Touchstone Exploration Share Discussion Threads

[zengas] 12/9/2018 11:25

Might be an update prior to or just after this 3rd Q end Sept.

[awise355] 12/9/2018 10:44

Hi MT. all quiet here, when do you expect news for TXP?

[mount teide] 12/9/2018 10:15

L2 strengthening - 3 v 1 / 17.5p v 18.5p (2 @ 19.0p, 2 @ 19.5p)

Brent $79.17

JSE breaking out to new highs this morning on strong volume.

[che7win] 11/9/2018 16:02

Yes, Brent rocketing this afternoon

[euclid5] 10/9/2018 13:29

Thanka Spangle for the message - have replied back today

[spangle93] 10/9/2018 07:22

Announcement by CERP this morning ref Cory Moruga

"The Company is pleased to note that the Ministry of Energy and Energy Industries..has granted an extension of the licence for the Cory Moruga Block (the "Licence"). The Licence will now run until 2032. The extension will allow Steeldrum Oil Company Inc to commence commercial sales from the Snowcap-1 well as the first step of the Cory Moruga field development.

T-Rex Resources (Trinidad) Limited ("T-Rex"), a wholly-owned subsidiary of Steeldrum, holds 83.8% of the Licence as operator, with the remaining 16.2% being held by Primera Oil and Gas Limited, a subsidiary of Touchstone Exploration Inc

[mount teide] 09/9/2018 13:38

Off topic: Briefly mentioned Jadestone Energy previously as an early stage O&G sector company worth having a look at - since, from 2016 it has become an investment project controlled and driven by three highly successful hedge funds.

David Neuhauser, Jadestone NED and MD of Livermore Partners, a US hedge fund which generated an astonishing +85% portfolio performance in 2016, specialises in the Energy, Commodity and Financial sectors. Livermore hold 6.96% of JSE after buying more in the recent Jadestone placing to buy the shallow water Montara Field off NW Australia and again in the open market last week.

In the following BNN Video David explains how he and two other Hedge Funds effectively took over the running of Mitre Energy(since renamed Jadestone Energy) in 2016, restructured the company, changed the business strategy and Management/Board, recruited Paul Blakeley and his team from Talisman Energy(Asia), one of SE Asia's most successful oil and gas industry growth stories, to run Jadestone and what their plans are going forward.





Part of an industry interview David gave in H2/2017 specifically relating to Jadestone Energy - well worth a read:

'VW: One small cap you like is Jadestone Energy. What do you like about this business in particular?

DN: When we first took a position in Jadestone, we saw an opportunity to transform the company by replacing the management and board and using the business to acquire depressed operating assets others must sell to de-lever their balance sheets and focus on core basins. Producing assets (not exploration) with real cash flows and deep value.

We feel that we’ve made excellent progress on this. New management has been brought in, and the company has been transformed. New Jadestone is built on an “acquire and exploit” strategy not unfamiliar to some domestic E&P companies, whereby bringing operating capability and new capital to under-invested assets (or assets in the hands of super-majors for whom materiality in future activity is a concern to them), can add significant incremental value.

The difference with New Jadestone, compared to North American plays is that the company is focused on Asia Pacific opportunity where the returns are on average two or three times better than North America (IHS Herold annual performance reports), where the competition is very limited and therefore purchase price is very modest (often assets are sold on bilateral deals – no competition), and finally where opportunity options are on the increase.

These characteristics make the thesis almost unique (compared with North America for example where the competitive bidding is intense. What’s more, product pricing is favorable in Asia. Oil is usually sold at premiums to Brent and domestic gas is contracted in the range $7.50 – $8.50/mcf)

VW: The company just completed a refinancing to acquire assets from Stag Oilfield, what’s your view on this acquisition and the financing deal?

DN: Jadestone secured $68 million of new financing, by way of a (nonbrokered) placing for C$53 million (c$40 million) at C$0.40/sh and a $28 million convertible debt facility from Tyrus Capital to contribute towards further acquisition opportunities.

The convertible facility has a tenor of three years and carries a 7.5% coupon. The conversion price is C$0.50/sh. This additional financing will allow Jadestone to conclude the (previously announced) Stag asset acquisition, provide a LoC in respect of the Stag FSO and provide the capital to drill additional appraisal wells.

The Stag asset adds production of 3,750bopd and will generate cash that could be deployed elsewhere for the development of the portfolio. There are some additional acquisitions also in the pipeline. As described above, New Jadestone is built around an acquire and exploit strategy.

There is a growing number of M&A opportunities emerging with limited competition. Opportunities are increasingly being sold at distressed prices. The fundamental value proposition, however, is the reinvestment that follows M&A. We look for almost an order of magnitude of reinvestment potential compared to acquisition price which drives 3-6 times MOIC.

As the portfolio builds the ratio of organic capital increases giving optionality, diversity, and control. After the completion of Stag, Jadestone is now aiming to complete the purchase of two appraised gas fields in Blocks 05-1b and 05-1c offshore Vietnam in the Nam Con Son basin in the next two months and bring them on stream in 2019, as well as further development of its existing assets in Vietnam’s Malay Basin with the Nam Du and U Minh gas fields.

VW: If everything goes to plan how much do you think the company could be worth? Do you have a bear and bull valuation?

DN: We feel Jadestone can be worth $2.00+ a share. Perhaps much more over time as the company continues to roll-up assets. Timing is tough to determine, but today even with our capital raise, the shares are very cheap. Trading at only $15,000 a flowing barrel and a discounted 0.30 net asset value per share with no debt, $20 million of cash on the balance sheet and plenty of development opportunities in the pipeline this is a very compelling opportunity where we believe the downside is limited. Catalysts to further upside will be closing the two current acquisitions, adding two or three new acquisitions currently being targeted, delivering production and cash flow stability for the company for the first time since inception. Also, recognition in the market that the strategy of new management is working and value is being delivered, re-listing the stock on a more appropriate exchange, further delivered growth longer term.

VW: What do you think of the new management?
They’re very skilled and experienced. Each of the team has 15 to 30 years experience operating in the industry within the Asia Pacific region. The new team also has a longstanding relationship with the principal stakeholders and deep insight to many M&A opportunities. They’re credited with already creating one of the most successful independent E&P business in Asia Pacific, Talisman Energy, and we hope they can replicate this success at Jadestone.

VW: Are there any issues that could derail this thesis? Is the company highly sensitive to oil prices or is this a play on rising oil prices?

As Jadestone’s shares are already trading at a deep discount to the value of the company’s assets, we believe there’s a wide margin of safety here. The stock is not a direct play on oil but a play on management’s ability to buy distressed assets at attractive prices. Of course, as with all investments, there are risks; execution of the new management team, available opportunities, and of course financing risks but today the company has plenty of opportunities available to it and is fully funded.

So, we see much more upside as long as the current environment holds. On the topic of energy prices, I should point out that as part of the Asia Pacific upstream strategy, approx. 50% to 70% of the reserves and production will be domestic gas the majority of which is sold at long-term fixed prices with escalation clauses. This makes the business a natural hedge in a volatile price environment and takes away significant upstream investment risk.'

[spangle93] 08/9/2018 07:59

Hello Euclid5, ref #2832, rather than widely demonstrate my ignorance of another company, I've sent you a message

[mount teide] 07/9/2018 18:05

Ross - have long term top 5 portfolio holdings in CAML and ARS, which like TXP, i've added to significantly on pullbacks during the last two years.

A new 118 page Copper market research report from Arden Partners strongly supports what a few of us have been saying for at least two years - that copper is likely to be the standout investment over the next 5-7 years(the recovery stage of the new business cycle for the metal that commenced in H1/2016), following a near 8 year downturn/recession created by an over supply situation after copper appreciated in price over 500% between 2000 and 2006, creating a surge in new investment on high operating cost mines.

The oversupply situation was eliminated by 2015/16 and with capital investment in the sector dropping by 65% since 2013, has left the copper market facing a forecast deficit of at least 5 million tonnes by 2025(some 23% of current annual global demand) based on a continuation of 2% annual growth(considered conservative by many in light of the rapidly growing demand from the Green Energy and EV sectors).

It is pleasing to note that of the hundreds of producers/explorers in the copper industry to choose from, Arden's three top stock picks from this new coverage of the sector include ASIA MET (ARS) and Central Asian Metals (CAML).

'Where copper exposure is concerned, not all companies are created equal and this is key in allocation when trying to maximise gains from the copper market. Our top picks from our new coverage are Asiamet, MOD Resources and CAML. We see SOLG as an interesting higher risk yet higher reward option due to its current stage.'

Sector Overview:
'Copper is entering an interesting phase. Supply is stretched from successive underinvestment at the mine level and demand is rising from infrastructure growth in China, new technologies and the ‘green revolution’.

Opportunities exist to ride this cycle and market dynamics have changed, largely from China developing its commodity usage methodology and global economic jockeying. We believe that China is about to go into a major growth and regenerative phase that will be copper and iron ore dependant. Combined with predicted supply shortfalls, we see copper as a standout medium to long-term investment.'




HSBC - CEO recently told the O&G industry that over the next 8 years they're going to cause investment in renewables to happen as a result of major shareholder pressure.

HSBC Balance Sheet Exposure to Oil and Gas and Renewables Industries
2017
$1bn - Renewables
$30bn - O&G

2025 - Forecast
$100bn - Renewables


The Re-Electrification of Everything - Gianni Kovacevic



25 Largest copper mines produce 50% of global production
15 Largest copper mines had average mined grades of 1.2% in 2010; by 2016 it had fallen to 0.72%.
Source: Citi and FT.

China is currently adding a 9,500 fleet of electric busses every 5 weeks to its National fleet - to put this in context, the same number of buses currently operating today in London is being replaced with electric vehicles every 5 weeks in China.
Source: Sprott

[mount teide] 07/9/2018 16:39

Ross - Kaz - why take an unnecessary risk when there are many other very competitively priced copper miners with great prospects over a 5 year timeframe?

Regardless as to the performance of Kaz's excellent producing assets, the circa $5.5bn of investment needed to get the Russian 'asset' into production is likely to weigh on the share price for years - particularly with Russia being increasingly seen as a gangster state where property rights are determined by Putin and his fellow crooks, as BP and Hermitage Capital to name just two have found to their cost.

Abramovich and his pals are probably delighted to have got circa $950m for the Russian copper asset - Kaz's share price since the announcement suggests the market is far from convinced that it's a good move for Kaz's shareholders.

[mr. t] 07/9/2018 12:16

In mid 2019, according to Morgan Stanley, the European Majors will warm shareholders up to increasing investment by 25% from 2020:



I like that TXP are ahead of the curve. By the time the majors and others in the industry are investing due to continuous high oil prices, TXP will already be receiving the benefits of its aggressive drill program.

Given Shell's interest in Trinidad, Shell may want to spend some of their extra 25% investment in TXP if Ortoire is a success next year.

[mount teide] 07/9/2018 08:47

Asia Braces For Much Tighter Oil Markets - OilPrice.com today



'Two months before the U.S. sanctions on Iranian oil exports go into effect, Asian refiners and traders are beginning to line up their purchases for cargo loadings for November.

On September 3, the crude oil trading cycle rolled to the month of November, and sentiment in the Middle East crude trade sharply changed. Asian buyers—whose oil purchases from the Middle East are priced off the Dubai and Oman benchmarks—are anticipating tighter supplies of medium and heavy sour crude grades from November onwards, when the U.S. sanctions are expected to stifle at least part of those Iranian barrels flowing to Asia.

The market’s expectations of reduced flows of both medium and heavy sour grades from Iran lifted the Middle East crude structure at the start of September, sending the November Dubai cash and swap spread surging. This spread between Dubai cash and Dubai swap—a monthly cash-settled swap based on the Platts daily assessment price for Dubai Crude—is generally viewed as an indicator of market sentiment in the Middle East sour crude market......

.....The market will lose “well over 1 million” bpd from Iran with the sanctions, and “that can’t be made up,” John Kilduff of Again Capital told CNBC on Tuesday, expecting WTI Crude prices at the end of this year to reach between $85 and $90 per barrel, with Brent Crude between $95 and $100.

RBC Capital Markets expects the losses of Iranian oil to exceed 1.2 million bpd in the first quarter of 2019, and Iran’s reaction to the U.S. sanctions in November could lead to some sort of “unintended military escalation,” which the markets are currently underestimating.'

[marvelman] 07/9/2018 08:40

Musing to myself and reminder to myself in order that I may not end up with egg on my face...it matters not who is right but it does matter if you refuse to accept you may be wrong.

[mount teide] 07/9/2018 00:20

Ross - With respect to Geraint who thoroughly deserved his win this year - when a fresh Froome and Dumoulin turn up for next years TDF it is likely to be a very different story.

Froome entered the TDF off the back of an unprecedented 3 back to back Grand Tours, winning all three.

No other rider in recent history other than Tom Dumoulin has shown that its possible to be competitive in two back to back GT's, never mind in Froome's case 4.

In last year's Spanish Vuelta won by Froome, the two riders to podium behind him in the TDF that finished just 4 weeks previously completely blew up in the Vuelta, ending up nearly an hour behind after failing to deal with many of the 13 mountain top stage finishes, including the toughest climb in pro cycling which the organisers somewhat meanly scheduled for the end of the penultimate stage; the dreaded Alto De L'Angliru, an incredibly steep 13km mountain goat track with hellish slopes of up to 28 degrees. After seeing it destroy his riders, the furious manager of one team, Vicente Belda, stormed into the race organisers cabin and said to them: "What do you want? Blood? You ask us to stay clean and avoid doping and then make the riders tackle this kind of monstrous barbarity at the end of 2,000 miles of racing."

[mount teide] 06/9/2018 22:22

Ross - What bet? According to my on-line turf accountant the only open position i've got running is Chris Froome at 2/1 to win a 5th TDF in 2019!

As mentioned before, i would have no problem with TXP raising cash/taking a partner to fund the ultra high impact Ortoire prospects - particularly now the number of prospects has risen from 5 to 9 - as drilling success on any of the larger gas or oil prospects has the potential to send the share price into the stratosphere.

In the meantime i'm happy to see Paul Baay replicating at TXP what he did at True Energy at the beginning of the recovery stage of the previous oil sector commodity cycle - plough the cash flow into a continuous production development drilling programme - a strategy he successfully used in a rising/strong oil price environment to increase production between 2000 and 2007 from 350 boepd to 20,000 boepd. Late in 2007, a little over one seventh of the assets were sold for over CAN$200m.