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Oil price 

The history books will record this as an unexciting week for the oil price which it may well be. But behind the scenes on the political front it has been far from dull. A lone sniper lying on a roof that was too steep for the FBI to climb has changed a great deal. For right or wrong the failed assassination attempt has galvanised the chances of President Trump and made the Democratic party sharpen the knives for the most powerful man in the world. It is thought that a Trump administration would be oil and gas friendly and add to that the potential VP is a climate change denier and strongly supports fossil fuel production and the domestic industry in particular.

Trinity Exploration & Production

Trinity has provided an update on operations for the three-month period ended 30 June 2024.  The information contained herein has not been audited and may be subject to further review and amendment.

Q2 2024 Operational Highlights

• Q2 2024 sales volumes averaged 2,522 bopd (Q2 2023: 2,824 bopd, Q1 2024: 2,668 bopd).
• Sales volume declined in the Period due to deferral of some well recompletion and workover activities from Q2 2024 to Q3 2024 on Onshore and East Coast assets.
• The Jacobin well was re-perforated in the Lower Forest horizon in May 2024 and is producing dry oil at a steady rate of 30 bopd.
• The Company maintains its Full-Year 2024 sales volume guidance of 2,600-2,700 bopd.

Average Annual and Quarterly Sales by Region

During Q2 2024:

• 18 workovers were completed (Q2 2023: 16; Q1 2024: 33).
• There were four recompletions in the Period (Q2 2023: one; Q4 2023: three).
• Swabbing operations continued across Onshore and West Coast assets.

Q2 2024 Financial Highlights

The Group reports its consolidated financial information annually and half yearly, in its Annual Report & Accounts and Interim Results, in accordance with UK adopted International Accounting Standards and the London Stock Exchange’s AIM Rules for Companies.  Quarterly, the Group provides unaudited information for guidance.

• Average realised oil price of USD 73.2/bbl for Q2 2024 (Q2 2023: USD 63.7/bbl; Q1 2024: USD 69.9/bbl).
• Cash balance of USD 8.0 million (unaudited) at 30 June 2024 versus USD 8.6 million (unaudited) at 31 March 2024 and USD 11.3 million (unaudited) at 30 June 2023.
• The Group had drawn borrowings (overdraft) of USD 3.0 million at 30 June 2024 (USD 4.0 million at 31 March 2024 and USD 2.0 million at 30 June 2023).

I am providing this primarily as a record as it will likely be the last report from Trinity as an independent company with the court case scheduled for 31/7/24. After that Touchstone will get its hands on the portfolio and will have the ability to take advantage of the synergies across the board.

This final update is as unexciting as its previous few quarters with its slow production decline and is ‘due to deferral of some well recompletion and workover activities from Q2 2024 to Q3 2024 on Onshore and East Coast assets’ which exhibits a lack of  drive although it keeps guidance at 2,600-2,700 bopd. Jacobin’s 30 yes 30 bopd after reperforating, what might it have been before that one wonders?

But Touchstone will benefit from greater economies of scale and more importantly recurring annual cost synergies which they believe will be ‘significant’ which also tells you something about the cost base and the combined beast will be leaner and fitter on a pro forma combined basis. So farewell Trinity, I had hoped some time ago that it would stay independent but that wasn’t to be. 

Recommended All Share Offer for Trinity by Touchstone Exploration Inc

On 1 May 2024, the board of directors of each of Trinity and Touchstone announced that they had 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 2006 (the “Scheme”).

On 24 June 2024, Trinity announced that at the Court Meeting and General Meeting the requisite majorities of Scheme Shareholders voted in favour of the Scheme at the Court Meeting; and the requisite majority of Trinity Shareholders voted in favour of the Resolution at the General Meeting to give effect to the Scheme by, among other things, amending the articles of association of Trinity.

On 28 June 2024, Trinity and Touchstone announced that all Regulatory and Antitrust Conditions, as set out in Part A of Part Three of the Scheme Document, had been satisfied.

The Acquisition remains subject to the satisfaction or waiver (where capable of being waived) of the remaining Conditions to the Acquisition as set out in Part Three of the Scheme Document, including the Court’s sanction of the Scheme at the Court Hearing and the delivery of a copy of the Court Order to the Registrar of Companies.

The Court Hearing is currently scheduled for 31 July 2024, and Trinity will inform Shareholders of any changes to the date and time, by issuing an announcement through a Regulatory Information Service.  The Scheme is expected to become Effective on 1 August 2024.

Sound Energy

Sound Energy, the transition energy company, is pleased, further to the update provided by the Company on 30 April 2024 and the continued discussions with Morocco’s L’Office National des Hydrocarbures et des Mines, to provide a further update regarding further amendments to the Company’s exploration permits at Anoual, and entry into the optional Complementary Period under the exploration permits at Anoual.

The Anoual exploration permits cover 8,873 square kilometres in Eastern Morocco.

The Additional Amendments and entry into the Complementary Period remain subject to Moroccan Energy and Finance Ministerial approval.

Anoual Exploration Permits

The Company is pleased to report that ONHYM has now agreed, in place of the 18-month extension previously announced by the Company, on a longer 24-month extension to the initial period of the Anoual Exploration Permits, due to Force Majeure, ending on or about 7 January 2025.

Subject to Ministerial approval, the length of the Anoual Initial Period will therefore now be 7 years and 4 months, commencing on or about 8 September 2017 and ending on or about 7 January 2025. The amended work programme commitments for the Initial Period remain as announced on 30 April 2024 and have historically been fully satisfied.

In addition, in reflecting the extension to the Initial Period and subject to Ministerial approval, ONHYM has also agreed an extension to the expiry of the Anoual Complementary Period (of the existing 3 years and 8 months) is to conclude on or about 7 September 2028.

As a result of ONHYM’s agreement to the further extension to the Initial Period and the extension to the conclusion of the Anoual Complementary Period, the Company confirms that it intends to progress the application to enter the Anoual Complementary Period on these revised terms.

Subject to Ministerial approval, the Anoual Exploration Permits now therefore have a total duration of 11 years and the remaining work commitments under the Anoual Exploration Permits, being the work commitment under the Anoual Complementary Period remain as announced by the Company on 30 April 2024.

The Company plans to fulfil the firm commitment for the Anoual Complementary Period with the drilling of the M5 exploration well detailed in the Company’s announcement of 9 August 2022.

John Argent, Sound Energy’s VP Geoscience, commented:
“Once again we thank our partner ONHYM and greatly appreciate their support and, as partners, we await the necessary Ministerial approvals allowing us to progress with the drilling of the M5 prospect.  This is an opportunity to discover a much thicker TAGI reservoir section, across a very large structure in the centre of the Tendrara Basin, with the prize of unlocking significant potential gas volumes.  We look forward to updating our stakeholders with the timing of these exciting drilling plans.”

Sound are reporting that the extended dates proposed will help the potential upside and in particular as Chairman Graham Lyon said to me recently, gives Sound the chance to drill the highly exciting M5 prospect. Accordingly they have confirmed that they will  progress the application to enter the Anoual Complementary Period on these revised terms.

KeyFacts Energy Industry Directory: Malcy's Blog