Touchstone Exploration Share Discussion Threads

[mount teide] 21/3/2019 16:13

Ross - recall having a discussion with you some 18 months ago as to why I was invested in TXP but would not put a penny in CERP (you were then a shareholder) - the share price performance since through to today makes interesting reading:

+ 31% - TXP
- 58% - CERP

[buffythebuffoon] 21/3/2019 10:53

Quite a differential between Brent and WTI... $68 to $60!

Buffy

[ileeman] 20/3/2019 15:32

Wow look at oil price, flying at the moment.

[mount teide] 20/3/2019 14:40

brasso - i would put 'low cost' in front of high impact, since the average drill cost of the campaign is circa 15% of a well drilled offshore T&T, and in the event of success would have an extremely low production development cost, since the first Corosan well is just a 2-3 mile tie in to the gas pipeline network to one of the World's top ten LNG export terminals.

[captainfatcat] 20/3/2019 14:33

Indeed and with a market cap of under £20M as well...

Tick Tock

[brasso3] 20/3/2019 14:09

You don't find many AIM companies with high impact drilling campaigns with the insurance of 2350 BOPD.

[ileeman] 20/3/2019 12:13

Great production figures but I think people are more interested in Ortoire, first drill next to a discovery and the lowest risk drill out of the lot. Not long now.

[brasso3] 20/3/2019 12:07

With 4th quarter results due its not surprising people are buying.

[che7win] 20/3/2019 11:55

Philip Verleger's analysis about a projected decline in US oil production ranging from 1-2 million barrels (mbd) mostly from US shale oil production by 2020 is simply brilliant, objective and eye-opener.Contrast this with the hype masqueraded as research and analysis coming out from the likes of the International Energy Agency (IEA) saying that US oil production in 2025 will be bigger than the combined production of Russia and Saudi Arabia or Rystad Energy boasting that the United States will overtake Saudi Arabia in oil exports at a time when US oil imports amounted to 9.6 mbd in 2018. I have always maintained that the US shale oil industry is one with diminishing returns and therefore will never be profitable. It has been borrowing billions of dollars to continue production just to remain afloat. Since its actual inception in 2008, it has been in a vicious circle. It has to continue production to remain afloat and without borrowing it can't continue to produce thus amassing huge debts estimated in hundreds of billions of dollars and being unable to pay meaningful dividends to its investors.The Achilles heel of the US shale oil industry is the steep depletion rate ranging from 70%-90% in the first year of production necessitating the drilling of thousands of wells just to maintain production. It is estimated that US shale producers need to drill some 10,000 new wells every year at an annual cost of $50 bn just to maintain production. That adds year after year to their fast-growing debts.Wall Street investors have been aware of this situation since the beginning of shale oil production. But major investors hoped that shale companies would scale up, achieve efficiencies and lower break-even prices to the point that they could turn a profit.Moreover, investors are now calling on shale producers to stop spending so much and instead return cash to shareholders. That leaves less capital available to inject back into the ground. The shale oil revolution was only possible because cheap money in the aftermath of the post-2008 financial crisis financed the debt-fuelled shale revolution.Supermajors like ExxonMobil, Chevron and Shell have the resources to plan long-term and can therefore take a long view since their financial survival is not dependent on the Permian like the small independent drillers.And despite a spate of highly authoritative reports from credible sources of a slowdown in production in the Permian which is the best shale play in the United States and which accounts for more than 60% of total US shale production, the US Energy Information Administration (EIA) is projecting that US oil production will average 12.4 mbd in 2019 compared with 10.9 mbd in 2018 and averaging 13.2 mbd by 2020. The US shale oil industry could become a diminished presence in the global oil market if not a thing of the past within 5-10 years. Dr Mamdouh G SalamehInternational Oil EconomistVisiting Professor of Energy Economics at ESCP Europe Business School, London

[someuwin] 20/3/2019 09:17

About time this one started moving up.

[ileeman] 19/3/2019 12:22

Oil back near weekly highs, looks like another surge north soon.

Still no value for the oil bounce over the last few months being priced in.

[mount teide] 19/3/2019 11:40

A recent Wood Mac research paper for the Lead mining industry published in Jan 2019 contained the following Car Industry forecast data:

By 2025:
85% of all new car production will still be ICE - after which it will decline around 1.3% p.a. through to 2035, when ICE cars will still generate 70% of all new car production

By 2035:
70% (1.05 billion) of all cars on the World's roads will still be ICE.

While copper demand for the EV industry will grow exponentially over the next 15 years - Wood Mac are suggesting that the ICE and demand for oil will remain the overwhelmingly dominant factor driving car production until probably close to the second half of this century.

[mount teide] 19/3/2019 11:09

“Perfect Storm” Drives Oil Prices Higher - Oilprice .com

'Oil prices have already hit four-month highs, forcing a range of analysts to overhaul their expectations for this year.

“The latest Brent rally has brought prices to our peak forecast of $67.5/bbl, three months early,” Goldman Sachs wrote in a note. The investment bank said that “resilient demand growth” and supply outages could push prices up to $70 per barrel in the near future. It’s a perfect storm: “supply loses are exceeding our expectations, demand growth is beating low consensus expectations with technicals supportive and net long positioning still depressed,” the bank said.

The outages in Venezuela could swamp the rebound in supply from Libya, Goldman noted. But the real surprise has been demand. At the end of 2018 and the start of this year, oil prices hit a bottom and concerns about global economic stability dominated the narrative. But, for now at least, demand has been solid. In January, demand grew by 1.55 million barrels per day (mb/d) year-on-year. “Gasoline in particular is surprising to the upside, helped by low prices, confirming our view that the weakness in cracks at the turn of the year was supply driven,” Goldman noted. “This comforts us in our above consensus 1.45 mb/d [year-on-year] demand growth forecast.”

Demand in China is growing at a stronger rate than expected, while other emerging markets are set to shake off a rough 2018 that saw a strong dollar, rising interest rates and high oil prices.

Meanwhile, other analysts are also similarly bullish. “As risky assets focused on macro concerns, oil markets have largely overlooked supply-side tightness in 1Q19 that has helped global oil markets to rebalance since the end of 2018,” JPMorgan Chase said in a report. “With a potential for a US-China trade talk resolution emerging, oil prices should finally break out of the narrow trading range and should be supported in the very near-term due to policy-driven supply-side tightness.”

A supply deficit could become rather significant, the bank said, with total oil products demand growth at 1.03 mb/d against supply growth of only 0.3mbd. The second quarter is particularly tight. “As OPEC+ cuts begin to bite and non-OPEC supply tightens in 1H19, due to Canadian curtailments, a temporary US production growth slowdown, and maintenance in some of the key global oil fields (Kashagan particularly), we expect 2Q19 to have a theoretical tightness of over 1.2mbd in global balances.” A supply deficit of 1.2 mb/d is rather notable given the roughly 1.5 mb/d surplus in the fourth quarter of last year, the bank said.

Both Goldman Sachs and JPMorgan see the supply deficit fading in the second half of the year unless OPEC+ continues to over-comply with the production cuts. U.S. shale could rebound from the current lull, while the fate of OPEC+ compliance is up in the air. “Hence, we think OPEC+ cuts will need to be extended not just to the end of 2019 but also into 2020 if they want to avoid another oil price crash,” JPMorgan wrote.

Of course, there is no shortage of uncertainty to these – or any other – price scenarios. In particular, the Trump administration will have a lot of influence over what unfolds this year in the oil market. Trump has helped exacerbate the crisis in Venezuela, where the output declines had somewhat stabilized late last year. Venezuela’s production fell by 142,000 bpd in February, while the losses this month have the potential to be even worse.

The U.S. is also weighing the expiration of sanctions waivers on Iran, and the tight oil market could force Trump to extend some of them. The Department of Energy could also release oil from the strategic petroleum reserve, while the U.S. Congress is working on NOPEC legislation, which could threaten OPEC coordination. Moreover, it is unclear how OPEC+ might respond to any of those actions. For instance, Saudi Arabia could ramp up supply to crash prices in response to NOPEC being signed into law. Or, they could continue to over-comply with production cuts after making the mistake of abandoning them too early last year. The permutations are endless, so take each price forecast with a grain of salt.'

[mount teide] 15/3/2019 16:26

Page 10 of the latest Corporate Presentation has got a chart forecasting the payout period chart for a new development well according to the level of production and Brent Price

The 2018 wells currently average 90 bopd (with three wells yet to contribute from the upper zone - the lower zones tested to comply with license commitments were not found commercial) indicates circa 15 months.

Extrapolating for the current circa the 118 bopd average for the 8 optimised wells after allowing a combined 50 bops for the three non optimised wells, indicates circa 10 months.

[mount teide] 15/3/2019 15:18

ross - thanks - accuracy can sometimes be a casualty during a fast paced on-line Q&A session when you're writing down comments and trying to listen at the same time.

Regardless, useful to have confirmation all new development wells have a zero royalty during the first year of production - this is a material benefit on 900-1000 bopd of 2018 production.

[on target] 15/3/2019 15:05

And how many development wells would they need to drill on Corosan to get that production increase?

[ileeman] 15/3/2019 14:49

Not only is production much higher than expected things are about to get very interesting on Ortoire.

"The first target is Corosan, a natural gas prospect located just north of Shell’s Carapal Ridge discovery, which is scheduled to be drilled in June. Corosan could contain up to 50 billion cubic feet (Bcf) of gas which could effectively double the company’s current production"

[wanobi] 15/3/2019 14:09

echo others, great posts today, well spotted, well researched, well acted upon etc etc many thanks all, cheers Wan :-)

[ileeman] 15/3/2019 14:06

Another very good interview, short and sweet.

[mark10101] 15/3/2019 13:52

Yes LG, as a TRIN holder who follows TXP closely (well done on solid update) some very useful information (thank you Rossanan and GO). I just could not understand why only TRIN reported this issues, it seemed very unfair, greatly reassuring it was a common issue and now largely balanced out. Thanks guys.

[ileeman] 15/3/2019 13:04

Touchstone production ramps to 2,358 bopd with exciting drilling of Ortoire Block on the horizon – time to buy? (TXP)