Touchstone Exploration Share Discussion Threads

[grannyboy] 30/6/2018 13:41

MATD has, by what some oil experts call world class assets in Mongolia....And yet they are finding it hard to get farm-ins..

It's taken years for Bahamas Pet years to get anyone interested until recently....

[mount teide] 30/6/2018 13:36

Ortoire Block - 2019 Exploration Drilling Programme - some research information:

To the immediate south west of the Ortoire block lies the Central Block, which contains T&T's only producing onshore gas field.

The Central Block (along with most of the Ortoire block) sits in the highly prolific Herrara Turbidite Fan Fairway - the up dip end of the Venezuelan basin.

The Central Block contains three pools of which Carapal Ridge is the largest. It was discovered in 2002 by BP and has since been taken over by Shell. The three pools - Carapal Ridge, Baraka 1 and Baraka East 1 - produced some of the largest on-shore natural gas production test results in the world at the time of initial testing.

Carapal Ridge tested at 62 MCF million cu ft per day and 1,620 (bcpd) barrels of condensate per day. (at current US well head spot price of US$3 MCF - at that production level, the gas alone from Carapal Ridge would generate potential annual revenue of circa US$70m!)


The Ortoire block technical work carried out by Touchstone has identified five large exploration prospects - each 'Carapal Plus' size targets.

Three are gas targets within the prolific Herrara Turbidite Fan Fairway - with up to 2,000ft of potential pay that will be drilled to a depth of up to 10,000ft - suggesting an average drill cost perhaps of circa £1m per well( using the current rates in the latest 2018 Presentation).

The two oil prospects are much shallower targets in the Forest and Gros Morne Formations - at a similar depth to some of the deeper development plays drilled over the last year at around 5-7,000ft suggesting an average drill cost of £650k per well. The two oil targets are defined in part by oil bearing legacy wells - they are analogous structures to offsetting pools.

LNG Industry:
The oil price directly impacts the worldwide demand and price for natural gas. As the price of oil increases, countries that use oil for industrial purposes or power generation increasingly have the option of a lower cost 'green' alternative such as natural gas. At $80 oil, even at $12.00 per (MCF)thousand cubic feet, natural gas is very competitive with oil.

The current spot price of US Natural gas for example is circa US$3 MCF - the additional cost to route the gas through an LNG plant and ship it to the huge Far Eastern and fast growing European market is typically circa US$1.50-$2.00/MCF - leaving a very healthy profit margin at the global average price of circa US$7-8/MCF of the last few years.



One of my best investments over the last two decades was Hamworthy Engineering - a specialist UK marine engineering company that cracked the holy grail of developing the technology for a small scale LNG liquification plant capable of being operated on a LNG vessel. Early generation LNG vessels burned the LNG cargo 'boil off' through the main engines - on average 2% of the very highly valuable LNG cargo was 'lost' as boil off each voyage. Hamworthy's shipboard LNG Plant allowed the 'boil off' to be reliquified and put back into the cargo tanks rather than burnt through the ship's main engines.

Shortly after highly successful testing of the prototype Hamworthy Plant on a LNG Carrier, Hamworthy received an order from the Qatari Government for 50 of these small scale LNG plants at circa $5m each (plus the 20 year maintenance contract) for the Qatai's new LNG fleet under construction at US$250m a vessel. The largest Qatari vessels carry 250,000 cubic metres of LNG - each cargo is worth US$60m - $80m at today's prices.

It proved transformational for Hamworthy's investors - we saw the share price go from £1.25 shortly after IPO to £8.25 seven years later when Wartsila, the Finnish Marine Engineering giant made a successful offer for the company - many of us were 'disappointed' though, since we felt the company had at least another 50% upside over the medium term.

AIMHO/DYOR

[dunderheed] 30/6/2018 13:34

Well ffs but come on, if we went on ceos definition of world class we'd have lost a fortune wouldn't we?! If it is world class I'm sure some world class ie top 20 o&g companies would be knocking on the door to farm in which still doesn't prove this but, may increase the chances of this being the case?
All imho and dyor of course!!

[grannyboy] 30/6/2018 13:28

"On what basis do you justify the description" "World class Ortoire exploration prospects"


Maybe it's because it came from the horses mouth!!!!

[mount teide] 29/6/2018 19:10

Mr T - good post - pleased to see your estimates are very similar to my own.

'With those numbers, I think Q2 operating netback should increase from Q1's CA$33.53 to over CA$40/bbl, and operating cashflow should increase from CA$2.6m in Q1 to around CA$4.5m in Q2.'

As posted previously, I too have Q2 operating netback at circa CA$40/bbl; and likely to enter Q3 at $43 to $45 at the present POO.

With first production from 7 further wells to come in Q3 and early Q4, H2 has the potential to deliver a very big increase in cash flow over H1.

And then things start to get really interesting, with 20 further development wells in 2019 together with the hugely material 4 well Ortoire exploration programme.

Suggesting a potential increase in operating cash flow to circa $25m - $35m in 2019 if the POO averages anywhere near the consensus forecast of $80-$90 - plus a potential huge bonus on top should any of the world class Ortoire exploration prospects prove successful.

[mr. t] 29/6/2018 18:16

As Q2 comes to an end we know the following average daily production figures:

Apr: 1,669
May: 1,728
7 days to June 6: 1,821

Let's say 1,821 carries on through June, that gives average Q2 daily production of 1,740. (cf. 1,543 in Q1)

We also know average April Brent was $72.11, May was £76.98 and June is close to $75. That gives an average of around $75. (cf. $66.86 in Q1)

With those numbers, I think Q2 operating netback should increase from Q1's CA$33.53 to over CA$40/bbl, and operating cashflow should increase from CA$2.6m in Q1 to around CA$4.5m in Q2.

If I'm right TXP will create CA$7m H1 operating cash flow, half of the upper end of Paul Baay's CA$12-14m 2018 cashflow forecast.

If H2 2018 daily production averages 2,000 bbl/day and Brent stays at $75 then I predict H2 CA$9-10m cash flow.

There's of course risk on H2 production and oil price figures, but I'd say the risk is as much to the upside than to the downside.

In short I predict 2018 full year operating cash flow of CA$16-17m, a good 15% more than Paul Baay's prediction. Then there's all the stuff happening in 2019.

TXP has a £20m market cap - I think this is a good share to hold.

[sleveen] 29/6/2018 16:35

No you don't.

[sleveen] 29/6/2018 15:58

SCAP gone on the offer @ 15.5p , so I wonder if there's a largish sell to be reported later causing the share price to fall slightly?

We shall see in an hour.

[mount teide] 29/6/2018 15:37

WTI up 14% and Brent 9% since this weeks Opec statement announcing a modest 600,000 bopd production increase in an attempt to offset rapidly falling Venezuelan production and recent material production declines and outages reported by other Opec members.

Brent $79.0
WTI $74.2

[fardels bear] 29/6/2018 11:28

Need to be a bluey to vote down, but not up, strangely.

I'm not surprised though. Oil rocketing sounds like ramping in a way that Brent $78.89 doesn't..

[che7win] 29/6/2018 10:39

Oil rocketing

[grannyboy] 28/6/2018 17:36

As was highlighted in the presentation by Paul Baay, they would have no trouble finding a market for the gas, so Ortoire is a twofold opportunity..

[captainfatcat] 28/6/2018 17:16

Interesting post MT

[mount teide] 28/6/2018 16:46

Shell CEO recently stated that the company is actively positioning itself to be predominantly a natural gas company that also has oil assets.

They see T&T as an important regional hub for their rapidly growing global LNG business - having concluded a number of deals recently to increase their natural gas assets in T&T.

In a recent release Shell stated:

“Trinidad and Tobago represents a rich opportunity for us to continue building our integrated gas position in country and securing new competitive production,” said Derek Hudson, vice-president, Shell Trinidad & Tobago. “Shell continues to actively evaluate other options to increase supply from our existing assets, as well as pursue additional opportunities such as the previously announced purchase of Centrica’s interests in the North Coast Marine Area.”


In T&T in the 50's and 60's virtually all hydrocarbon exploration was conducted onshore with oil the principal target - natural gas was of little interest - since outside of the small T&T population there was no way to commercially exploit gas discoveries encountered when drilling for oil - since before the development of the technology to convert it to LNG it was uneconomic to transport overseas.

The Ortoire block in that era was a major area of interest for oil exploration for Shell - they made a number of oil(and gas) discoveries on the block and commercially exploited the fields by building an oil pipeline across the island to their oil refinery some 25 miles away at Point Fortin.

Page 47 in the link shows the principal location of T&T's oil fields, pipelines and refineries in the 1950's and 60's.




Major exploration shifted to offshore in the 1970's and 80's once the technology and equipment for such operations become available - leading to numerous large oil field(and gas field) discoveries.

The advent of LNG ships in the 1980's and 1990's was the catalyst that led to the commercial exploitation of T&T's offshore gas fields, most of which were found while looking for oil.

By cooling natural gas to minus 160 degrees centigrade it reduces in volume 500 fold allowing LNG ships to transport natural gas commercially worldwide from remote island locations. (I know this because as a very young man i used to operate the first generation of these ships at sea world-wide).

In 2000, Atlantic LNG Co (recently taken over by Shell) built the first Western Hemisphere LNG export plant in the previous 30 years in T&T. It has since been increased in size 5 fold.

Shell has been expanding its holdings in Trinidad and Tobago since its purchase of BG Group. It has now become the largest shareholder in Atlantic LNG and is seeking to rival BP as the biggest player in Trinidad and Tobago, though principally through growing its natural gas assets.

Should TXP make commercial natural gas discoveries on the Ortoire block - which historically produced gas in commercial quantities for internal use( an old gas distribution pipeline is still in situ) - they will not have too far to look for a ready market.

AIMHO/DYOR

[mr. t] 28/6/2018 16:39

I know a little about the EV charging market, and have met David Martell - founder of Chargemaster. He also found and sold Trafficmaster many a year ago. Fairplay to him for doing this deal with BP. The thing I having with EV charging companies is that none of them make money, and I can't see a clear path to them making money. There's going to be a hell of a lot investment though, that's for sure, and the big energy companies (oilers & utilities) are snapping up the start ups.

[zengas] 28/6/2018 14:30

No relevance someuwin, just see it as a major growth market and consolidation with money to be made. Bit like when the mobile phone era kicked off. Dissapointed to see it being bought up so soon but I guess a sign of how Shell, BP and others will diversify at the pumps etc over the next few decades. Will be a huge demand for energy generated and storage.

[someuwin] 28/6/2018 13:52

Interesting ZEN, but what relevance to TXP?

[zengas] 28/6/2018 12:39

Had my eye on Chargemaster peparing to IPO but BP snapped them up this am for £130m. Major energy Cos targeting charging tech. Shell bought NewMotion last October.

[futuredlighter] 28/6/2018 10:53

plenty of nice buying today

[someuwin] 28/6/2018 10:29

Can't buy any online.