Touchstone Exploration Share Discussion Threads

[dalesman] 29/6/2015 09:07

Hi Jamsie

The CPR at LGO increased the STOIIP to 800 - 1.3 billion an amazing uplift in the OIP.

The 1P doubled which I got wrong because only fully funded wells drilled are included in 1P

Lots of upside with my extimate of CR increasing from 63m - 150m

[jamesiebabie] 24/6/2015 07:52

Phil,

Below is one of your posts, how much do you value LGO now on the new 2P? It is along way south of your 30M. Do you now value LGO at £50M?


dalesman
17 May'15 - 23:17 - 673 of 724 0 0 Moderate | Ban


OOPS I missed you question above before I go I'll try to answer that.

I can't speak to Canada or for Touchstone but I think that LGO is in the driving seat in Trinidad. It is now very well respected by Petrotrin and the Ministry as it has delivered early on all its promises and quickly fulfilled its commitments.

Trinity has over extended itself and its debt position is not good.
Range is a basket case and may have to de list after the failure of its money raising initiative has placed it in a very poor position.

There are four new blocks coming up in Trinidad. You have to ask who has the cash to bid? Who is not having to cut back on opex and capex? Who can increase its portfolio and up its reserve base?

Comparing the Market cap of Touchstone and LGO is really a red herring. The relative reserves will be reversed not to say eclipsed come June IMHO and the upside potential from the infill drilling is expected to mean that production will be above 3000bopd come the end of the year.

With LGO throwing off cash at low oil prices even though it is linked to the lower WTI crude as opposed to Brent means that it is seen as a safe haven compared with many that are struggling and having to make savings to try to conserve cash.

LGO based on the old CPR has recently had the correct market cap but with production about to increase with the start of the next 22 well continuous drilling campaign the MC will rise. The 30% rise last week shows the market is coming up to speed.

Add on to that the uplift in 1P and 2P reserves and 5-6p would be achievable.

5p x 3 billion shares would give a MC of around 150m

Or to put it another way I'm hoping for 30m 2P reserves at a notional $5 valuation for each barrel of 2P reserves (less than half the netback at $43 WTI crude oil price) we get to a MC of 150m

Thats not out of the way given that the new infill wells drilled last year have added around 175bopd / well. 22 x 175 = an additional 3875 bopd reduce that by 30% depletion until the wells reach plateaux production and we get an additional 2600 bopd on top of current production (remember Spain is still producing - not a lot but an additional 150 bopd does help)

Neil Ritson says that the depletion on last years new drills should be compensated by the re-completions (12 planned this year)

We have just completed the ARKeX full tensor survey which only Petrotrin and LGO has contributed to the cost and thus have gained the extra information. This will give LGO an edge. Touchstone was invited to participate but failed to cough up the readies.

So upping the reserves, increasing production - equals free cash flow, increased data from the ARKex Survey, reduction in drilling costs of $500,000 per well and a shortening of the drilling time between wells increasing the wells to be drilled this year means additional upside, pads 4/5/6 are being constructed now and having the confidence of the ministry and Petrotrin evidenced by them paying for the new enlarged pipeline to Goudron means a market cap of 150m looks cheap to me.

This leaves out the deep wells at Cedros to be drilled in the next 3 years, targeting an extension of the Venezuela reservoirs below the Herrera Sands- huge upside on success. The ArkeX survey should do a lot to target the sweet spots.

You said in the board above that LGO is over valued - not on a NAV basis its not or on a Canadian Production based metric. Rather Touchstone is undervalued on its booked reserves.

What you need to ask yourself is why is Touchstone so cheap and what does it have to do to lift its Market Cap to a level that reflects these booked reserves. Why is the market not recognising its potential because on its booked reserves alone it should be much higher.

I have to say that I don't think a presentation intimating that it is struggling to deal with the low oil prices currently gives the market a lot of confidence. It needs to slim down its operation, concentrate on the low hanging fruit, fulfil its drilling commitments to the ministry and look to do more than just work over legacy wells. Then its MC may reach 40m which compared with the expected reserves in LGOs portfolio after the up and coming CPR will be about the right ratio to LGO.

All my own opinion of course and I understand and respect that you have a very different view.

Kind regards

Phil

PS we are leaving the island and returning to the UK - I'm now a Granddad

[jamesiebabie] 22/6/2015 21:19

Third parties are proving up the reserves for us with plenty of drilling going on.

[lazarus2010] 17/6/2015 22:00

interesting (?) trades today. 99k in total and all designated as sells at $0.31 but no change to the share price (ok the offer dropped from 0.33 to .32 but had no effect on the bid price)

[jamesiebabie] 12/6/2015 15:52

hamlette - TXP had nothing to do with that article, so I have been told by the company.

[jamesiebabie] 11/6/2015 09:37

hamlette - I understand a few are whining behind their mouths, but TXP are being quite Yorkshire men and women [tell it as it is]; I'm not sure what to make of it to be honest.

I know Petrotrin are being heavily criticized within country and from their own; it will be interesting to see if Kevin Ranmarin [Energy Minister] will take action and if so to whom.

[hamlette] 11/6/2015 09:28

Don't normally post here as I hold LGO in preference to TXP.

Interesting article in the Trinidad Express about Petrotrin. One of the independents is not happy about Petrotrin drilling wells on their LO acreage. Paul Baay is featured in the article.

[lazarus2010] 04/6/2015 09:11

well all of the +ve news out of Canada re WCS and the closing of the gap with WTI doesn't seem to be having much of an effect on TXP or EDG, hardly any buying in Canada and TXP fell a bit yesterday. Extremely frustrating to say the least!!

[jamesiebabie] 01/6/2015 17:29

Laz - c.400m per section.

None near EDG, yet.

[lazarus2010] 01/6/2015 10:23

JB, refresh my memory, what's the dimension of the blocks, ie how far away is Block 27 from B32? Within spitting distance I guess and therefore any results can be extrapolated to our acreage.

Re the rigs starting up, it's the end of the wet spring (during when rig operators are not allowed to move their rigs), after the thawing and drying of the ground rigs get remobilised, but I'm sure you knew that!

What is more important, is, as you have pointed out, the actual location of the rigs. I just hope we're not the wrong side of any fault lines!!

Any rigs being mobilised to near Edg properties?

[jamesiebabie] 29/5/2015 20:09

Here are the drills currently going on by three different operators this week. TXP's acreage is highlighted in red.

[jamesiebabie] 29/5/2015 19:38

A bit more digging and I see that the majority of the wells are being drilled very, very close to TXP's acreage by Raging river who are mentioned in TXP's presentations; I counted about 7 rigs are drilling as I type this within 10 miles of TXP's acreage.

[jamesiebabie] 29/5/2015 19:17

It will be interesting to see what is said about the Canadian operating assets at this level, the rig count is up in Canada by 26, 20 in Saskatchewan where our assets are; I wonder why. :)

[jamesiebabie] 27/5/2015 19:25

Laz not for about 12 months anyway as we've had a revised reserves report as all TSX listed companies have to.

[lazarus2010] 27/5/2015 19:18

Dalesman,

I think Trin have just cleared the decks and got all the bad news out of the way. No doubt if LGO had not had a successful drilling campaign they too would be forced to writedown a lot of their reserve estimates, as it is their (unexpected) extremely successful drilling thus far should provide the complete opposite!

Here's hoping we don't see any major writedowns in the future from TXP!

[dalesman] 27/5/2015 11:45

Re Trin accounts From John on the LGO board

speculater

Was having a browse through them myself earlier. The write downs are the major issue for them, with capital expenditure now not available for projects, the 2p reserves have suffered. The accounts show a operating profit of $12.2m before exceptional items, which are huge at $123m ( US$92mln impairment for property, plant and equipment and around US$37mln for exploration assets. And subsequently, it equates to an operating loss of US$123.7mln).

The ongoing situation will not improve either by the looks of it, and growth is very much no stagnant until they get more finance or even clear old debt at the very least.

These two companies (RRL and TRIN) tried to run before they could walk, and this is the result today.

Will be very interesting to see how TRIN do with any merger or disposal of assets, they are in a negative position, and that is not a good place to start negotiations from.

Best regards

John

[johnsmithmmxiii] 27/5/2015 08:00

Trinity rns out

[jamesiebabie] 23/5/2015 09:42

Laz - it would appear the directors keep on buying, this time at 35c. I'm trying to find out if these buys are like buying in the open market or if they are options. It would appear it is like buying in the open market.

I know that they HAVE to buy as part of their contract and they have hold a set percentage within so many years, so that they 'have some skin in the game'.

[lazarus2010] 22/5/2015 14:03

JB, re LGO - yes it is, but as ever with rns's it's a case of the market expecting the rns and selling on the news. Too many bb'ers bigging up every possible news so that when it actually arrives it's a bit disappointing. What is very encouraging however is the talk of 60 C-sand wells 'minimum'. Considering this time last year I think there were only planned to be c. 7 wells before moving the rig off and bringing in a smaller rig to drill just the Goudron sands, clearly the results from the C-Sands have been so good that the strategy has been turned on its head and increased c. 10 fold.

[jamesiebabie] 22/5/2015 07:22

A good RNS from LGO, this morning.

[jamesiebabie] 21/5/2015 20:33

motr - I suspect TXP will contribute as I believe it is part of the minimum obligations for the Ortoire block; the difficult bit is what other services they use.

[mark of the rushes] 21/5/2015 20:24

Hi Dalesman/Jamesie,

I recall reading, before the Arkex survey took place, that other than MOEEA, LGO and Petrotrin, nobody else had contributed to the cost but that nevertheless they would be entitled to the data flown over their licences. LGO ie.Neil Ritson were hoping that, on seeing the data, they would be good eggs and make a financial contribution as a good neighbour would.

[jamesiebabie] 21/5/2015 20:15

Done - thank you.

[dalesman] 21/5/2015 19:48

Hi Jamsie

I think the cost is around $900,000

[jamesiebabie] 21/5/2015 19:10

That was my question; I suspect payment will be required. I have also highlighted to TXP that Arkex carry out integration of 3D siesmic with the FTG to make it even more powerful; as I have highlighted before, TXP have been obtaining quite a bit recently, so combining the two would be interesting.