Touchstone Exploration Share Discussion Threads

[jamesiebabie] 26/9/2014 23:21

Presentation is out.

[jamesiebabie] 26/9/2014 20:40

Another extract:-

"However, while it assesses the best way to exploit the Canadian potential, the
Company will focus its 2014 capital program of $27.5mm on drilling 21.32 wells
in Trinidad, 18 of which are planned for H2/14 while simultaneously targeting 2-3
workovers and recompletions per month."

[jamesiebabie] 26/9/2014 19:56

blik - I believe there is a BIG buyer mopping up, but they do not want to push it up yet; in fact they maybe squeezing folks.

A BIG push from the company will start shortly, but they want the momentum to build in terms of the drilling results; they are coming.

[blik] 26/9/2014 16:35

Thanks for those notes JB, promising indeed, market just doesn't like this share at the moment.

[dosser2] 26/9/2014 16:16

The way LGO has been going this should be much higher

[jamesiebabie] 26/9/2014 16:08

Some extracts.


Target Price of $2.00 per Share and Outperform Ranking

We have increased our target price for Touchstone to $2.00 per share (previously $1.75 per share), which reflects the value now assigned to the Company’s Viking rights. We now assign risked value of $28 mm or $0.33 per share to 7 (4.75 net) sections that are prospective for the Viking, which has increased our risked NAV estimate to $2.10 per share (previously $1.77 per share).

There continues to be significant potential that is not recognized in our risked NAV estimate from the transaction with Petrobank. For instance, our risked NAV estimate does not value the remaining 12.5 (6.75 net) sections of land that are potentially prospective for Viking rights. Also, we have not ascribed incremental value to the heavy oil assets at Luseland and Kerrobert, Saskatchewan, or at Dawson, Alberta. It is noteworthy
that Canadian heavy oil production is approximately 450 bbl/d and that the assets are now generating positive cash flow.

In 2015e, Touchstone will potentially drill up to 12 (9 net) wells in Canada targeting the Viking. In total, on the 7 (4.75 net) sections we have valued, we estimate there are potentially up to 112 (76 net) unrisked drilling locations and 82 (46 net) risked drilling locations, which implies
the potential for a multi-year drilling inventory. Touchstone’s assets in Saskatchewan have the potential to be a core area that could generate significant value for shareholders. The unrisked value of the 7 (4.75 net) sections is $50 mm or $0.60 per share.

[jamesiebabie] 26/9/2014 16:06

We've had two new broker notes out this week with target prices of $1.50 and $2.00; then there is big upside from the unbooked assets, ost of Trinidad and all of Cananda.

This should be an exceptional few months from what I can see and hear from the company.

[jamesiebabie] 26/9/2014 15:53

VALUATION, TARGET PRICE AND RECOMMENDATION

In our valuation of the Company’s prospects, we valued the potential reserves rather conservatively to reflect the development timing of drilling within forecasted cash flow for the foreseeable future.

For the various Trinidadian land blocks we looked at Touchstone’s low risk development prospects and the Company’s identified 130 drilling locations, 73 of which have no reserves booked to-date. In evaluating these net unbooked locations we split them into the core producing properties and Touchstone’s remaining development blocks. The core development wells are estimated to recover between 75 mbbls and 100 mbbls resulting in an unrisked resource potential of 4.9 mmbbls and an unrisked NPV of $25.1 million, or $0.31/sh of unrisked upside. On Touchstone’s non-core development plays, we estimated these wells to recover between 20 mbbls and 50 mbbls resulting in an un-risked resource potential of 1.4 mmbbls and an unrisked NPV of $6.6 million, or $0.08/sh of unrisked upside. All together the Trinidad development potential evaluated resulted in a total unrisked resource of 6.3 mmbbls and an unrisked NPV of $31.7 million, or $0.38/sh of potential upside. To be prudent, we further risked the upside potential by 50% to reflect both the risk and future development timing resulting in $0.19/sh of near term upside on a risked basis.

We took a similar approach in the valuation of the Company’s exploration upside potential at Cory Moruga (16.2% WI) and Ortoire (100% WI) covering a total of approximately 51,900 acres. At one well per 160 acres, if we assume a 10% CoS on the prospective lands, this should result in a minimum 28.0 net future locations. We also made the assumption that these wells will perform on par with the Company’s core devleopment wells recoverying at least 75 mbbls of reserves, resulting in an unrisked resource potential of 2.6 mmbbls and an unrisked NPV of $12.5 million, or $0.15/sh of unrisked exploration upside. However, we further risked the upside potential by 95% accounting for increased exploration risk and the limited near term capital expenditures allocated to advancing these exploration plays resulting in minimal per share value at this time on a risked basis.

Finally, we evaluated the near term growth potential of the Canadian assets where the heavy oil plays have a combined contingent resource assessment of 78.6 mmbbls. Given the minimal capital expenditures planned this year, as well as early stages of development on the heavy oil assets, a 5% recovery factor yielded an unrisked resource potential of only 3.9 mmbbls and an unrisked NPV of $16.7 million, or $0.20/sh of upside potential. Again, we further risked the exploration upside by 95% accounting for increased risk and the limited near term development resulting in minimal per share value at this time on a risked basis. However the 18.5 (10.1 net) sections of Viking prospective lands in the Beadle area gave us a little more comfort due to the historical industry development in the surrounding areas. These wells typically cost around $1.1mm and recover approximately 50 mbbls per well. Given the size of the land base and Touchstones working interest, we estimate at least 37 net drillable locations for future development. This resulted in an unrisked resource potential of 1.9 mmbbls with an unrisked NPV of $9.6 million, or $0.12/sh of unrisked upside potential in the Viking. As Touchstone currently has no production or reserves booked in this area, we further risked the upside potential by 75% to reflect both the risk and future development timing resulting in $0.03/sh of near term upside on a risked basis.

[jamesiebabie] 25/9/2014 17:32

Bloody annoying in the short term, that's for sure, but the offer is still at 80c, so it would have been interesting to see what you can buy at in significant numbers.

[blik] 25/9/2014 16:52

Down we go again... wish I held off buying...

[jamesiebabie] 23/9/2014 19:53

It'll get there, but remember the POO is under pressure, so stocks will follow; the good thing is TXP is a cheap producer.

[dosser2] 23/9/2014 19:43

The price into a nice upward pattern, hopefully.

[jamesiebabie] 23/9/2014 19:40

The price? or what you want to buy at?

[dosser2] 23/9/2014 19:28

Still wont settle

[dosser2] 22/9/2014 16:46

MM games here with the price

[blik] 22/9/2014 16:37

Cheers JB, I don't think the predicted exit rates have changed much from the figures in that article.

[jamesiebabie] 21/9/2014 16:30

blik - this article is worth reading again and discusses some of your questions.

[blik] 20/9/2014 19:28

JB can you recall previously predicted exit rates?

Currently predicting 2300-2400 for 2014, 3100-3300 for 2015 (for Trinidad). I think these numbers are unchanged? Can't recall... 2015 is very conservative IMO.

Clear the priority is T&T

[blik] 20/9/2014 19:16

I have seen it JB... It's not on the site yet.

Noted there are more analysts covering the share now (FirstEnergy Capital, Paradigm, Maison Placements Canada, Industrial Alliance securities), and it does highlight recent wins and potential very well. Should be well received.

[jamesiebabie] 20/9/2014 08:23

blik - can you see the new presentation?

[jamesiebabie] 19/9/2014 20:59

Well I can't get to their website. :0(

[blik] 19/9/2014 18:51

Nothing new in the presentation, pretty much a summary of the last RNS with some nice graphics and timelines.

[blik] 19/9/2014 17:31

Fully loaded here, got an extra ~35000 at varying prices yesterday and day before.

Look forward to the next update.

[jamesiebabie] 19/9/2014 16:12

88c in Canada.