A move to secure two rigs for exploration wells off the coast of Trinidad & Tobago is a clear sign Trinity Exploration & Production (TRIN:AIM) means business. Work will begin in the fourth quarter as the firm targets 45 million barrels of oil across the two sites.

The shares trade at a discount to the estimated value of the company’s 31.2 million barrels of proved and probable (2P) reserves, which broker Jefferies puts at 181p. The £98 million cap is also working towards a year-end 2013 production forecast of 5,000 barrels of oil per day (bopd), as compared to the latest reported level of 4,000 bopd. Any such uplift could provide a further boost to sentiment.

Increased production has a particularly material impact on Trinity’s cashflows because fixed costs on the core Trintes field are high. As output ramps up, revenues will increase and the per-barrel operating costs drop substantially.

The company was formed through the reverse takeover of Bayfield Energy by Trinity Exploration & Production Limited in February 2013. This transaction was accompanied by a $90 million placing designed to help fund the immediate work programme. The founder of Trinity will be familiar to investors in the UK oil and gas sector. Bruce Dingwall, the executive chairman, founded Venture Production in 1997.

Active in the North Sea, Venture was floated at 170p in 2002 and subsequently acquired by Centrica (CNA) in August 2009 for 845p. Dingwall’s presence is supplemented by that of Bayfield’s former chairman Finian O’Sullivan, who is a non-executive director. He founded fellow sector success story Burren Energy. This managerial combination gives the enlarged Trinity considerable pedigree.

Shares says: We agree with the consensus that the shares have great potential at 103.75p.