This time last year, we predicted Trinidad & Tobago would soon become an exciting exploration destination for Aim-traded oil and gas companies in our sector focus piece, 'Could Trinidad be the new North Sea?'. And almost right on cue, exploration activity across Trinidad has rapidly accelerated while interest from speculative investors is exploding.
Aim junior Leni Gas & Oil (LGO) has seen its share price rise four-fold this year on the back of successful drilling at its mature Goudron field onshore Trinidad. Shares in rival onshore operator Range Resources (RRL), meanwhile, have doubled in value since May, as have shares in Toronto Stock Exchange-listed Touchstone Exploration (TSX: TXP). This is despite the wider Aim oil and gas sector retreating a miserable 20 per cent over the past six months.
The excitement in Trinidad mainly stems from long-awaited changes to the country's onerous tax regime that were finally passed into law in June. These include cost recovery measures as well as exploration and development tax breaks designed to reward companies seeking to increase onshore oil production. Reductions in royalty rates have also been successfully negotiated on a case-by-case basis. At the same time, there has been early progress toward redeveloping major onshore oil fields previously operated by the likes of Texaco and state-owned Petrotrin. Onshore fields have largely been left alone for the past 40 years but rising oil prices, technological advances and the proposed changes to Trinidad's tax regime have caused oil executives to look at them with fresh eyes.