Touchstone Exploration Share Discussion Threads

[wanobi] 20/11/2018 18:16

wow, that's some turn around in your confidence in the markets Mr.T,,, hope you are wrong, but who knows..... when I watch cnbc & bloomberg TV all I see is a natural correction which is well overdue in my opinion!!!

Why do you think it's anything else/more?

Thanx
Cheers
Wan

[mount teide] 20/11/2018 15:47

Considering that there will be new production from 4-6 wells coming on stream in Q4/2018 and early Q1/2019 - it would not be a surprise, should the oil price not have recovered to the Saudi's preferred $70 - $75 range by early 2019 - if Paul Baay elected to push back the commencement of the 2019 Production development programme until Q2/3 and prioritise /bring forward the the first Ortoire gas drill.

[ileeman] 20/11/2018 14:47

Amazing people willing to buy at 20p+ with the same fundamentals but when price is 40% lower not many want it.

Opportunity.

[mount teide] 20/11/2018 13:08

The oil sales price the T&T onshore producers receive from Petrotrin post the refinery shut-down will be impacted by a number of new factors - all likely positive;

Since the winding down of their refinery operations Petrotrin has established and publicly reported that T&T's high quality light oil commands a premium to WTI on the international market.

Petrotrin will in future collect the oil from the onshore producers(including their own new E&P company) and transport it directly to an export terminal storage tank/s at the Port Fordtin sea terminal for direct transfer to export vessels.

There is a well established market rate for this type of basic oil collection, storage and export sales service.

The previous sales price received by the onshore producers was almost certainly benchmarked against the lower price, lower grade oil the self serving Petrotrin management were buying in to keep the refinery operation going - hence the surprise of the Government energy minister(but not the Petrotrin management) to find that Petrotrin's first export sales post the run down of the refinery generated a significant premium to WTI.

Petrotrin with no heavily loss making oil refinery to continue covertly subsidising through T&T on and offshore oil production purchases, will be subject to considerably more transparency in its future oil purchase and sales operations and pricing - not least by its own new E&P company, which like the other onshore producers will expect to receive the international market rate less the market rate for a simple oil collection, storage and export service.

[wanobi] 20/11/2018 12:36

added another 50K shares here today, cheers Wan

[shanklin] 20/11/2018 12:30

FWIW, I sold my TXP recently, purely because there are other shares where the share price had fallen even harder than TXP, whose prospects I prefer.

[walter walcarpets] 20/11/2018 11:43

Thanks MT - good summary. Why I added at 12.8p this morning.

[mount teide] 20/11/2018 11:34

Only six of the eight 2018 wells are producing from their target zones - the other two are producing at less than 20bopd each(company threshold for commerciality) from an upper zone(a license requirement test) while awaiting clearance to produce from the principal lower zone target of the wells.

Assuming an historic 20 bopd each from these two wells(could well be less) during October that would indicate that the other six 2018 wells are currently producing at 70bopd+.


Mr T - Based on the transaction volumes since the Q3 results 5 days ago, how did you manage to sell your claimed 2m holding? - the total transaction volume to date since the Q3 results is 3.8m.


I believe the investment case for TXP based on fundamentals remains little different from when the share price was at 20p - where some very large new positions were built and heavily added to by a number of highly experienced professional investors, who will be in much closer contact with the company than us.

The entire oil sector has taken a short term hit from Trump's hoodwinking of Opec and Russia into rapidly increasing production in the run up to sanctions on Iran, and then leaving them high and dry by reversing the decision by giving waivers to most of Iran's largest customers.
In response, the Saudi's have already announced a 500,000 bopd production cut commencing in December and have informed the market that Opec is likely to vote at their early December meeting to increase that cut collectively to 1.0m to 1.4m bopd commencing Jan 2019.

This should see pricing revert back to the Saudi's preferred oil price range of $70-$80 over the next 2-3 months - a period during which TXP will be adding production from a further 4-6 wells and preparing to spud the first Ortoire well.

By any objection evaluation TXP remains one of the best risk/reward oilers in the small cap sector, and has the additional attraction of the near term very high impact Ortoire well drilling programme - potentially capable of adding multiples to the current share-price.

TRIN which I also hold is now debt free as a result of a recent placing - yet has corrected even greater from 28p to 12p, despite the investment case fundamentals as at TXP having never been stronger.


AIMHO/DYOR

[king suarez] 20/11/2018 10:58

Mr.T,

I do not think your calculation in (2) is correct.

You have attributed $1.6m of income tax to a marginal increase of 400bpd in production. I think you have simply applied a 20% tax rate to the gross revenue, rather than the profit?

400bpd x c300 days a year x $70 = $8.4m
$8.4m x 20% = $1.68m

Your calculation is something like the above?

This does not take into account operating expenses, depreciation, G&A costs etc which are subtracted before profit attributable to taxation....

I think you should be taking your $5m annualised netback figure, then subtracting the $800k additional associated G&A costs = $4.2m before then applying 20% tax to this ($0.8m) so the additional 400bpd generate $3.4m p/a after tax on this basis?

KS

[roundup] 20/11/2018 10:25

MT. thank you for the clarification; you will however know that you will not be taken serious with any future comments. It is now obvious that you pump and dump as and when it suits your portfolio.

[ileeman] 20/11/2018 10:19

Never nice to see price down especially on a company that continues to deliver but on a plus managed to get my average down from 19p to 15-16p so very happy with that.

£18million mcap vs $12.5million-$15million cash generation per year.....

A few more director buys would go down a treat right now.

[celeritas] 20/11/2018 10:05

Added a few more, thanks Mrt.
This is really all about early next year for me so will just keep on dribbling in until then.

[che7win] 20/11/2018 10:03

I would agree, TXP is profitable down to mid $30s dollar prices.They can change drilling plans if necessary.Ortoire drills hitting oil would triple share price from here immediately.I would hate to be in any other T&T oil stock, this is least risk. Very little net debt here, and it will most likely be rolled over again as happened recently. Lenders are very happy with that arrangement.Management know their business very well, one director buying yesterday.

[ileeman] 20/11/2018 09:18

I would add it looks like a large holder (I assume MR T) has been dumping for any old price which is fair enough he is entitled to do so but worth noting market makers will have a field day on this, very amateurish way to sell.

Let the dust settle, let oil bounce, positive update on 4 more wells by year end, still looking at over 20p imo, then with a bit of patience exploration in Q2 will hopefully see this go from a tiddler to a monster.

Bought another 75k, not showing yet, should pop up in 1 hour...fundamentals very strong so drop looks silly to me happy to mop some up in the panic.

[ileeman] 20/11/2018 09:11

Insane drop.

Oil of about 25% TXP off about 50%, it is amazing what happens when fear hits the market.

Just goes to show an uptrend in oil for a few years means nothing, everyone panics on a one month drop which will no doubt correct at some point.

[buffythebuffoon] 20/11/2018 09:08

So you sold out and then immediately felt the desperate need to turn 180 degrees and paint a black picture.

That says a lot about you.

Buffy

[mr. t] 20/11/2018 08:53

roundup, for some reason I'm struggling to read, write and edit posts at the moment, so I don't think my last one was complete.I've sold having decided in the last 3 weeks to liquidate most of my shares. Although I've taken a hit to my portfolio, I feel happier waiting on the sidelines in the current market turmoil.In TXP's case, I just don't think the numbers are panning out as good as I expected them too. Maybe it's my fault for unrealistic expectations. It could be things will improve by the next results and I'll regret my decision - I hope for current holders that's what happens.

[poombear] 20/11/2018 08:51

Nipped in for 100k 12.4p

[che7win] 20/11/2018 08:47

I will just say this, management have ruled out any placing here, the debt will not be an issue either.Reach out to them, they are very proactive.I don't own many shares here, having sold the majority between 18 and 21p, but do think TXP will outperform peers and will do well, regardless of current oil turmoil.

[captainfatcat] 20/11/2018 08:43

Market cap now £16.4M very tempted to add a few more to the pot.

Tick Tock

[sleveen] 20/11/2018 08:37

Mr.T

Agree, although I didn't go into as much detail:

"sleveen 14 Nov '18 - 08:13 - 3343 of 3398

Doesn't help presenting in CD$ rather than US$ grr.

The CD15m loan is the elephant in the room.

The cash generated by ops CD$37/bl is being used to fund the drilling and RCP campaign.

Will there be enough cash to pay this off in due course AND drill Ortoire?

At the current POO probably not without a placing IMV"

[roundup] 20/11/2018 08:09

Mr. T you have posted a fairly glum outlook for the company which you reportedly hold over 2 million shares in. I understand you were buying up to and beyond 20p. I'm wondering have you been offloading or do you still hold.

[mr. t] 19/11/2018 23:22

I'm disappointed with the last results and update, for the following reasons:1) We know from the 11 Oct update TXP did 2015 b/d in the first 9 days of October, and the 8 wells drilled in 2018 were doing 454 b/d. That means TXP averaged 1943 b/d in the last 22 days of October, and I think it fair to extrapolate the 2018 wells would have averaged less than 50 b/d each. In comparison the four wells drilled in 2017 delivered 78 b/d in in q3 2018 - newly drilled 2018 wells are producing over a third less than 2017 wells. I hope TXP can improve that and drill more productive wells in future.2) Capex in the first 9 months of the year for those 8 new wells (and 21 recompletions) cost $12.7m. Dec 17 production was 1536 b/d, so that $12.7m of capex has achieved an extra c. 400b/d. At the average $36.40 net back so far in 2018, these would earn approx $5m per year...a 2.5 year payback. That's before increased annualised G&A costs of $800k this year and the quite sizeable income tax payable. Annualised income tax is c. $8m, or about $1.6m for the extra 400b/d. So those 400b/d would earn $2.6m after tax, giving a payback of almost 5 years. It's not as bad as this, as most tax is deferred due to drilling TXP is undertaking. Still, it's not as good as I've been hoping for.3) The realized price discount to Brent and WTI keeps rising. Paul Baay did flag this earlier, but it's a bad trend. At the bottom of p.7 of the the recent MD&A, TXP describes the risks of Petrotrin restructuring given they are sole buyers of TXP's oil and and 4 of TXP's 5 core properties are leased off Petrotrin. It doesn't paint a pretty picture and there must be a fair chance TXP will continue to get a poor price for its oil, and there's not much the company can do about it.4) Opex per barrel increased from $19.26 in q2 to $22.06 in q3. What happened to cost efficiencies and economies of scale?5) Net debt increased by $1.7m in the last 3 months to $12.9m, after drilling 3 wells. 4 wells are being drilled in q4, so net debt is likely to continue to increase. Given the recent oil price drop, the large & increasing discount to Brent TXP realises, the

[gunsofmarscapone] 19/11/2018 20:42

10,000 CAD buy. Diddly squat!

[ileeman] 19/11/2018 08:47

Always good to see director buys.