Aleem Khan

A lead­ing UK fi­nan­cial ser­vices com­pa­ny, Le­gal & Gen­er­al Group plc, has ac­quired 25.43 per cent of San Fer­nan­do-based Trin­i­ty Ex­plo­ration and Pro­duc­tion plc since its list­ing on the Lon­don Stock Ex­change (LSE) on Valen­tine's day, be­com­ing the lo­cal oil com­pa­ny's new sin­gle largest share­hold­er.

With �388 bil­lion in­vest­ed world­wide, the 175-year-old Le­gal & Gen­er­al Group plc is one of the largest in­sti­tu­tion­al in­vestors in the UK.

It is a ma­jor share­hold­er, de­fined by the LSE as own­ing at least 3 per cent, in sev­er­al FTSE-100 com­pa­nies that have al­ready in­vest­ed heav­i­ly in T&T, in­clud­ing BP, British Amer­i­can To­bac­co (the par­ent com­pa­ny of Wit­co), BG Group, BHP Bil­li­ton, Roy­al Dutch Shell and Cen­tri­ca.

One of the largest in­vestors in the UK stock mar­ket, the Le­gal & Gen­er­al Group is al­so a ma­jor share­hold­er in Bar­clays, As­traZeneca and Di­a­geo.

On its own, as well as through sub­sidiary com­pa­nies Le­gal & Gen­er­al As­sur­ance So­ci­ety Lim­it­ed (LGAS & LGPL) and Le­gal & Gen­er­al In­vest­ment Man­age­ment Lim­it­ed (LGIM), the UK in­vestor ac­quired a to­tal of 24,108,727 shares in Trin­i­ty in three tranch­es on three days.

The first was on the day Trin­i­ty plc opened for trad­ing when Le­gal & Gen­er­al pur­chased of 14,608,445 shares. As the stock fell two pence from its Ini­tial Pub­lic Of­fer­ing (IPO) price of �1.20, Le­gal and Gen­er­al went in deep­er, and pur­chased an ad­di­tion­al 4,750,281 shares on Feb­ru­ary 20. On Tues­day, Le­gal and Gen­er­al pur­chased an­oth­er 4,750,001 shares, tak­ing its share­hold­ing in the T&T oil com­pa­ny to 24,108,727.

For­mer­ly Trin­i­ty E&P Ltd, the Bruce Ding­wall-found­ed com­pa­ny fast-tracked its IPO when it merged with AIM-list­ed Bay­field En­er­gy Hold­ings through a re­verse takeover un­der AIM rules. Bay­field was delist­ed in Oc­to­ber last year and re-ad­mit­ted as Trin­i­ty plc on Feb­ru­ary 14.

Trin­i­ty has a to­tal of 94,799,986 is­sued or­di­nary shares, each car­ry­ing the right to one vote. The new merged com­pa­ny does not hold any or­di­nary shares in trea­sury.

...now pro­duc­ing near­ly 4,000 bopd

Trin­i­ty is an up­stream oil and gas ex­plo­ration and pro­duc­tion com­pa­ny with in­ter­ests on­shore and off­shore Trinidad and South Africa. The com­pa­ny has a cur­rent mar­ket cap­i­tal­i­sa­tion of ap­prox­i­mate­ly US$179 mil­lion. Trin­i­ty holds a 65 per cent op­er­at­ed in­ter­est in the Ga­le­o­ta Ex­plo­ration and Pro­duc­tion (E&P) li­cense lo­cat­ed off­shore the east coast of Trinidad.

The Ga­le­o­ta li­cence cov­ers 30,084 acres (121.6 square kilo­me­ters) in the shal­low wa­ters (55 feet to 150 feet) of the Bay­field Basin. With­in the Ga­le­o­ta li­cence area, Trin­i­ty op­er­ates four fixed drilling and pro­duc­tion plat­forms ap­prox­i­mate­ly 10 kilo­me­ters (km) off­shore in shal­low wa­ter (100 to 150 feet). Trin­i­ty al­so holds an ex­plo­ration li­cense cov­er­ing 11,000 square km in the Plet­mos In­shore area in South Africa.

Up­on com­ple­tion of the merg­er on Feb­ru­ary 14, the com­bined en­ti­ty's as­set base surged to 31.2 mil­lion bar­rels of proved plus prob­a­ble re­serves, 38 mil­lion bar­rels of con­tin­gent re­sources and to­tal on­shore and off­shore pro­duc­tion of 3,965 bar­rels of oil per day.

More in­sti­tu­tion­al in­ter­est

An­oth­er in­ter­na­tion­al in­vest­ment com­pa­ny, Hong Kong-based Re­gent Pa­cif­ic Group Lim­it­ed ac­quired a hold­ing of 3,479,850 shares, which rep­re­sents more than 3 per cent of the is­sued share cap­i­tal of Trin­i­ty, on the first day of its re-ad­mis­sion to AIM on Feb­ru­ary 14, 2013.

With its new share­hold­ing, Re­gent Pa­cif­ic Group Lim­it­ed now owns 3.67 per cent vot­ing rights in Trin­i­ty. The Hong Kong group was one of the orig­i­nal in­vestors in Trin­i­ty be­fore it took over Bay­field and mor­phed in­to Trin­i­ty plc.

Pri­or to the sub­scrip­tion, the Hong Kong com­pa­ny held 1,912 shares in the then Trin­i­ty Ex­plo­ration and Pro­duc­tion Lim­it­ed, which were ac­quired in No­vem­ber 2011 by way of sub­scrip­tion in re­spect of Trin­i­ty's pri­vate plac­ing at a price of US$4,185 per Trin­i­ty share, for an ag­gre­gate amount of cash con­sid­er­a­tion of US$8,001,720. These shares were ex­changed, in re­spect of the merg­er, for 14,298,507 new Bay­field Shares (be­fore the Share Con­sol­i­da­tion) or 1,429,850 new Trin­i­ty Shares (fol­low­ing the Share Con­sol­i­da­tion).

As a re­sult of the merg­er, like many oth­er orig­i­nal Trin­i­ty share­hold­ers, the Hong Kong group's share­hold­ing as a per­cent­age dwin­dled, though not as small as Bay­field's orig­i­nal share­hold­ers who re­ceived one Trin­i­ty plc share for every 10 Bay­field shares they had.

Re­gent Pa­cif­ic said in a re­lease dat­ed Jan­u­ary 13, 2013: "As not­ed, in the com­pa­ny's (Re­gent Pa­cif­ic's) an­nounce­ment is­sued on Oc­to­ber 15, 2012, the merg­er val­ues the com­pa­ny's (Re­gent Pa­cif­ic's) share­hold­ing in Trin­i­ty at �2.97 mil­lion (or ap­prox­i­mate­ly US$4.69 mil­lion or HK$36.58 mil­lion), which is ap­prox­i­mate­ly 41.38 per cent be­low the Com­pa­ny's orig­i­nal in­vest­ment cost in Trin­i­ty."

For­mer Bay­field di­rec­tors and at least one of the orig­i­nal Trin­i­ty in­vestors have al­so been in­creas­ing their stake in Trin­i­ty. In re­sponse to a Busi­ness Guardian ques­tion, Arif Shah, a spokesper­son for Trin­i­ty, said: "Fin­ian (O'Sul­li­van, chair­man of the for­mer Bay­field) was is­sued new shares in the com­pa­ny. I do not have in­for­ma­tion on whether any­one else has raised their shares through the eq­ui­ty is­sue, but would as­sume that would be the case."

Trin­i­ty raised US$90 mil­lion in new eq­ui­ty in the run up to its AIM list­ing. Trin­i­ty raised "in con­junc­tion with com­ple­tion of the merg­er" what it de­scribed as "gross pro­ceeds of US$50 mil­lion through the is­sue of new or­di­nary shares to ac­cel­er­ate its de­vel­op­ment pro­gramme, and for gen­er­al cor­po­rate pur­pos­es; and a fur­ther US$40 mil­lion to fund a ma­te­r­i­al and high val­ue in­fra­struc­ture-led ex­plo­ration pro­gramme."

Hen­der­son Glob­al In­vestors, a British-Aus­tralian in­sti­tu­tion­al in­vestor, was one group that took ad­van­tage of the US$90 mil­lion new eq­ui­ty is­sue to raise its stake in the com­pa­ny to more than 10 per cent. On Jan­u­ary 25, 2013, it in­creased its stake in the then Bay­field to 10.11 per cent or 21,900,000 shares.

Dr Jim Lee Young, one of the orig­i­nal Trin­i­ty in­vestors, al­so in­creased his stake in the new Trin­i­ty, al­though he be­moaned that the merg­er was di­lu­tive in­stead of ac­cre­tive of ex­ist­ing share­hold­er. He said the merg­er of Trin­i­ty and Bay­field "de­stroyed val­ue for the ex­ist­ing share­hold­ers" as they now have a small­er per­cent­age hold­ing in a larg­er com­pa­ny. He said it was clear Bay­field need­ed the merg­er more than Trin­i­ty.

De­scrib­ing the IPO as a good deal for new in­vestors, Lee Young, the for­mer boss at Ten De­grees North the first in­car­na­tion of Trinit), said he would have walked away from the Bay­field merg­er, and launched a Trin­i­ty stand-alone IPO.

He said in 2004/2005, Ten De­grees North En­er­gy Ltd "at the time was worth US$30 mil­lion and the shares were sold at US$1,000 a share. At that time, the oil price was US$30 per bar­rel of oil." Still, Lee Young ac­knowl­edges that the as­sets of the merged com­pa­ny are un­der­val­ued, and he ex­pressed con­fi­dence that the as­sets will pro­pel the new Trin­i­ty to do well.

Bay­field needs re­pairs

Giv­ing its first joint op­er­a­tions up­date to the LSE on Feb­ru­ary 13, Bay­field and Trin­i­ty ac­knowl­edged: "Pro­duc­tion from the Trintes field has re­cent­ly been im­pact­ed by a num­ber of fac­tors in­clud­ing a fail­ure of the main gen­er­a­tor on Al­pha plat­form." They said: "Jan­u­ary net pro­duc­tion for Bay­field av­er­aged 1,481 bar­rels of oil per day (bopd) (2,278 bopd - gross) and for Trin­i­ty 2,260 bopd rep­re­sent­ing ag­gre­gate net pro­duc­tion for the two groups of 3,741 bopd."

Fol­low­ing re­pairs to the gen­er­a­tor, in­ter­ven­tion work has been un­der­tak­en to re­sume pro­duc­tion from the wells im­pact­ed by a pow­er out­age, Bay­field said. "Pro­duc­tion from these wells is in­creas­ing though still at lev­els be­low those achieved pri­or to the in­ci­dent. Twelve wells from a to­tal of 36 po­ten­tial pro­duc­tion wells are cur­rent­ly shut-in await­ing re­me­di­a­tion. None of the re­cent­ly drilled de­vel­op­ment wells which have utilised mod­ern com­ple­tion tech­niques and pump­ing equip­ment are im­pact­ed," Bay­field said.

The pro­gramme of re­me­di­al ac­tion is un­der­way and is ex­pect­ed to add gross pro­duc­tion of up to cir­ca 410 bopd by the end of March, the up­date said. Ac­tion has al­ready been tak­en to in­stall new gen­er­a­tor sets on Al­pha and pro­grammes of pre­ven­ta­tive main­te­nance im­ple­ment­ed to re­duce risk of fu­ture pow­er out­ages, ac­cord­ing to the up­date. "Sep­a­rate­ly, op­er­a­tions com­menced on the B5X well on Feb­ru­ary 7, 2013. The sched­ule for eight in­fill de­vel­op­ment wells for 2013 is un­changed," Bay­field said.

Trin­i­ty ahead on plan

Jan­u­ary sales av­er­aged 2,260 bopd (net), ahead of bud­get for the pe­ri­od, Trin­i­ty said in the doc­u­ment. Trin­i­ty drilled two on­shore wells dur­ing Jan­u­ary and is cur­rent­ly drilling a third well, and so, is ahead of its plan to drill a to­tal of 12 on­shore wells in 2013, the up­date said. The two wells drilled to date are cur­rent­ly be­ing com­plet­ed and should be in pro­duc­tion in the next two weeks, Trin­i­ty said.

Ad­di­tion­al­ly, Trin­i­ty plans to ini­ti­ate a pro­gramme of workover ac­tiv­i­ties at its Brighton field dur­ing Feb­ru­ary. The re­pair or stim­u­la­tion of an ex­ist­ing pro­duc­tion well for the pur­pose of restor­ing, pro­long­ing or en­hanc­ing the pro­duc­tion of hy­dro­car­bons is re­ferred to as a "workover" in the oil in­dus­try, ac­cord­ing to the Schlum­berg­er oil­field glos­sary. "Trin­i­ty has ac­quired a cap­il­lary tub­ing unit to op­ti­mise its gas lift mech­a­nism with eleven wells tar­get­ed for workover... Ini­tial in­cre­men­tal rates from this project could be in the or­der of 135-150 bopd (net) in ag­gre­gate," Trin­i­ty said.

Hy­wel John, for­mer chief ex­ec­u­tive of­fi­cer of Bay­field, said: "We are work­ing close­ly with our coun­ter­parts at Trin­i­ty to ad­dress the pro­duc­tion is­sues en­coun­tered. The abil­i­ty to ad­dress these is­sues in a time­ly man­ner demon­strates the ad­di­tion­al re­sources that can be de­ployed as a con­se­quence of the com­bi­na­tion of the two groups."

Mon­ty Pem­ber­ton, chief ex­ec­u­tive of­fi­cer of Trin­i­ty, com­ment­ed: "We are pleased that Trin­i­ty is ahead of its 2013 pro­duc­tion bud­get and to be close to com­plet­ing our third on­shore well this year. We ea­ger­ly await com­ple­tion of the merg­er with Bay­field to pro­vide the fi­nan­cial re­sources need­ed to rec­ti­fy Bay­field's cur­rent pro­duc­tion is­sues and de­liv­er the work pro­gramme as pre­sent­ed in the Ad­mis­sion Doc­u­ment. We re­main con­fi­dent that we will achieve the pre­vi­ous guid­ance of 5,000 bopd ex­it rate for 2013." The Ad­mis­sion Doc­u­ment is the doc­u­ment the new­ly (re) list­ed com­pa­ny had to sub­mit to the LSE.

On its first day trad­ing, Feb­ru­ary 14, Trin­i­ty opened at 120 pence, and closed 6 pence high­er. Dur­ing its first week trad­ing, Trin­i­ty touched its high at 134 pence on Feb­ru­ary 14, and its low twice on Feb­ru­ary 19 and again on Feb­ru­ary 21 at 118 pence. Trin­i­ty closed its first week of trad­ing on Fri­day (Feb­ru­ary 22) at �1.185. (�1=$10.05)