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A quick look at Trio Petroleum Corp.
Trio Petroleum Corp. (TPET) has requested to raise an undisclosed amount in an initial public offering of its common stock, according to an S-1 registration statement.
The Company operates as an oil and gas exploration company with leasehold interests in Monterey County, California.
When we hear more details about the IPO from management, I will provide a final comment.
Trio overview
The Danville, California-based trio was formed to develop oil and gas prospects in Monterey County, California, which they refer to as the South Salinas Project.
Management is led by Chief Executive Officer Frank C. Ingriselli, who has been with the company since February 2022 and was previously President of Indonesia Energy Corp. (INDO) which recently went public in the US
Management believes the South Salinas project has potential for up to 39 million barrels of oil plus 40 billion cubic feet of gas. (P2 likely)
The Company intends to develop its existing leasehold properties and potentially acquire “other oil and gas exploration opportunities in California.”
As of April 30, 2022, Trio has approximately $10 million in equity and debt investments at market value as of April 30, 2022 from investors including Elpis Capital, Gencap Fund, Primal Nutrition and others.
Trios market & competition
According to a 2022 market research report by Offshore Technology, oil and gas production in California increased 5.27% month-on-month to 592,000 barrels per day in February 2022, but fell 13.7% year-on-year.
The following chart presents California oil production by month for the twelve months ended February 2022:
California Oil Production (Offshore Technology)
While California regulators have become increasingly restrictive on fossil fuel operations, the increasing severity of climate events in recent years has required the state to continue to significantly increase energy amid a decline in power plant capacity.
Key contestants or other industry participants include:
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California Resources
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Exxon Mobile
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rafters
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Sentinel Peak Resources California
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berry petroleum
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Sempra energy
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Buckeye Partners
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Niska gas storage partner
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Pacific Gas & Electricity
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Other
Trio Petroleum Corp. financial performance
The following are relevant financial results arising from the company’s registration statement:
Operating Account (SEC EDGAR)
As of April 30, 2022, Trio had $249,711 in cash and $4.6 million in total debt.
Trio IPO Details & Commentary
Trio intends to raise an undisclosed amount of gross proceeds from an initial public offering of its common stock.
No existing shareholder has expressed an interest in buying shares at the IPO price.
Management has not specified how it will use the net proceeds from the IPO, but has said generally that it will seek to develop its existing leasehold properties and potentially acquire and develop additional resources in the Monterey area.
Management’s presentation of the company’s roadshow is not available.
With respect to pending lawsuits, management states that there are no lawsuits involving the Company that would materially adversely affect it.
The sole public bookrunner for the IPO is Spartan Capital Securities.
The company’s financials do not show any income and some expenses related to its initial operations.
The company currently plans not to pay dividends and to retain future profits for reinvestment in the company’s operations and growth initiatives.
The market opportunity for developing oil and gas resources in California is significant, but the company faces competition from major oil and gas producers and state regulators are extremely restrictive.
Spartan Capital Securities is the sole underwriter and IPOs led by the firm over the past 12 months have generated an average negative yield (74.4%) since its IPO. This is a lowest performance for any major underwriter over the period.
The main risks to the company’s prospects are its low asset value, weakly capitalized status and lack of revenue history.
When we hear more details about the IPO from management, I will provide a final comment.
Estimated IPO Price Date: To be announced.
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