HERITAGE Petroleum Company, the wholly state-owned oil producer, reported audited after-tax profit of $682.6 million for its fiscal year ended Sept. 30, 2021, down 33% from 1.01 billion dollars the company earned in 2020.
The company’s condensed consolidated financial statements for the year ended September 30, 2021 are due for release today as a newspaper announcement.
Heritage reported revenue of $6.82 billion in fiscal 2021, a 44% increase from the $4.73 billion the company generated in its fiscal 2020. the company were driven by higher crude oil prices, which average 31% in 2020, and increased oil production.
Heritage also reported pre-tax profit of $1.95 billion in 2021, a 97% increase from $991.9 million in 2020.
The company’s after-tax profit in 2021 was lower than in 2020, as its tax expense in 2021 was $1.27 billion, compared to a tax credit of $25.9 million in 2020.
Total assets held by Heritage increased 20% to $12.23 billion as of September 30, 2021, from $10.19 billion at the end of its 2020 fiscal year.
The company’s non-current assets totaled $6.74 billion and its current assets were $5.48 billion.
Among the oil company’s current assets is $1.93 billion owed by related parties.
Among its current assets are also assets held for sale valued at $300 million at the end of September 2021. Heritage has liabilities of $515.65 million directly associated with assets held for sale. .
In the report accompanying the audited financial statements, Heritage Chairman Michael Quamina said that amid strengthening rough demand and rising market prices in 2021, Heritage and its subsidiaries continued to generate revenue. strong earnings and cash generation for 2021.
“Heritage generated significant value with cash from operations in 2021 of $2.9 billion (2020: $1.7 billion), enabling the company to:
• Fund a $498 million capital program in production gain, asset integrity, and infrastructure and technology upgrades.
• pay $2 billion in taxes, fees and levies to the government of Trinidad and Tobago; and
• Settle all debts of the Trinidad Petroleum Holdings Ltd (TPHL) group.
Quamina said Heritage’s overall crude production rose 5% to 41,200 barrels of oil per day (bopd) year-over-year.
The president of the oil company said that in the face of the ongoing pandemic and a volatile economic environment, the increase in crude production “is particularly remarkable and demonstrates the company’s commitment and ability to meet the operational challenges presented by Covid-19”.
He said the company had another successful year of reserve replacement with a reserve replacement rate of 109% in the top quartile thanks to a strong focus on workovers, production optimization and improved oil recovery.
Regarding the outlook for the remainder of 2022, Quamina said the company’s strong financial results for 2021, along with an extended period of robust oil prices and the planned launch of its drilling program during the fiscal year in course, give him confidence that Heritage is well positioned to show continued growth in 2022 and advance our strategy.
…The company refinances TPHL’s debt
In its chairman’s report accompanying the 2021 summary financial statements, which were authorized for publication on May 24, Quamina said: “As of the date of this publication, I am pleased to report that the company would have successfully closed the refinancing of the Group’s senior secured debt through a tender offer on Trinidad Petroleum Holdings Ltd (TPHL) 2026 notes and the issuance of a new US$500 million Heritage 2029 bond and a new loan to Heritage term of US$475 million.
TPHL is the parent company of Heritage Petroleum. The two companies, along with Paria Fuel Trading and Guaracara Refining Company, were created in 2018 to succeed Petrotrin, which was an integrated oil company that produced and refined petroleum.
Indeed, Quamina’s statement that Heritage was closing the refinancing of TPHL’s senior secured debt means that the subsidiary, Heritage, is assuming the debts of the parent company, TPHL.
In a July 1, 2019 press release, TPHL announced the final settlement of Petrotrin’s original US$850 million bullet payment restructuring, which matured in August 2019.
TPHL said it has accepted offers and consents from holders of an aggregate principal amount of US$570.29 million of Existing Notes in exchange for:
• US$570.26 million aggregate principal amount of TPHL’s 9.75% Senior Secured Notes due 2026;
TPHL also announced that it has borrowed US$603 million under a term loan facility consisting of:
• A tranche of 388 million US dollars maturing in three years and
• A tranche of US$215 million maturing in seven years.
“The proceeds of the term loan facility will be used to repay the remaining 2019 notes, repay a shareholder loan and pay fees and expenses associated with the exchange offers, consent solicitations and closing of the facility. term loan,” according to TPHL News. released in July 2019.
In last week’s Chairman’s Report, Quamina said, “The refinancing has delivered significant benefits to TPHL Group, including reducing our weighted average cost of debt, extending the average term of our debt maturities, freeing up short-term cash for winning businesses in production and healing the administrative defaults resulting from the late release of TPHL’s 2019 consolidated financial statements.”
The administrative flaws the Heritage chairman referred to relate to TPHL breaching an administrative covenant because it failed to release its 2019 audited financial statements in a timely manner. This is one of the reasons given by S&P Global Ratings for downgrading TPHL from BB to B+ in its rating action of February 2, 2022.
S&P said another factor influencing TPHL’s downgrade was that the company “faces short-term maturities that could put pressure on its liquidity if not addressed within the next four months.”
In response to S&P’s downgrade in a Feb. 3, 2022 press release, TPHL said, “The successful execution of this refinancing, which would allow the company to meet its near-term obligations, is listed as one of the actions that could lead to an upgrade of S&P Global over the next year. »
Last week, in its chairman’s report, Quamina said: “It is significant from a national perspective that the refinancing has enabled all of TPHL’s non-core assets, including agricultural, residential and recreational facilities, to be fully available for better utilization by the Government of Trinidad and Tobago for the benefit of the citizens”.
Heritage officials were unavailable late yesterday to clarify whether the Petrotrin refinery, located in Pointe-à-Pierre, is considered a core or non-core asset.