Touchstone Exploration Share Discussion Threads

[spangle93] 12/7/2018 09:13

Thanks Mount Teide. To be honest, that's a slightly different point to the one I was making; you're looking at additional value from investment, or rate of return on workover recompletions. I was coming at it from the angle that nothing stays still in a dynamic system like oilfield exploitation, so if you don't make further investment, in most cases your daily production will decline over time. This is nowhere near the decline of unconventional plays, and indeed, you can set the pump rate such that a plateau production can be preserved for a while. But Range was definitely on a treadmill for a while with its wells. So if TRIN is only drilling a couple of wells in a year, it's possible that its production will remain steady rather than growing as a result of the new wells.

On a different tack, ref our conversation the other day, I notice on slide 13 of your link that they show both "per well" costs, and drilling cost/ft, and both are explicitly in USD ;-) and they also show drilling days reduction.

[mount teide] 11/7/2018 23:43

Spangle93:

From the Q3 2017 Presentation(link below), the Well Recompletion Program Results for the period November 2016 through October 2017 produced an average increase in production per well over 12 months of circa 10 bopd for the 22 recompletions.


Maintaining Base Production via Recompletion Program - page 14



24 Well recompilations are scheduled for 2018

[spangle93] 11/7/2018 23:22

Another angle for comparison would be to consider the decline rates from these wells. I dont' think I've seen an individual well decline curve, but looking at base production in slide 14 of the recent presentataion, decline seems to be of the order of 10% pa. So to grow production, you have first to offset natural decline

[zengas] 11/7/2018 22:08

Trin should double 17-34p but with that will be a m/cap of £130m in turn leaving a major disparity with TXP.

TXP has a price target currently of 35p which is £44m m/cap and would still be a huge future target upside to eventually catch up with Trin.

TXP at 2,000 bopd are targeting multiples of current production, ongoing reserves additions from current drilling, as well as large scale and relatively low risk exploration that could dwarf current reserves.

To triple the same investment money, Trin needs to get to £200m m/cap (TXP £66m). Which is more do-able before a valuation looks too high ?

With what TXP is chasing, current debt level is entirely manageable and imo would be wiped out in a lower cost environment if TXP chose to do little drilling. As it stands imo we should be going towards 3,000 bopd from a 15-20 well development drilling programme.

[mount teide] 11/7/2018 20:27

marv - debt and cash considerations were an interesting read and far more significant at $44 Brent last May/June when TXP commenced their 14 wells in 15 months 2017/18 production development programme.

However, it is probably a less significant consideration at the rate TXP and TRIN are now throwing off cash at $75-$80 Brent - particularly with TXP's very low drill cost, estimated at CAN$184/ft for the entire 14 well programme.

Although the TRIN management has committed to 10 new wells before the end of 2019 - are we actually going to see any drilled before the start of the wet season in late October - otherwise we could end up with just two in 2018, while Brent is averaging $71.5 in 2018 on a rising trend - which would be disappointing.

[marvelman] 11/7/2018 19:19

...but the debt and cash comparisons should also be an interesting read.

[mount teide] 11/7/2018 18:51

Market Cap Comparison:

£22m - TXP @ 17p - circa 1,800 bopd onshore with 7 more 2018 wells to come in H2
£27m - CERP @4.5p - circa 500 bopd onshore
£65m - TRIN @ 17p - circa 1,800 bopd onshore + circa 1,000 bopd offshore

[essential] 11/7/2018 16:06

Fantastic parabolic chart!!

[brasso3] 11/7/2018 15:51

It wants to pop...

[rafieh] 11/7/2018 15:31

Just needs the slightest spark of an RNS to explode....

[someuwin] 11/7/2018 15:01

18p+ soon.

[rafieh] 11/7/2018 13:03

Basem1The whole last 8 months we have been back-testing. The chart broke into new highs of 16.75 last November, then went down to near 10 p, so on the one-year chart, the back testing has been completed. We are off to new highs.

[basem1] 11/7/2018 10:45

How far do you think the backtest will be iLeeman ? There doesn't seem an obvious level without too much of a pullback

[ileeman] 11/7/2018 10:08

Looking for a typical back test then towards 20p+


free stock charts from uk.advfn.com

[mount teide] 11/7/2018 07:41

Uber Oil bear Barclays throws in the towel for H2/2018 and 2019!

In the middle of April, Barclays expected oil prices to collapse in the second half of this year - telling the market to expect $57 Brent by the third and fourth quarters - as it saw a new supply surplus looming because of an “overstated221; impact of Iran and Venezuela on the oil market( an urgent spec-saver group appointment for their expensive team of 'analysts' was perhaps in order).

For the second half of 2018, Barclays said yesterday that it now sees Brent averaging $73, some 28% higher than its April price call, as it expects "lower supply from Iran and Libya to further tighten the oil market." (never mind Venezuela where oil production continued to fall off a cliff!)

“Due to new outages and a quicker Iran supply reduction, we see Brent prices averaging $71 next year,” said Barclays - up from a previous forecast of $65.

According to the bank, OPEC and Russia’s decision to reverse some of the production cuts would deplete the global spare capacity cushion and push prices up, but OPEC’s leader Saudi Arabia, as well as Russia, would be making efforts to cap a big upside in oil prices because much higher prices would destroy oil demand growth.

“OPEC’s decision and disruptions elsewhere will deplete the market’s spare capacity cushion, raising prices,” Barclays’ analysts said after coming back from their spec-saver appointment.

[captainfatcat] 10/7/2018 21:06

Looks like a pic of what could be the new rig on twitter

[brasso3] 10/7/2018 21:04

PB mentioned in a recent interview that they have been studying the data from the Ortoire block for the last few years. Its only now that they are confident they understand the geology. Also, they found a geologist who worked on the block in the 1970s/ 1980s who provided some valuable input.

I suggest you watch the recent interview.

[acsatix] 10/7/2018 16:56

What does not seem rational in the Ortoire story is that if the drilling costs are the same as in other blocks, why not start using some money from other blocks for Ortorie instead? and if it is such a high probability Block, with such a nice bopd figure expected per well, why was it not targeted earlier?? e.g. by other more powerful companies... who seem to know the place quite well.


Does anyone have a good theory on this?

[euclid5] 10/7/2018 15:21

Thanks for the detailed post Mt T,

Do you know the GCoS for any of the exploration blocks they plan on drilling?

Thanks

[crooky1967] 10/7/2018 13:46

Nice Mr. T.

Just to also mention that the Ortoire lease requires 4 wells to be drilled by 2020 by TXP. If it leads to finds to be commercially viable then TXP can extend the lease for another 25 years.

[mount teide] 10/7/2018 13:23

Ortoire Block - Some analysis of the 2019 high impact exploration Drilling Programme and the location's unique potential today - should any of the large prospect natural gas wells prove successful - to commercial exploit the discoveries.

This is a summary of many previous posts into a single reference source.

Historical background to T&T's oil and gas industry and the Ortoire Block:

In T&T in the 50's and 60's virtually all hydrocarbon exploration was conducted onshore with oil the principal target - natural gas was of little interest - since outside of the low demand, small T&T population there was no way to commercially exploit gas discoveries encountered when drilling for oil - as before the development of LNG technology it was uneconomic to transport natural gas overseas from remote island locations.

Page 47 in the link shows the principal location of T&T's oil fields, pipelines and refineries in the 1950's and 60's.



The Ortoire block in that era was a major area of interest for oil exploration for Shell - they made a number of oil(and gas) discoveries on the block and commercially exploited the oil discoveries via a pipeline across the island to their oil refinery some 25 miles away at Point Fortin.

Major exploration shifted to offshore in the 1970's and 80's once the technology for this type of operation became available - leading to numerous large oil field(and gas field) discoveries.

The advent of LNG ships in the 1980's and 1990's was the catalyst that led to the commercial exploitation of T&T's offshore gas fields, most of which were found while looking for oil.

By cooling natural gas to minus 160 degrees centigrade it changes state and reduces in volume 500 fold allowing LNG ships to transport natural gas commercially worldwide from remote locations and offshore islands surrounded by deep water.

In 2000, Atlantic LNG Co built the first LNG export terminal in T&T - the first in the western hemisphere for 30 years. It has since been increased in size 5 fold.

Shell has been expanding its holdings in Trinidad and Tobago since its purchase of BG Group. It has now become the largest shareholder in Atlantic LNG and is seeking to rival BP as the biggest player in Trinidad and Tobago, principally through growing its natural gas assets.

The Ortoire Block and Exploration Drilling Programme:

To the immediate south west of TXP's Ortoire block lies the Central Block, which contains T&T's only producing onshore gas fields. The Central Block (along with most of the Ortoire block) sits in the highly prolific Herrara Turbidite Fan Fairway - the up dip end of the Venezuelan basin.

The Shell owned Central Block contains three pools of which Carapal Ridge is the largest. The three pools - Carapal Ridge, Baraka 1 and Baraka East 1 - produced some of the largest on-shore natural gas production test results in the world at the time of initial testing. Carapal Ridge tested at 62 MCF million cu ft per day and 1,620 (bcpd) barrels of condensate per day.

The Ortoire block technical work carried out by Touchstone has identified five large exploration prospects - each "Carapal Ridge Plus" size targets. Three are gas prospects within the prolific Herrara Turbidite Fan Fairway - with up to 2,000ft of potential pay that will be drilled to a depth of up to 10,000ft.

The two oil prospects are much shallower targets in the Forest and Gros Morne Formations - at a similar depth to some of the deeper development plays drilled over the last year at around 5-7,000ft suggesting an average drill cost of £650k per well at current drilling rates. The two oil targets are defined in part by oil bearing legacy wells - they are analogous structures to offsetting pools.

Commercial Development Potential of any Gas discoveries:

Should drilling of the Ortoire gas/liquids exploration prospects prove successful - it would be extremely cheap to connect the production into the existing nearby Central Block pipeline infrastructure to the Point Fortin LNG terminal - offering TXP a wide range of commercial possibilities to exploit the assets - including outright sale as BP did with the Central Block.

Trinidad, is a top 10 global exporter of LNG. Its 15 million tonne-a-year (mmta) Atlantic facility, which liquefies natural gas for export ran at 75% of capacity last year as offshore gas deposits become depleted.

Being familiar with the LNG industry - export and import terminals and shipping - i consider the potential investment upside that Ortoire's large reserve, "low risk" gas prospects offers investors is exceptional - as a result of the incredible good fortune of the Ortoire Block being adjacent to the Shell owned Central Block gas fields and pipeline running direct to their world class LNG export terminal.

Without(until recently) an oil major(Shell) willing to fund the cost of an LNG export terminal (minimum US$2bn), similar sized natural gas discoveries on the Bahamas have remained undeveloped for nearly 2 decades.

The application to carry out the Ortoire exploration drills has been submitted with the relevant authority to gain the necessary consents - these will be in place to allow drilling to commence directly following the short Nov/Dec wet season.

As with all exploration drilling there is no guarantee of success, although unusually, the management do consider these prospects "low risk' largely as a result of their own technical evaluation and invaluable input from an old Texaco geologist who was involved in previous exploration drilling on the block in the 1960's (when natural gas discoveries were considered worthless since they could't be commercially exploited), and had retained all the drilling data - none of which from that era had been retained by the T&T oil ministry.

Let industry veteran Paul Baay, who previously built from scratch a 20,000 bopd oil company have the final word:

TXP AGM Presentation - Ortoire Block - The exploration drilling programme will be targeting "both oil and natural gas prospects - with potentially very large reserves". "These are some of the most exciting opportunities i've seen in my 30 year career"

[spangle93] 10/7/2018 12:26

iLeeman - it's at an all time high on AIM, yes, but it's far from an all time high

[mr. t] 10/7/2018 11:25

Brent on the up again, over $79. My view of $16m to $17m operating cash flow this year is based on $75 Brent through h2. For every dollar above that in h2 I estimate an extra CA$300k cash flow.

All adds to the positive news stream we’ll get in the coming weeks, improved sentiment in the sector and stock, and confidence that TXP’s planned drill program is more than fully funded.

A good time to be a TXP holder.