THE auditors of the Trinidad oil and gas business developed by North Sea veteran Bruce Dingwall have highlighted material uncertainty about the firm’s ability to remain a going concern, after it incurred hefty losses amid the crude price plunge.
PricewaterhouseCoopers noted uncertainty as to Trinity Exploration & Production’s ability to secure the additional funding it required, after the company lost $15.8m (£10.4m) in the six months to June.
The company’s accounts for the period provide clear evidence of the toll the fall in the oil price has taken on Trinity, which Mr Dingwall developed out of assets he acquired from the Venture Production business he once ran. Aim-listed Trinity has its investor relations office in Edinburgh.
After growing Venture into a £1.3 billion business that focused on developing North Sea assets bigger fish did not want to invest in Mr Dingwall decided to follow a similar strategy off Trinidad, where he was born.
However, Trinity lost $141.2m in the year to December after writing down the value of its assets.
Directors launched a strategic review of the business in April.
Mr Dingwall moved to a non-executive role as chairman of the board in May amid cost-cutting moves at the firm.
In the accounts directors noted the company's need for additional funding and said they are continuing a formal process which could result in the sale of the whole business or some assets.
They added: “At the date of approving the condensed consolidated financial statements, certain asset deals have been executed and a number of conditional proposals and expressions of interest had been received but not concluded.”
In their review of the unaudited accounts, which was signed off in Aberdeen on Monday, 28 September, PwC said: "The directors recognise that the Group and Company have insufficient financial resources to operate the business in the longer term in the absence of additional funding."
They said matters noted by the directors indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern.
Trinity’s chief executive, Joel ‘Monty’ Pemberton, said the formal sale process remains competitive, with discussions ongoing with several interested parties. Directors look forward to announcing additional news on the strategic review and sale process in due course.
Earlier this month the company announced the sale of the Gaupo block for $2.8m, against a book value of $2.2m.
Noting the company has achieved significant cost savings, Mr Pemberton added:”Despite the significantly reduced levels of capital expenditure our production levels have held up well, reflecting the robust nature of the asset base.”
Trinity produced an average 3,085 barrels oil equivalent daily in the first half, against 3,795 last time.
Operating revenues fell to $27.8 m, from $62.3m. The company got an average $49.5 per barrel for its oil, against $93/bbl in the first half of 2014.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here