A mere two years af­ter its for­ma­tion, Her­itage Pe­tro­le­um Com­pa­ny Lim­it­ed (Her­itage) ap­pears to be emerg­ing as the coun­try’s most prof­itable state en­ter­prise.

The com­pa­ny de­liv­ered strong re­sults for the first six months of the cur­rent fis­cal year, yield­ing rev­enue of $2.8 bil­lion which ac­cord­ing to its Chair­man Michael Quam­i­na builds on the re­cent­ly re­port­ed ‘re­mark­able per­for­mance’ for fis­cal 2020.

Quam­i­na not­ed that as the world econ­o­my slow­ly re­sumes its eco­nom­ic ac­tiv­i­ty, In­ter­na­tion­al Brent pric­ing av­er­aged $53 per bar­rel as com­pared to $57 per bar­rel for the cor­re­spond­ing pe­ri­od in 2020. (Brent is an in­ter­na­tion­al mark­er for main­ly Eu­ro­pean Crude)De­spite this low­er price en­vi­ron­ment, Her­itage’s prof­it for the pe­ri­od im­proved to $0.8 bil­lion, com­pared to $0.7 bil­lion for the same pe­ri­od in 2020 as a re­sult of a fo­cus on cost man­age­ment in a volatile price en­vi­ron­ment.

Her­itage re­placed the for­mer Petrotrin af­ter the com­pa­ny was shut down by the then Board of Wil­fred Es­pinet and Her­itage launched in its stead.

The clo­sure of Petrotrin meant that Es­pinet’s Board was able to start a brand new com­pa­ny with all the ex­plo­ration and pro­duc­tion as­sets of the for­mer Pa­trotrin, with­out its debt nor large staff and high salaries. In short they cre­at­ed a far more nim­ble and cost ef­fec­tive or­gan­i­sa­tion.

Her­itage’s pro­ject­ed per­for­mance was used to al­low for the re­fi­nanc­ing of Petrotrin’s bonds with the cash from Her­itage be­ing used to meet the for­mer Petrotrin’s fi­nan­cial com­mit­ments.

In its fi­nan­cial re­port for the first half of 2021 Her­itage re­vealed that cash gen­er­a­tion re­mained re­silient and $1.2 bil­lion was gen­er­at­ed for the pe­ri­od re­sult­ing in a cash bal­ance of $1.5 bil­lion.

Her­itage’s con­tri­bu­tions to the Gov­ern­ment through its pay­ment of tax­es, levies and roy­al­ties amount­ed to $372 mil­lion for the six-month pe­ri­od. The Com­pa­ny al­so con­tin­ues to meet all of the Trinidad Pe­tro­le­um Hold­ings Lim­it­ed (TPHL) Group’s debt pay­ment oblig­a­tions in­her­it­ed from Petrotrin.

Quam­i­na’s re­port al­so point­ed to the com­pa­ny’s strat­e­gy of in­creas­ing its crude oil pro­duc­tion.

He said, “ Pro­duc­tion growth is key to the suc­cess of Her­itage. Her­itage’s role is man­ag­ing our as­sets and re­sources by op­ti­mis­ing re­serves and pro­duc­tion. The strat­e­gy for its ma­ture fields re­volves around pro­duc­tion op­ti­mi­sa­tion by in­fill drilling and workovers, field re­vi­tal­i­sa­tion, steam flood­ing and gas re-in­jec­tion- based en­hanced oil re­cov­ery.”

Quam­i­na said pro­gres­sion of con­tin­gent re­sources through out­step de­vel­op­ment, and ex­plo­ration is al­so a key el­e­ment of this strat­e­gy. With the ex­e­cu­tion of this ap­proach, Her­itage has suc­ceed­ed in ar­rest­ing the de­cline in its pro­duc­tion and re­serves.

He added ; “Key strate­gic part­ner­ships are be­ing de­vel­oped via Lease Op­er­a­tor­ships, Farm Outs and Joint Ven­tures. These are be­ing pro­gressed to ex­plore and de­vel­op key re­sources in the South­ern basin oil play which in­cludes the Sol­da­do and Ju­bilee off­shore fields, and in the deep­er hori­zons on land.”

Her­itage and EOG re­cent­ly em­barked on a Joint Op­er­at­ing Agree­ment which in­volves EOG farm­ing-in by drilling one and pos­si­bly of adding an­oth­er ex­plo­ration well in the off­shore Trinidad North­ern Area (TNA.) This the Her­itage Chair­man not­ed is the first of sev­er­al new part­ner­ships be­ing pur­sued.

Ac­cord­ing to Quam­i­na, Her­itage con­tin­ues to pur­sue pru­dent in­vest­ment to max­imise re­turns and in­crease op­er­at­ing ef­fi­cien­cy. This is part of our over­all strat­e­gy to op­ti­mise the ex­ploita­tion of its as­sets by ex­e­cut­ing high val­ue projects at the low­est sus­tain­able cost.

In a de­tailed Chair­man’s re­port Quam­i­na said Her­itage, as the state-owned ex­plo­ration and pro­duc­tion com­pa­ny, is ded­i­cat­ed to sup­port­ing the coun­try’s com­mit­ment to the Paris Agree­ment and the UN’s Sus­tain­able De­vel­op­ment Goals on cli­mate change as part of T&T’s En­vi­ron­ment, So­cial and Gov­er­nance (ESG) strate­gic agen­da.

“In March 2021, Her­itage suc­cess­ful­ly com­plet­ed its sec­ond An­nu­al Green­house Gas (GHG) In­ven­to­ry for the re­port­ing pe­ri­od Jan­u­ary 2020 to De­cem­ber 2020 and its first Emis­sions Re­duc­tion As­sess­ment Re­port. The Emis­sions Re­duc­tion As­sess­ment has out­lined sev­er­al mid-term and long-term GHG re­duc­tion op­por­tu­ni­ties. Her­itage has as­signed a cross-func­tion­al team to de­liv­er GHG Re­port­ing and Man­age­ment and is pro­gress­ing fur­ther projects to em­bed sus­tain­abil­i­ty process­es through­out the busi­ness.”

He re­vealed that Her­itage has al­so par­tic­i­pat­ed in the Min­istry of Plan­ning and De­vel­op­ment and the En­vi­ron­men­tal Man­age­ment Au­thor­i­ty’s Na­tion­al Cli­mate Mit­i­ga­tion Mon­i­tor­ing, Re­port­ing and Ver­i­fi­ca­tion (MRV) Sys­tem. As part of its com­mit­ment to its ESG agen­da, Her­itage sub­mit­ted its GHG emis­sions da­ta for the year 2019 via the MRV Sys­tem.

He added that as part of Her­itage’s En­vi­ron­men­tal Agen­da, a grant of $1.5 mil­lion in spon­sor­ship was al­so giv­en to the Pointe-à-Pierre Wild Fowl Trust. The Trust is ded­i­cat­ed to en­vi­ron­men­tal ed­u­ca­tion and the con­ser­va­tion of wet­lands and wa­ter­fowl.

“The chal­lenges of the COVID-19 pan­dem­ic com­pelled the Com­pa­ny to dis­trib­ute thou­sands of ham­pers to vul­ner­a­ble fam­i­lies with­in its com­mu­ni­ties. In the spir­it of vol­un­teerism, which thrives at Her­itage, mem­bers of staff al­so per­son­al­ly do­nat­ed ap­prox­i­mate­ly$250,000 of their own mon­ey to pur­chase ad­di­tion­al food ham­pers for the com­mu­ni­ty in sup­port of the Com­pa­ny’s ef­forts.

Her­itage has al­so do­nat­ed over 500 com­put­ers to stu­dents to fa­cil­i­tate on­line learn­ing in re­sponse to COVID-19 pro­to­cols that were put in place to pro­tect our na­tion’s stu­dents. Spon­sor­ships and do­na­tions to or­gan­i­sa­tions such as the Coali­tion Against Do­mes­tic Vi­o­lence al­so re­flect the Com­pa­ny’s com­mit­ment to pro­gres­sive and sus­tain­able so­cial in­ter­ven­tions.” Quam­i­na end­ed.

Last week rat­ing agency S&P Glob­al Rat­ings its view on Trinidad Pe­tro­le­um Hold­ing Ltd was not af­fect­ed by its out­look for the wider T&T.S&P said “Our rat­ing on TPHL con­tin­ue to re­flect our view that there’s a very high like­li­hood of time­ly and suf­fi­cient ex­tra­or­di­nary sup­port to the com­pa­ny from its own­er, T&T, in the event of fi­nan­cial dis­tress. This is be­cause TPHL holds a very im­por­tant role in the coun­try’s en­er­gy and in­fra­struc­ture pol­i­cy and a very strong link giv­en it’s ful­ly-owned by T&T.”

S&P con­tin­ued, “ There­fore, rat­ings on TPHL con­tin­ue to ben­e­fit from a four-notch up­lift over its ‘b-’ stand-alone cred­it pro­file (SACP). The neg­a­tive out­look re­flects our view that TPHL will re­main high­ly lever­aged with ad­just­ed debt to EBIT­DA above 5x for the next 12-18 months. This, while the com­pa­ny com­pletes the di­vest­ment of Petrotrin’s non-core as­sets and re­duces short-term debt pres­sures, which al­so con­tin­ue to im­pair its liq­uid­i­ty po­si­tion.”

The agency said it could low­er the rat­ings on the com­pa­ny “in the next 12-24 months if we low­er the long-term lo­cal cur­ren­cy rat­ing on the sov­er­eign, and/or if we con­clude that TPHL’s lever­age met­rics weak­en to the ex­tent that the com­pa­ny’s cap­i­tal struc­ture is un­sus­tain­able or its liq­uid­i­ty po­si­tion weak­ens be­yond our ex­pec­ta­tions.”