Touchstone Exploration Share Discussion Threads

[homebrewruss] 27/3/2019 08:44

Will be interesting to speculate on the debt at some point. Presumably they are waiting to see what happens with Ortoire and then (assuming success) may either just pay down from increased cashflow and/or perhaps do a placing at a higher price?

[lord gnome] 27/3/2019 08:38

Not much to say about the results. Most of it was already well known, so this is just confirmation. The production figures are already ancient history. As everyone on here knows, this is all about the drilling of Ortoire, so all the action will take place in June / July.
I'll go back to sleep now if you don't mind.

[homebrewruss] 27/3/2019 08:27

Not gone through in detail yet but it's hard to demand comment from others if you don't make any yourself.

[sleveen] 27/3/2019 08:25

Mostly operational figures so unreliable BS atm

Lets see the account; SPT paid, tax etc, cash flow etc etc.

[sleveen] 27/3/2019 08:02

Can't find the accounts on SEDAR or the TXP website.

...and the RNS switches between US & Cdn $ FFS.

[brasso3] 25/3/2019 21:02

TXP seems to have bottomed out now.

Nice to see a new investor on board.

[spangle93] 25/3/2019 16:23

Aye, I saw that this morning. But having wasted an evening in January participating in the conference call and the Q&A's, many of which were about finance, only for him to rip up and chuck in the bin all that he'd said in the call about capital stewardship two weeks later when, apparently, a placing would be required for Corosan, I think I'll find better things to do with my time, like feed the goldfish.

Besides unless an RNS comes out between now and then, he's not got much more to talk about than he had in January, other than they've completed more wells and the production is therefore higher.

[mount teide] 25/3/2019 16:16

Join us for a live online investor presentation and Q&A session by Touchstone Exploration Inc starting 7pm GMT on Wed, 27th March 2019.

The presentation hosted by Touchstone’s CEO and President, Paul Baay will be followed by a Q&A session and attendees will be able to submit questions throughout the event.

Those unable to attend the presentation can send questions they would like to be asked to [e-mail].

Please copy and paste the following link into your browser:

[mount teide] 23/3/2019 09:29

TXP v TRIN

The major difference between the step change potential of TXP's Ortoire Asset compared to TRIN's Offshore asset is that the drilling cost, and in the event of success the development cost, of a discovery on Ortoire, is close to an order of magnitude less.

TRIN's cash will be completely swallowed up drilling just one offshore well - average cost $25m-$35m.

TXP can drill 7-10 wells on Ortoire for the same money. Plus, in the event of success with both the Nat Gas and Oil prospects the cost of development(and abandonment cost) will be a tiny fraction(orders of magnitude less) of that for a similar offshore discovery and have a considerably shorter timeline to production.

TXP's first Corosan nat gas prospect in the event of success could be in production within 6-12 months since it would require just a 2-3km tie-in to Shell's Central Gas Field.

In the T&T O&G industry TXP is unique in that the company offers shareholders near term step change potential similar to that offered from much larger offshore prospects but at a fraction of the exploration and development cost, and without putting the core business at risk in the event of failure.

AIMHO/DYOR

[lauders] 23/3/2019 01:30

Lord Gnome - Have a look/listen to this video at 38.20 minutes/seconds in and I think your question will be answered by PB:

[mount teide] 22/3/2019 16:17

Hi Spangle - at least one well was started in Q4/2018 and completed in Q1/2019 - as i understand it, such a well could be included in Q1/2019's SPT offsetting capex.

Regardless, since the offsetting capex from the drilling programme will be less than the gross SPT(provided they drill 3 wells or less a quarter), then all of the capex for these wells should be able to be used without exceeding the gross SPT before the offsets are applied. Paul Baay suggested in a previous online Presentation/Q&A that this would likely reduce the SPT for the 2018 drilling programme from 18% to an estimated 5%.

[lord gnome] 22/3/2019 14:41

Innocent question. If we are generating all this income, why aren’t we paying down our net debt or otherwise funding ongoing drilling e.g. Ortoire. Just asking.

[spangle93] 22/3/2019 12:44

Hi MT - if drilling is suspended then there is no capital investment cost against which to offset SPT in Q1.

I was/am trying to understand why ameliorated conditions are not being reflected in the share price

[mount teide] 22/3/2019 12:22

Spangle - What we do know is that production is now some 600 bopd (34%) higher than the average achieved during Q3.

Going forward this should have a much greater positive impact on cash-flow than the negative impact generated by an oil price currently attracting a reduced level of SPT as a result of TXP's drilling/completing wells during all the last four quarters.

The extra 600 bopd alone should generate an additional circa $1.15m a month / $14m a year of additional gross revenue after sales tax at the current oil price.

[spangle93] 22/3/2019 08:12

Well, it will be interesting to see the netback quoted for 4Q 2018. I suspect it will be closer to the 2015 level than the Q3/18 one, given that the oil price fell from around $84/bbl at the start of the quarter to $50/bbl at the end of (coincidentally leading to an average price in the quarter of around the level it's at today)

The question the figures above prompt is that if sentiment about the oil price, and its effect on cash flow, rather than operational performance, caused the share price to fall 50% at one point, why is there no reverse swing in share price as production and oil price increases?

Is it because (as slide 16 in the recent presentation shows), the effect of differential, royalties and SPT means that perversely profit per barrel is better at $56/bbl than $68/bbl.

At least Corosan gas, if/when produced, would hopefully have greater profitability.

[mount teide] 21/3/2019 17:55

The risk profile of an investment in TXP has changed dramatically over the last 18 months since the company came to AIM in mid 2017 - and when the story changes materially, it's worth paying very close attention.

How has the production development risk profile changed since the 15 well development programme commenced in Summer 2017?

From:
mid 2015 to mid 2017

* Average production: 1,250 bopd
* $47 average Brent oil price
* 50 bopd average production from most shallower development plays
* drilling costs 62% higher than in 2017/18/19

To:
Mid 2017 to March 2019

* Current production: 2,358 bopd
* $64 average Brent price - currently $68
* Proven 75-100 bopd ave development well production - mostly from the deeper play wells
* Drilling costs reduced from $292 a foot to an average of $180 a foot
* Nett back increased by over 60% to CAN$37.13 in 9 months to end Q3/2018
* Ongoing project to further reduce operating costs is only 50% complete
* SPT is significantly reduced based on capital spending from circa 18% to an effective rate of just 5% at $61.0 Brent (Source: TXP Management)
* $65 Brent should generate estimated production/net backs that should comfortably support a self funding 12 - 15 well a year production development drilling programme
* 2P Compound annual growth rate averaging 38% since 2010

Paul Baay's prescient timing/foresight to introduce a since proven 75-100bopd deeper play production development strategy to co-incide with the start of an oil market cyclical recovery, has dramatically turned around the risk profile of TXP - and if you take the view that oil prices are likely to stay at/close to the present level, never mind continue to gently appreciate into the Saudi's push for a price in the mid $70's, then the strategy is very sound.

That Touchstone is "icing" this accelerated production development strategy(production up 81% since AIM Admission) with a 2019 programme of three 2,000 boepd potential, relatively "low risk", low cost, ultra high impact exploration wells scheduled to commence in June 2019, offering the prospect of a highly material "Low risk step change" in production and reserves development without putting at risk in the event of failure, the core production development plan, only increases the investment attraction, particularly at the current market valuation.


AIMHO/DYOR

[mount teide] 21/3/2019 17:20

EG - the astonishing debt levels of some of the US's greatest stockmarket titans, who are all implementing large share-back programmes rather than pay down debt. Makes you wonder what they know?

Cisco: Cash and cash equivalents - $7bn, Debt $28bn
Pepsi: Cash and cash equivalents - $13bn, Debt $43bn
Oracle: Cash and cash equivalents - $22bn, Debt $60bn
AmGen: Cash and cash equivalents - $10bn, Debt $35bn
eBay: Cash and cash equivalents - $3bn, Debt $9.2bn
Mondelez: Cash and cash equivalents - $1bn, Debt $19bn
Lowe’s: Cash and cash equivalents - $2bn, Debt $16bn
Visa: Cash and cash equivalents - $8bn, Debt $17bn

They would surely be aghast that economist by training Paul Baay would use TXP's cash to fund an accelerated programme of production development and ultra high impact exploration drilling in a strong and rising oil price environment rather than use it 'wisely' for share buy-backs or perish the thought, to pay down debt!