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Touchstone Exploration Inc

Touchstone Exploration enters new era following results from Coho-1 well

Snapshot

  • One of Trinidad's largest onshore independent oil producers
  • Production assets across 10 licence blocks including 208 wells
  • Higher-than-expected production rate from Coho-1 well
Touchstone

Quick facts: Touchstone Exploration Inc

Price: 14.75 GBX

Market: AIM
Market Cap: £23.7 m
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What Touchstone does

Touchstone Exploration Inc (LON:TXP) is a Canadian-based oil and gas company focused on the exploration, development and production of onshore assets in Trinidad.

The group has been producing oil in Trinidad since 2010 and is now one of the largest onshore independent oil producers in the country.

 

What it owns

Touchstone has production assets across 10 licence blocks in Trinidad, including 208 well locations over some 7,910 acres.

Across its portfolio, the company also has areas with exploration upside, through which it has earmarked potential growth projects.

Specifically, the Ortoire block covers a large area (about 55,000 acres).

 

How it’s doing

In mid-November, the company said it had achieved a higher-than-expected production rate from its Coho-1 well.

Output peaked at 19.8mln cubic feet (MMCFD) of sweet natural gas, the equivalent of 3,300 barrels of oil per day, and averaged 17.5MMCFD, or 2,917 of crude equivalent.

Providing a further boost, water production was significantly below what had been predicted ahead of testing.

Touchstone chief executive Paul Baay said the well test results represented a "new era" for the company with significant natural gas volumes set to be added to its production base.

The CEO also pointed out that the Coho-1 well was on the smallest prospect of the Ortoire exploration programme, which bodes well when it undertakes future discovery work.

For the three months ended 30 September, the company achieved crude sales of 1,729 barrels per day.

Meanwhile, the rate was marked at 1,871 barrels across the nine-month period, reflecting a 12% rise against the previous year’s comparative.

Touchstone generated US$1.08mln of funds from operations in the quarter, and US$4.8mln for the nine months. It also ended the quarter with a cash balance of US$3.42mln of cash and net debt of US$12.28mln.

 

Executive interview – CEO Paul Baay

 

What the broker says

Analysts at Touchstone’s house broker Shore Capital said the production rate achieved by the firm at the Coho-1 well was “genuinely superb” and that they “anticipated early commercialisation of the discovery in the first half of next year”.

The broker expects a “significant production impact” from the Coho-1 result as well as a “meaningful upgrade” to its net asset value estimates for the firm, which currently stands at 35p per share.

With the shares trading at 13.3p as of 18 November 2019, Touchstone carries a market cap of £18.5mln.

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Watch

Full interview: Coho-1 well to double Touchstone Exploration's daily...

Touchstone Exploration Inc's (LON:TXP; TSE:TXP) Paul Baay speaks to Proactive London's Andrew Scott after announcing a higher-than-expected production rate from its Coho-1 well, onshore Trinidad. Output peaked at 19.8mln cubic feet (MMCFD) of sweet natural gas, the equivalent of 3,300...

2 weeks, 6 days ago

2 min read