Touchstone Exploration Share Discussion Threads

[tektonik] 13/9/2018 15:11

Thanks for sharing Che7win, good time to get in me thinks

[mount teide] 13/9/2018 13:24

ross - considered yourself honoured then - you've become just the third poster i have filtered since 2011!

Good luck with your trading!

[walter walcarpets] 13/9/2018 12:14

Che7win: thanks for the link - looking very promising. :-)

[che7win] 13/9/2018 11:45

Yes Mt, That is an upgrade from him.Makes TRIN comparison look pedestrian.

[mount teide] 13/9/2018 11:41

Ross - Paul Baay has upped his conservative year end figure from 2000 to 2100 bopd.

With 11 wells due to come into production in H2/2019 - that means each well would have to generate an average of just 35bopd of additional production in H2 to hit that 2,100 bopd figure.

Since he is a cautious man, i strongly suspect that if TXP has all 11 wells on production by year end they are highly likely to exceed that figure by some margin - and so will be keeping with my previous estimate of 2250 - 2,500 bopd inclusive of the addition of these 11 wells.

Happy to agree to disagree and leave it there.

[sleveen] 13/9/2018 11:09

astocourt


13p placing only if TXP do a TRIN, which I very much doubt they will.

[mount teide] 13/9/2018 11:01

The last 70 years has shown us that the commodity markets follow highly predictable 15-20 year cycles, and once the tide changes direction it usually flows for between 5-10 years(with high volatility), before slowing and reversing. The oil industry is currently 2.0-2.5 years into a new recovery stage - the current tight market, sector fundamentals and long market history would suggest its likely to have at least another circa 3-7 years left to run.

Early in the recovery stage of a long term, highly cyclical market, as a long term high conviction investor like North Energy and Richard Sneller, i'm mostly interested in where my investment is likely to be in 2-3 years time - next week/month is largely just background noise on route to 2021.

History has shown that the best returns in the recovery stages of commodity markets are mostly generated by management with a previous track record of success in the industry, making high quality assets sweat.

Regardless as to success or otherwise with the "low risk" Ortoire prospects, at $70-$80 oil, with the production development programme TXP is likely to carry out during 2019-2021, i believe the company has the potential to reach 4k-5k bopd by 2021.

Risk/Reward - I believe the downside risk over a 2-3 year view will be largely insulated by the oil market fundamentals and the current stage of the market cycle.

What we do know is that those who suggest that the global economy cannot handle $80 oil, never mind higher, are either being self serving, disingenuous or cannot be bothered to check out the 15 year Brent chart.

What that chart tells the market is that Brent has averaged $79.23 in the 15 years since 2003, including averaging $96 from 2008-2015 and $110 during 2010-2014. So today's Brent price is not high in historical terms, merely back to the 15 year mean price.


AIMHO/DYOR

In the success case at Corosan next spring I would expect highly material revenues to be generated in H2/2019 from an early tie in to Shell's pipeline infrastructure some 2-3km away in the Central Block.

[mount teide] 13/9/2018 10:44

Ross - as previously posted, you know very well the early forecast calculations were largely based on the up to 20 well programme initially proposed by Paul Baay - subsequently amended to an initial 10 well programme and recently upped to 14 wells.

The forecast was based on the not unreasonable expectation that most of the 10 well programme would be drilled and on production in H1/2016 - as we've since seen, the commencement of the programme was delayed due to certification issues with one of the rigs, resulting in the production from seven(now 11) of the wells getting pushed into H2.

This means TXP has 11 new wells scheduled to come into production during H2/2018 - something the management of my TRIN investment tells me they need 18 months to do for 10 wells, immediately after announcing the dilution of my shareholding by 40% at a 40%+ discount to the previous share price high.

The observant might suggest that despite hundreds of TXP posts, Advfn is probably yet to see a single post where you have been positive on any aspect of TXP's development since listing on AIM, after oil finally found a bottom after 8 years in H1/2016 and entered a new cyclical recovery stage.

I'm all for objectivity but see little point is endlessly debating pure speculation that is likely to have little or no impact on my investment over a 2-3 year view, should as I expect oil averages between $70-$90 over that period.

The strong flood tide effect of the recovery then boom stage of the oil market business cycle comes along once every 15-20 years - its when fortunes are made - long history has shown for the best returns it's not a time for investment timidity and playing it safe(there is no safe) - but a case of following management with a proven track record of success in previous recovery/boom commodity cycle stages, in an effort to minimise the risk and maximise the profit potential.


AIMHO/DYOR

[wanobi] 13/9/2018 10:29

Lord Gnome - had to post, what a great name!!! cheers W

[lord gnome] 13/9/2018 10:22

Ask rossannan, he's the expert.

[astorcourt] 13/9/2018 09:44

when is the placing coming?
13p placing about right. will have to be discounted.

[captainfatcat] 13/9/2018 07:20

Mr T

"Spangle, I think your post 2866 is beautifully written and almost perfectly sums up my view too. The only thing I’d add is that TXP is giving out signals that they have the financial resources they need, and will flex their operational plans to meet their financial resources."


Absolutely agree

[brasso3] 13/9/2018 07:02

The market is eagerly awaiting the confirmation of 2000 BOPD...

[che7win] 13/9/2018 06:58

From another interview:"The rig completed at our eighth well recently and should be moving off in the next week. That will free us up to get the service rigs in and ramp everything up, getting us to where we need to be. Hopefully, in mid-September, we will be through that 2,000bopd range, and once we have two weeks of production at that level, we will put out an update with more details. We still hope for our exit rate to be 2,100bopd this year.'"This should bounce today on bullish updates yesterday

[mr. t] 13/9/2018 06:31

From the oil capital presentation, I picked up the following useful points on cash, debt and cash flow.

Around 19 minutes, Paul Baay says TXP is generating around $2m cashflow per month (twice what they did in Q2) and has $10m cash. That $2m is with 5 of 2018's planned 14 oil wells online. If they continue to average 70 bbl/day extra production per well then I’d expect cash flow to be closer to $3m per month by the end of this year.

From 26 minutes, Paul was asked about debt and gave a pretty straightforward answer. TXP thinks it’s good to have some debt and they’re looking for debt to be less than 1x cash flow. Next year they expect $24m cash flow and have $15m debt - so have room on gearing. He then says “we see it (the team debt with 8% coupon) as proper capital allocation, it’s not something where we’ll use free cash to pay back the debt”. He’s talking about actively deciding to not pay off debt with free cash - instead TXP will take advantage of attractive investment opportunities.

(Debt was over 5x cash flow when the last placing was done. TXP were in a much more precarious financial position to where they are now).

Also, slide 30 of the presentation pdf on TXP’s website have this point: “The Company’s Board of Directors has approved 14 new wells in 2018, subject to stable commodity pricing and adequate liquidity.” The drilling plan is subject to TXP having funds and stable oil prices Ie. if they don’t have funds, they scale back drilling.

Spangle, I think your post 2866 is beautifully written and almost perfectly sums up my view too. The only thing I’d add is that TXP is giving out signals that they have the financial resources they need, and will flex their operational plans to meet their financial resources.

[spangle93] 13/9/2018 02:03

Ross - what, nothing about Bury St Edmunds? I'm gutted. ;-)

Ref your theory of raising money "just in case things are tight". The optics for doing this need to be considered.

Look at MATD. They were fully funded for their 2018 program of 4 wells - 2 rank wildcats, 2 low risk appraisals - but opportunistically and out of the blue raised more before the first exploration well was spudded to increase funds for 2019 wells at an acceptable price. The immediate perception was that they had no confidence in the exploration wells coming in and (fair enough, it's about a 1 in 8 chance) so the price fell immediately to, and remains at, 20% below that placing level.

[mount teide] 13/9/2018 01:43

Some highlights from the presentation:

2018
Production Development Plan - 14 wells (8 drilled / 5 on production / 6 to be drilled)

2019
Production Development Plan - 15 wells

Exploration Programme - 4 wells (Corosan(Gas) / Balata West(Oil) / Central North(Gas) plus one other.

Using 2018 drill cost as guidance - estimated cost of 15 wells x US$800k = US$12m.

First two Ortoire 10,000ft+ wells - estimated cost of US$4-5m each = US$8-10m

Company has worked closely with Shell, the owners of the Central Block Gas Field and LNG Terminal who have kindly shared their well data from Carapal Ridge - the Corosan prospects are just 2-3km away.

Corosan will be the location of the first well to be drilled since it can be quickly and cheaply tied into Shell's nearby pipeline system running to the LNG terminal. The well will twin a well previously drilled at Corosan in 2001 which tested at 8.2mmcfd from the upper zone, before being abandoned since there was no gas processing facilities/infrastructure on the Island at the time. The potential reserves being targeted with the first well is equivalent to the total current reserves of the company.

Company currently has $12m in cash and is generating roughly $2m a month cash flow.