Trinity E&P sells West Coast assets to Range
- Business & Finance
Oil and gas company Trinity Exploration & Production has entered into an agreement to sell its West Coast assets, offshore Trinidad & Tobago, to AIM-quoted Range Resources for $4.55 million.
Together, the West Coast assets constitute all of Trinity’s West Coast license portfolio, which includes the Brighton Marine and the Point Ligoure – Guapo Bay – Brighton Marine Exploration and Production Licenses and related fixed assets.
Range said on Friday it will fund the acquisition from the existing cash resources and it will be the operator of both blocks. The combined current production of these is approximately 200 bopd. With this acquisition, Range is increasing its current production in Trinidad by approximately 33% to over 800 bopd.
As a rationale for the transaction, Trinity stated the transaction supports its strategy to grow reserves, production and cash flow from its core onshore and offshore East Coast assets where the bulk of current reserves and production reside.
“Whilst there is significant remaining potential across the West Coast assets, the Directors believe that this is best extracted by an operator with the resources required to continue to invest in these assets,” Trinity explained.
Bruce Dingwall, CBE, Executive Chairman of Trinity, commented: “Trinity’s West Coast portfolio played a significant role in the early evolution of the company. However, greater shareholder value can now be delivered by focusing our financial and management resources on driving forward a focused onshore and offshore portfolio with a robust reserve base, substantial production growth opportunities and significant further resource potential.”
Commenting on the acquisition Range Chairman, Kerry Gu, said: “Expansion of our existing portfolio of producing assets in Trinidad will not only provide additional production, cashflows, reserves, drill targets and enhanced oil recovery potential, but it is also expected to result in further improvements to the cost structure across our Trinidad business.
“We see significant potential within the West Coast assets to grow production and believe that these assets are highly complementary to our existing portfolio.”
The assets are located in shallow water, offshore West coast Trinidad, a proven hydrocarbon basin with a world-class source rock. The two producing properties cover an aggregate 8,500 hectares (prior to a 50% acreage surrender on PGB which is awaiting Ministry approval).
In aggregate, the West Coast assets produced at an average net rate of 190 bopd for the twelve months to December 31, 2016, contain management estimate 2P reserves of 2.6 mmbbls and contingent resources of 0.52 mmbbls.
The BM field has been in production since the 1950’s with over 60 mmbbls produced to date. The field is operated primarily via 9 unmanned, offshore platforms with all oil handling and sales infrastructure in place onshore. The current PGB license was awarded to Trinity in 2012 but similarly to BM, the field overall has a long history of production prior to that date from the previous Pt.Ligoure license.
The current combined production of the West Coast assets is approximately 200 bopd with last reported 2P reserves of 2.6 mmbbls. Following the acquisition, Range currently intends to carry out two well workovers on the BM field, which has the potential to increase production by over 100 bopd.
Longer-term production growth could be achieved from continued workovers, infrastructure works, infill drilling and a greenfield development program. Furthermore, Range said there are potential opportunities from enhanced oil recovery which may be considered in the future to increase production and reserves. At PGB, there is also a heavy oil opportunity which has been previously tested at over 300 bopd of production.
According to Range, there are further opportunities that comprise exploration prospects from the prolific Forest and Manzanilla reservoirs. Exploration potential in the area has been evidenced by Petrotrin’s Jubilee field discovery in 2012, South East of Cluster 6-ALM 22 well, contiguous to the PGB license area.
One of the key terms of the sale and purchase agreement includes transfer of 12 employees from Trinity who currently operate the West Coast assets to Range. Completion of the acquisition is conditional upon a waiver of pre-emption rights by Petrotrin and receipt of all necessary regulatory approvals from Petrotrin and the Ministry of Energy and Energy Industries of Trinidad and Tobago (MEEI).
Range currently anticipates that completion of the transaction will occur during 4Q 2017.