tive op­er­at­ing mar­gin, that’s a clear in­di­ca­tor that you have a vi­able busi­ness.

Is the free cash flow from Her­itage ex­pect­ed to pay the debt for the re­fin­ery; and how does this im­pact work­ing cap­i­tal?

Trinidad Pe­tro­le­um Hold­ings Com­pa­ny Ltd (TPHL), the par­ent com­pa­ny of the four sub­sidiary com­pa­nies (in­clu­sive of Her­itage) has fac­tored all com­mit­ments in­to the over­all cash needs go­ing for­ward. Debt re­pay­ment is not in­signif­i­cant, and it has been fac­tored in­to our over­all fi­nan­cial mod­el, which in­cor­po­rates our work­ing cap­i­tal, rev­enue pro­jec­tions and debt.

When are the first half-year ac­counts ex­pect­ed to be pub­lished?

TPHL is cur­rent­ly re­view­ing its fi­nan­cial re­sults and ex­pects to pub­lish its in­ter­im au­dit­ed re­sults by end May 2019.