Touchstone Exploration Share Discussion Threads

[captainfatcat] 26/9/2018 10:03

Crooky good spot on TXP netback, TRIN look to be implying it roughly 35% lower than it should be going by their graph.

[the big fella] 26/9/2018 09:40

Captain - remind me of how much cash TRIN has and how much debt TXP has? That may well explain the disparity.

[crooky1967] 26/9/2018 09:37

Mmmm - Bit dubious those figures. Corporate Netback for TXP H1 2018 was CND $38 (USD $29) so why is Trinity showing under $20 for TXP on page 7. Or am I reading it incorrectly?

[captainfatcat] 26/9/2018 09:29

Page 6 of the new Trin presentation is interesting its a peer comparative to help visualize relative value to peers to emphasise TRIN growth potential. Given Trin market cap even after the recent slide is circa $68M in comparison TXP market cap circa $21M to my mind it shines a light on just how undervalued TXP to its peers.

The heading is Peer Comparatives (UK AIM Listed Production Led)

There are three graphs

EV/20 ($/boe)
EV Current Production ($/boepd)
Corporate Netback ($/boe)

[lord gnome] 26/9/2018 08:54

Ten years from now TXP will have a placing and Rossy will be here saying ‘I told you so.’ Nice day today Rossy, you really should get out a bit. 😀

[captainfatcat] 26/9/2018 08:47

Yes and interestingly that is exactly what they have been doing.

[mr. t] 25/9/2018 13:26

Ross, I have already looked at WTI. TXP uses Brent as a benchmark because it’s more correlated to realized price than WTI.

WTI gives a poor benchmark. E.g. in Q4 2017 there was a 0.8% discount to WTI. In Q1 2016 it was 16%. I’ve not seen realized prices fluctuate as much as that compared to Brent, and nor has the company - hence why they describe discounts to Brent.

[mr. t] 25/9/2018 13:02

Ross, what do you consider the usual discount to Brent to be? Here are the recent figures:

Q1 2017 - 9.7%
Q2 2017 - 8.2%
Q3 2017 - 8.8%
Q4 2017 - 10.8%
Q1 2018 - 11.7%
Q2 2018 - 17.1%

There’s a clear widening in the discount received in the last two quarters, showing TXP hasn’t been getting the full benefit of the increase in oil price. If you did the numbers as a % of WTI the you’d see a similar pattern (though less extreme).

I understand that the price TXP receives for its crude is linked to the price Petrotrin sells its refined products for. Hopefully there is a lag in the price of refined products compared to the increased price of crude, so the discount to Brent will narrow this quarter. But maybe not - Petrotrin’s refinery problems suggests they are not selling their products for a good price.

The realized price discount to Brent is something I’ll look at keenly in the next results. I like TXP as an investment, but I don’t like having a foreign national monopoly being able to determine the price received for Touchstone's oil.

[mr. t] 25/9/2018 10:17

Nice to see high oil prices, but I wonder what discount petrotrin will be expecting from txp.

[mount teide] 25/9/2018 09:33

Brent continuing to strengthen - $81.40

[mount teide] 24/9/2018 21:38

In its latest note, JP Morgan raised its Brent Crude forecast to $85 over the next six months, up from a previous forecast in the low $60s, expecting the Trump Administration to be tougher on Iranian sanctions than previous administrations. According to JP Morgan, a spike of Brent to $90 is likely, the analysts said in a note, as carried by Business Insider.


JP Morgan: Expect Brent Oil To Reach $90 On Iran Sanctions - OilPrice.com



'JP Morgan expects Brent Crude to hit $85 a barrel over the next six months—with a spike to $90 likely—as the investment bank raised its oil price projections to reflect expectations of more Iranian oil barrels coming off the market when U.S. sanctions on Iran return in early November.

The investment bank now sees the U.S. sanctions cutting Iran’s oil exports by 1.5 million bpd due to the tougher U.S. policies on Iranian oil customers as they succumb to U.S. pressure and cut off oil trading with Iran, and it sees the U.S. Administration less likely to grant waivers to Iranian oil buyers.

“The main driver of this revision is a higher estimate of how much Iranian crude exports might decline due to multi-country respect for US sanctions that should come into effect on November 4th,” JP Morgan said in the note.

The U.S. equity market resilience and the strong economy could embolden U.S. President Donald Trump on all fronts, including NAFTA negotiations, tariffs, and Iran, according to JP Morgan analysts. The result of this overconfidence would be a risk of “a major miscalculation from sanctions that are tough to calibrate,” according to the investment bank.

While initial estimates of Iranian oil export losses were closer to 500,000 bpd, now more analysts are expecting that the losses could be higher than 1 million bpd.

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 earlier this month, expecting WTI Crude prices at the end of this year at $85 to $90, and Brent Crude at $95 to $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.'

[mount teide] 24/9/2018 12:40

Total SA's announcement in the last hour suggest's Paul Baay was fully entitled to call some of TXP's Ortoire prospects like the Central North Seismic Anomaly "World Class" with its Estimated volumetric gas in place: 240 bcf (risked), 960 bcf (unrisked)


'£3 billion gas field discovered off the Scottish coast' - Scottish Daily Record

'The massive trillion cubic feet reservoir can be commercialised quickly and cheaply say French energy company Total.'

hxxps://www.dailyrecord.co.uk/news/scottish-news/3-billion-gas-field-discovered-13298580

A new gas field worth £3 billion has been discovered off the Scottish coast. French energy giant Total revealed the enormous find at Glendronach on the west of Shetland, which has the potential to deliver one trillion cubic feet of product.

Arnaud Breuillac, Total's president of exploration and production, said: "Glendronach is a significant discovery for Total which gives us access to additional gas resources in one of our core areas and validates our exploration strategy.'

[mount teide] 24/9/2018 11:35

Restructuring of the T&T energy sector tax regime is long overdue and by the sound of signals coming from Government looks like it may finally get addressed post the refinery shutdown to enable Petrotrin to recover and grow.

Allowing TXP to sell its light oil production direct to world markets has the potential to deliver a significant increase in revenue generation. By way of comparison JSE currently receives a $2.50 premium to Brent on the global market for a similar grade which at 15k bopd means it generates US$72m a year more gross revenue than it would as a T&T producer at the same production level under the present sales arrangement through Petrotrin.

The Permian light oil producers are currently receiving a circa $20 discount to WTI due to pipeline bottlenecks - this is $20 less than TXP and some $30 less than Brent, and means they would be getting $110m and $180m a year less revenue than TXP and JSE respectively for 15k bopd of production. The Canadian oil sand producers(mostly heavier oil grades) also have pipeline bottleneck issues and are currently receiving a circa $30 discount to WTI; an incredible 50% discount to Brent.

[mount teide] 24/9/2018 10:03

TRIN's SPT profit hit results would appear to fully validate TXP's astute approach of using cash flow and well controlled debt in a strongly rising oil price environment to finance capex for production development to mitigate much of the potential SPT hit.

[mount teide] 24/9/2018 09:55

After flirting on an number of occasions with $80 last week, Brent pushed through this morning - currently $80.15.


Shanklin - a few short term traders running tight stop losses crystallising another loss comes to mind - TXP often moves sharply up and down on low volume .
What we do know is at $80 oil with rising production the cash flow generation will be very strong.