State-owned Heritage Petroleum continues to report strong economic performance as the company has made an after tax profit of $1.2 billion for the first nine months of the 2021 financial year.
Not only has the company increased its profits but it has also grown production while benefiting from improved global crude oil prices.
The Business Guardian obtained an advance copy of the accounts which appear in today’s newspaper and they show record financial performance of the relatively newly minted Exploration and Production Company.
According to the accounts for the nine months ended June 30 2021, Heritage Petroleum Company Limited and its subsidiaries’ revenue for the period was $4.9 billion vs $3.2 billion in 2020, reflecting the continued increase in production and Brent prices which averaged $58/bbl for the year to date. This increase the company noted is representative of improved market conditions as COVID-19 restrictions across the world are slowly being eased.
“As a result of both our production increase and better Brent pricing our profit has increased to $1.2 billion as compared to $0.7 billion for the same period in 2020,” its chairman Michael Quamina revealed.
Hertitage is reporting that there has been strong cash generation from operations of $2 billion and cash balances stand at $1.7 billion.
The company which was formed following the failure of Petrotrin said its contribution, in the form of taxes, levies and royalties to the Government, was $606 million for the nine-month period.
The company said in addition to paying its taxes to government its net profit was achieved even with it having met all the debt payment obligations of Trinidad Petroleum Holdings Limited (TPHL) inherited from Petrotrin.
On the production side, Heritage is reporting that despite the challenges of the pandemic in managing the operations of the business it continues to grow production.
“Production is key for the company and Heritage continues to focus on activities that sustain existing production while exploiting new reserves through in-house drilling and workover programmes as well as with our key partnerships. Heritage has grown production by 7.3 per cent for the period to 41.6 bopd vs 38.7 bopd when compared to production for the comparable nine-month period in 2020.”
The company said its reserve replacement strategy has been successful and it has arrested the decline in production and reserves with its Field Revitalisation, Enhanced Oil Recovery and workover programmes.
“We have rebuilt the inventory of workover and drilling opportunities and in 2022, we will be pursuing an aggressive drilling campaign both on Land and Offshore. Our focus is on progressing new reserve pools which is a key element of our strategic growth agenda. Heritage continues to focus on value adding projects and increasing our operating efficiency as part of our overall strategy to operate a safe, profitable and sustainable business,” the chairman’s report read.
In response to questions from the BG, Quamina said 2021 was a strong year for financial returns at Heritage. The focus of 2022 he explained is to grow production and progress reserves that will drive the long-term growth of the business.
“We have made significant strides in developing our Drilling and Workover inventory. We are optimistic by the options in the subsurface, on both fronts, the progression of the reserves which will deliver and maintain the base profile, and new resources like Soldado East field that will grow production in 2022 and beyond.
“Our drilling and workover campaign in 2022 will be aggressive as we return to drilling on land with 10 wells. We will also be drilling 4 wells offshore in East Soldado, this is the first offshore drilling programme in this lease since 2016. In addition, we will be maintaining our workover campaign and enhanced oil recovery program.
We have a strong local team who are committed to deliver our agenda. Our strategy continues to be safe, efficient, and reliable operations,” Quamina told BG.
COVID-19 and work from home
Heritage said like many other organisations it has had to cope with the impact of COVID-19 on its day-to-day operations which has meant transitioning to remote working arrangements. The company said it has had to create ‘isolation bubbles’ for the operations team working in the fields and offshore to reduce COVID-19 spread.
“Even so, we have continued to deliver our ongoing projects all whilst ensuring the highest standards of health, safety and well-being are maintained for our employees and our community,” noted Heritage in its financial statement.
Heritage insisted it is committed to supporting the aims of the national commitments aligned to the Paris Agreement and to contribute to the UN Sustainable Development Goals on climate change as part of its Environment, Social and Governance (ESG) strategic agenda. Heritage said it continues to focus on GHG improvements and supports the Cabinet-appointed Carbon Capture Utilisation and Sequestration (CCUS) Committee.
“We are committed to developing our first Annual Sustainability Report in May 2022 in accordance with the Global Reporting Initiative (GRI). Taking on the challenge of our first sustainability report has created both momentum and tremendous opportunities. It affords us the chance to determine our goals, reflect on what we have achieved and how we will improve.”
On the issue of its fenceline communities the state company said it continues to work with those communities by providing much-needed assistance for those impacted by the onset of COVID-19 through food hamper distributions and donations of computer equipment to secondary school students.
“We have also partnered with community-based organisations (CBOs) to distribute 20,000 seedlings as a part of our ‘Here we Grow’ programme to encourage home gardening and households to eat what they grow.
“As we move forward, I would like to thank the Management and Staff of the company for their continued commitment to the company and to Trinidad and Tobago.”
Heritage Petroleum Company Limited (“Heritage”) was incorporated on October 5, 2018. It is primarily engaged in exploration, development, production and marketing of crude oil. The sole shareholder is Trinidad Petroleum Holdings Limited (TPHL). The ultimate parent is the Government of the Republic of Trinidad and Tobago with consolidated subsidiaries in Trinidad and Tobago and the United Kingdom.
Prior to Heritage’s formation, its exploration and production activities were conducted by Petroleum Company of Trinidad and Tobago.