The Oil Man: Trinity Exploration, Range Resources
11th August 2017 12:19
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WTI $48.59 -97c, Brent $51.90 -80c, Diff -$3.31 +17c, NG $2.98 +10c
Rather than reacting on the upside to the geopolitical concerns over North Korea, the oil price followed world markets down yesterday and again this morning by about another 50 cents.
Things were not helped by a spokesman at saying that he considers that it would be "economically feasible" to resume production from mature fields when the OPEC/Non-OPEC deal expires. The naivety of such economic interpretation requires some questioning, but I suspect working in a vacuum answers most of it.
Trinity Exploration & Production
has announced the sale of its West Coast, Trinidad portfolio to for $4.55 million (£3.5 million) in cash. (See below for RRL comment) The assets in question are, Brighton Marine (100%) and Point Ligoure-Guapo Bay- Brighton Marine (70%) and make up all of TRIN's West Coast assets and all of the related fixed assets.
This makes sense for both companies who can extract value in different ways. The assets are non-core to Trinity who are concentrating on the onshore and East Coast assets in their portfolio, where the bulk of their current reserves and production reside. In addition, the West Coast economics were higher on a cost per barrel basis than on the East Coast.
The deal crystallises significant value to the company and the realisation is higher than it has in the non-core asset sales budget, to the tune of around $1 million.
It also strengthens the balance sheet and the working capital position and enhances the portfolio economics going forward.
Without the West Coast, the company will be able to focus financial and human resources on the core growth opportunities it has selected onshore, and on the East Coast with management and technical teams aligned.
Trinity has always made it clear that the West Coast has been non-core so this is no surprise given that they were not prioritised. They are a bunch of high quality assets that the buyer will be able to benefit from with its ability to invest in the projects. This is a further step forward for TRIN who, as I said earlier in the week, are firing on all cylinders and are back in the game big time.
Range Resources
Range Resources has announced that it is buying the West Coast of Trinidad assets of Trinity for $4.55 million in cash. The 200 barrels per day increases their production by around 33% to 800 barrels per day and along with the Indonesian acquisition announced on Tuesday starts to put Range firmly back on the map.
The $1.75 billion 2P looks very attractive, and they acquire net 2P reserves of 2.6 million barrels and 2C of 0.5 million barrels and is a more than useful diversification of the portfolio.
This is profitable at current oil prices and has operational synergies with other RRL operations run by the team to be joined from Trinity.
Range have the necessary resources to invest in these assets and, assuming the RRDSL deal goes through, will have the added benefit to carry out the appropriate workovers and upgrades.
This, therefore, provides significant potential to increase production through low risk workovers achieving uplift swiftly and economically in the short term. This deal seems to me to be genuinely good for both sides who can gain advantage in different ways. Range and Trinity are both proving that the recent excitement in the area is no flash in the pan.
And finally…
Tomorrow is the Glorious 12th of August which is only significant if you are a grouse…
The MotoGP moves on to the Red Bull Ring in Spielberg, Austria on Sunday. It's probably the best chance for Jorge Lorenzo to justify his Number One position in the Ducati Team, although he would still be out of the running for the Championship as only 22 points separates front runners Marquez, Vinales, Dovizioso and Rossi and a podium could catapult Pedrosa back into the mix.
Flat racing sees the annual Shergar Cup held at Ascot and provides fun rather than compelling racing, but no less enjoyable…
And, of course, the Premiership is back. Only seems five minutes since those overpaid toerags were running and diving last season but here goes. The Gooners start the season off tonight against the Foxes, while the champions host Burnley tomorrow at the Bridge.
The HubCap Stealers are at the Hornets whilst newboys the Terriers are at the Eagles and other promotees the Seagulls host the Noisy Neighbours. The free spending Toffees entertain the Potters, whilst the Baggies take on the Cherries and the Saints host the Swans.
Sunday sees the return of the Magpies who have Spurs at St James' and the happy Hammers go to the Theatre of dreams along with the Little Pea, who will enjoy his return.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.