Ky­ron Reg­is

ky­ron.reg­is@guardian.co.tt

State-owned Her­itage Pe­tro­le­um Com­pa­ny Ltd has record­ed a prof­it $1.4bil­lion for 2019, which rep­re­sents the first ten months of op­er­a­tion.

In the re­lease of the com­pa­ny’s fi­nan­cial state­ments, the chair­man Michael Quam­i­na not­ed that the com­pa­ny “has per­formed re­mark­ably.”

For the pe­ri­od end­ed, Sep­tem­ber 30, 2019, the com­pa­ny al­so record­ed $5.4 bil­lion in rev­enue.

In an in­ter­view with Guardian Me­dia, En­er­gy Min­is­ter Franklin Khan said he feels proud of the com­pa­ny’s per­for­mance.

Khan ar­tic­u­lat­ed the rev­enue and prof­itabil­i­ty of the com­pa­ny has “vin­di­cat­ed the gov­ern­ment’s de­ci­sion to re­struc­ture Petrotrin in­to its var­i­ous com­po­nents.”

He con­tin­ued: “Petrotrin as it was cur­rent­ly struc­tured was los­ing $2 bil­lion dol­lars per an­num, and we have turned that around with­in one year, from a $2bil­lion loss to a prof­it of $1.4 bil­lion.”

Ac­cord­ing to Khan, it has al­ways been our view that the ex­plo­ration and pro­duc­tion (E&P) arm of the com­pa­ny was a prof­itable busi­ness, nonethe­less, its prof­itabil­i­ty was masked by the huge loss­es in the con­sol­i­dat­ed ac­counts of Petrotrin re­fin­ery busi­ness seg­ment.

Khan com­ment­ed: “Her­itage was man­dat­ed to fo­cus on pro­duc­tion with a laser beam ap­proach, that they have done suc­cess­ful­ly - they have been able to climb their pro­duc­tion every quar­ter.”

Ac­cord­ing to Khan the com­pa­ny was al­so asked to re­duce its op­er­at­ing costs, where the op­er­at­ing costs on a per bar­rel ba­sis is ap­prox­i­mate­ly US$28.

He said that the av­er­age oil price, that was re­ceived for the high­light­ed pe­ri­od was US$61 per bar­rel, hence the rea­son for the in­creased prof­itabil­i­ty.

Mean­while, Quam­i­na re­marked that the 2019 re­sults have been ac­com­plished while fund­ing a cap­i­tal pro­gram of $193 mil­lion and con­tribut­ing $821 mil­lion to the Gov­ern­ment of T&T in re­lat­ed tax­es, li­cens­es, roy­al­ties and levies due for the pe­ri­od.

Quam­i­na ex­plained that the com­pa­ny al­so had to si­mul­ta­ne­ous­ly en­sure that quar­ter-on -quar­ter pro­duc­tion con­tin­ued to trend up­ward and set­tle the debt oblig­a­tions to lenders which orig­i­nat­ed in lega­cy Petrotrin in a time­ly fash­ion.

Khan con­firmed that Her­itage’s cash flow was able to ser­vice all of the debt of the lega­cy oil com­pa­ny.

The to­tal as­sets of Her­itage as at Sep­tem­ber 30, 2019 was $10.96 bil­lion. The com­pa­ny’s cash at bank at the end of the pe­ri­od amount­ed to $1.17 bil­lion.

The com­pa­ny chair­man said that in the cur­rent eco­nom­ic cli­mate, along with the chal­lenges now faced by com­mod­i­ty mar­kets, the on­go­ing task of the board will be to sus­tain this prof­itable busi­ness with free pos­i­tive cash flows.

Re­cent­ly, Her­itage not­ed in a state­ment that it has not been in­su­lat­ed from all that is oc­cur­ring in the glob­al a en­er­gy mar­kets and has re­sort­ed to sell­ing ob­so­lete as­sets in­clud­ing scrap iron and sup­ply boats to gen­er­ate rev­enue.

In light of the re­cent his­toric oil price lows, Her­itage has in­di­cat­ed that it is pur­su­ing a strat­e­gy of stor­age of oil pro­duc­tion which will be sold as the oil mar­ket im­proves.

Nev­er­the­less, the com­pa­ny said, in the re­lease, that the first 5 months of the fis­cal year was very prof­itable for Her­itage, which would leave the com­pa­ny well po­si­tioned with the pru­dent man­age­ment of its busi­ness, to meet out debt com­mit­ments and fund our ac­tiv­i­ty for the rest of the fis­cal year in the present­ly chal­leng­ing en­vi­ron­ment.

Ac­cord­ing to Khan, “in this new COVID world, ob­vi­ous­ly we will be tak­ing a heavy hit.”

He said that the com­pa­ny does not ex­pect 2019’s prof­itabil­i­ty in the com­ing months, but the com­pa­ny has been asked to keep the op­er­at­ing costs as low as pos­si­ble, with­out re­mov­ing staff while keep­ing pro­duc­tion has high as at­tain­able.

The min­is­ter said that as the com­pa­ny’s plan has mi­grat­ed from sell­ing crude to stor­ing crude for the next two and half months—it is hop­ing for an up­turn in the mar­ket in the in­ter­im.