Touchstone Exploration Share Discussion Threads

[captainfatcat] 30/10/2018 16:55

Brent and WTI are probably likely to start heading north again once the US sanctions on Iranian oil come in to full effect after the 4th November.

[mr. t] 30/10/2018 16:25

One reason for the recent oil price drop is hedge funds unwinding heavily long positions, according to this Bloomberg piece:



"Hedge funds’ net-long position — the difference between bets on higher prices and wagers on a drop — in WTI crude tumbled 15 percent to 206,295 futures and options in the week ended Oct. 23, according to the U.S. Commodity Futures Trading Commission. Longs dropped 9.8 percent to the lowest in almost three years, while shorts bumped higher by 13 percent."

Let's assume that when Bloomberg say longs are the lowest in almost 3 years they mean since Jan 2016. Back then WTI was $31.68 - a good time for a trader to buy oil. In contrast to pundits who say hedge funds reducing net longs is a bearish sign, I see it as positive. Given all the selling, Brent is still over $75 and, when the hedge funds decide to go long again, they'll be a lot of buying pressure.

In contrast to the article's bearish interpretation, another positive for TXP investors I see is this:

"And front-month WTI has closed at a discount to its second-month contract for more than a week, another indication of an oversupplied market known as contango.

So although oil for immediate delivery has dropped $10 in price, oil further out hasn't dropped as much and (for first time in a long time) is priced higher. So - if oil prices stayed as the forward curve is today (I know that's ridiculous) - TXP will do well. I'd also expect a hedge or put option to be more competitively priced, if TXP wished to enter into one.

One more positive for oil prices from the article:

"But, it’s not all doom-and-gloom for the bulls. Hedgeye Risk Management says the oil market could be in for a surprise when U.S. sanctions on Iranian crude begin next month and Brent could gain $5 a barrel, with a spike to $90 a possibility."

It'll be interesting to see what happens to oil prices, and TXP's share price, when Iran sanctions begin to bite in earnest.

[sleveen] 30/10/2018 16:10

MT

I hope you don't mind me asking, but did you not sell any ARS at over 10p to top slice?

(Genuine question)

[mount teide] 30/10/2018 13:38

Ross - in light of gleeman's response I have taken you off filter to read your post.

Once again, the post could not better highlight your trader's mindset - 40% down in a month while forgetting to mention that ARS is still up over 600% in 2.5 years, and that this year had the market support a placing of more than two times the valuation of its 2015/16 market low at an incredible 1,200% premium to the then share-price.

Asia Met's world class assets and potential is why the Board since taking over the company in 2015 has not taken a penny in Directors Fees but aligned themselves totally with their shareholder by taking incentivised share options - so incentivised that at the current share price they have worked for their shareholders since 2015 for ZERO COST since the average price of their options is around 7.5p - if anyone has an incentive to monitise Asia Met's world class assets its the people who were responsible for taking Oxiana Metals from a $3m junior to a $6bn major during the last copper market recovery cycle of 2000-2008.

Asia Met, since announcing a 4-6 month delay to the BFS for their near term production project at BKM - which has near surface, high quality, low operating cost heap-leachable mineralisation - has seen short term, leveraged traders getting hammered out of their positions.

For long term investors like me its a buying opportunity - as posted on the ARS thread last week, I have increased my holding by over 600,000 to over 5 million, since like the highly incentivised management I'm more interested in where the valuation of the company is likely to be in three years time not three months. The eagle eyed will have noticed that the previous strategy of using cash flow from the BKM development to fund the start-up heap-leach operation at its six times larger Beutong project has changed (the management is aware the copper cycle like the tides wait for no one) and now are looking at taking an industry partner to fast track the project, which will bring forward the monitorisation of their largest asset.

Likewise, TXP is up over 140% since coming to AIM last summer - Zengas, North Energy, and a few friends and I were its lone supporters - enabling us all to build positions greater than 1% while the price was still around 8p. We have all heavily averaged up since - North has increased its holding to close to 11%.

Its called long term investing in high quality assets run by strong management teams and letting the recovery stage of the commodity cycle and their talent do the rest.

While there is no such thing as guaranteed success, 50 years of stock market history has shown that long term value/growth investing in high quality nat resource companies with outstanding management in the recovery stage of a highly cyclical, long term market is a tried and tested investment strategy for market outperformance with limited downside risk since its so much easier to swim with the tide than against it.

INVESTORS SHOULD IGNORE 50 YEARS OF NAT RESOURCE MARKET HISTORY AT THEIR INVESTMENT PERIL.

All industry research has long pointed to short term trading as a surefire way to lose money in today's markets and lots of it. The only certainties in life are death, taxes and the overwhelming majority of short term traders continuing to lose money!

AIMHO/DYOR

[captainfatcat] 30/10/2018 12:24

iLeeman nice spot on the C&H formation

[ileeman] 30/10/2018 09:29

Rossan


Poor comparison to ARS and talking about wider macro climate because they had bad news out which accounted for the drop.

TXP is a producer ARS is an explorer, explorers rinse cash.

TXP will make a lot of cash with oil prices much lower.

Chart wise very bullish which is testament to the improving fundamentals, all time highs tested the other week, cup and handle pattern playing out, trendline very bullish.


free stock charts from uk.advfn.com

[ileeman] 30/10/2018 09:07

Added at 18.822p

Couldnt buy much.

[mount teide] 29/10/2018 15:04

If Petrotrin's 'management' of the Point Fortin refinery is a reliably guide ( the Union Representatives make Labour's Momentum thugs look to the right of New Labour), the Petrotrin E&P assets that have been capital starved for "20 years" may offer some very interesting opportunities.

[zengas] 29/10/2018 14:42

Maybe he is being conservative on the development and exploration wells given his comments on possible deals with Petronin.

He expects TXP to be at or near the top of the list in such a case. An opportunity to add production and reserves not only from Petronin but also via small 'e' high impact exploration at Ortoire could be possible.

[crooky1967] 29/10/2018 14:27

I agree Mr. T.

I was expecting 2 Ortoire wells being drilled in 2019. If these are going to cost $4-5m then makes sense to reduce the dev drills and increase the Ortoire ones if the results could be that good. Could still see a few more than 10 dev wells next year but will be dependent on POO.

[ileeman] 29/10/2018 14:13

Added some more shares today.

[ileeman] 29/10/2018 14:12

I listened again just to reiterate the key points.

How can you not get excited by this, a rarity on AIM to see directors do what they say they are going to do.

More wells over next couple months and many more wells next year (qoute 'exactly the same as we have already done').

Exploration upside is mouth watering, if you can call them exploration. By the way he spoke they are re-drilling old discoveries.

200million+ barrels
1TCF+

Flowed at 27k barrels in the 50s-60s

[mr. t] 29/10/2018 14:08

Thanks for sharing crooky.

Nice to hear there may be an uptick to prices received from Petrotrin next year, Ortoire plans are developing, and the 2018 drilling program is on track - especially given the recent floods.

One thing was different in this presentation - just after 1min 20s PB said the Board is likely to initially approve 10 development (ie. not including Ortoire) wells next year and that they'll cost around US$1m each to drill.

In the 11 October Proactive presentation - just after 4min 40s PB said we could expect to see 15 wells in the development program.

TXP is being more conservative. I think that makes sense - 10 development wells plus 3 Ortoire wells should be fundable from cash flow if a decent oil price is maintained. They can always expand the development program later in the year if it's the right thing to do.

[mount teide] 29/10/2018 14:04

Thanks Crooky - as always Paul Baay is informative

Confirmation that wells 9-14 will complete drilling by year end - most of the new production will come on during December and during January - setting the company up for a very strong first quarter.

As this year the 2019 Production development programme will commence with 10 wells - all will be 3,000ft - 5,000ft oil targets with an average cost of US$1m.

Ortoire - 2019 Exploration drilling programme;

Q2 - shallow Corosan gas prospect,
Q3 - Ortoire West oil prospect
Q4 - Ortoire Central gas prospect

targeting 1 TCf of Nat Gas and 250mbbls oil

Website presentation has been updated with new volumetric gas and oil estimates for the three Ortoire prospects.

Corosan West -
(shallow prospect): 42 bcf (P50) to 110 bcf (P10)
(deep prospect) 30 bcf (P50) to 73 bcf (P10)

Ortoire West - 435MMbbls(P50) / 939MMbbls (P10)
Ortoire Central - 440 bcf (P50), 2,087 bcf (P10)

[ileeman] 29/10/2018 13:49

Thanks

Exciting stuff and good to hear everything full steam ahead on current wells.

[sleveen] 29/10/2018 13:49

yet another presentation this weds.

Ross's placing must be getting closer?

[captainfatcat] 29/10/2018 13:22

Thanks for the heads up on that crooky.

[crooky1967] 29/10/2018 12:00

PB starting to get excited.