Touchstone Exploration Share Discussion Threads

[lazarus2010] 21/7/2015 12:24

ok, I thought LGO pricing was based on WTI...

Oil Price
Risk
The Group is exposed to commodity price risk regarding
its sales of crude oil which is an internationally
traded commodity. The Group sales prices are based
off of two benchmarks, West Texas Intermediate (WTI)
for sales in Trinidad and Brent Crude (Brent) for
sales in Spain.

[jamesiebabie] 20/7/2015 15:17

Laz - Trinidad is based on Brent and always has been. I do not think they hedge their Canadian production.

[lazarus2010] 20/7/2015 09:03

JB, thanks for that, much appreciated. Any explanation as to how did they hedge against Brent prices when afaiaa they are in two locations, both of which use WTI pricing? It's not like they can take their own oil and export it?

Anyway at least this part of their production is still profitable!

[jamesiebabie] 17/7/2015 15:23

Laz - answer from the company.
"
Correct, the hedges are outside of the royalty and SPT charges. Note that the hedges are based on Brent pricing (not WTI). "

[jamesiebabie] 17/7/2015 12:52

Nope and tbh I'm not expecting much for a while from my O&G stocks; so diversification is ok by me.

[dosser2] 17/7/2015 12:41

Is anyone making money here?

[jamesiebabie] 17/7/2015 11:58

Laz - I'll ask about the hedge.

With regards to costs I think there was another slashing which will be noticed in the next update; one of my contacts has gone and was a casualty of the cost cutting exercise. TXP are slimming down!

[lazarus2010] 16/7/2015 19:02

I see that NR at LGO is stating $9/bbl opex...so how come TXP are showing $16? It's also clear that they need to slash G&A further, far too top heavy it would seem.

[lazarus2010] 16/7/2015 10:53

JB, do you think the hedge is outside of the royalty and SPT calculation? ie they only pay royalties on the actual WTI, meaning that the profits from the hedge at $70.60 - WTI (actual) is fully retained?

I note that in the video you linked to it was stated I think that they see $7 profit at $55 if I remember correctly, but from pages 18,27,28 I can't see any profit?

$55*71.5% = $39.325
les opex and GG&A (I calculate this as $16 + $24 = $40, or is the Gross opex inclusive of GG&A?) = -$0.675

But worse than this, the SPT comes from revenues after only royalties, so there is SPT of 18% on $39.325 = $32.25 from which opex and G&A are then deducted, meaning a loss of c.$7.74/bbl at $55!?

I hope I am interpreting this incorrectly!

[lazarus2010] 16/7/2015 10:32

looks identical to previous presentation to me, including the spelling mistake of 'recovery factory'

[jamesiebabie] 15/7/2015 20:51

A bit late but it's out now, the Q1 presntation.

[lazarus2010] 13/7/2015 15:39

yeah, I was looking at the rns's issued (none!) and just had a brain fade. Here's a question though, any signs of them solving the problem with their Canadian assets dragging earnings down all the time?

In March they came out with this statement:
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In Canada, Touchstone has successfully focused on transitioning the Company’s operations from a research program using in situ combustion technology to a true exploration and production operation capable of yielding positive economic returns. The Company continues to review all Canadian operations to ensure that they are able to provide commercially reasonable returns during times of depressed commodity prices.
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and in the accounts they again pointed to losses in Canada, after selling their only profitable asset (Luseland). Hopefully with higher WTI and better differentials the situation is closer to end 2014.
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In Canada, the Company continued its focus on evolving to a conventional production model and aggressively reduced operating costs in Saskatchewan. Kerrobert operations incurred negative operating netbacks of $391,000 in the quarter versus a gain of $55,000 recognized in the previous quarter. Operating cost reductions of 23% from the previous quarter were offset by price reductions in excess of 40% ($34.64 realized price versus $57.87 in Q4 2014). Luseland operations contributed $55,000 in operating income prior to the February 28, 2015 disposition.

[jamesiebabie] 13/7/2015 14:56

Laz - just for you. It has the updated position, the next one is 4 weeks away. :)



Production volumes averaged 2,036 bbls/d during the three months ended March 31, 2015 (100% oil). Trinidad and Canadian petroleum sales averaged 1,742 bbls/d and 294 bbls/d, respectively, representing a combined increase of 422% from the comparative 2014 quarter and a decrease of 11% from the 2014 fourth quarter.

[lazarus2010] 13/7/2015 12:56

JB...so why the freaking drop in the sp! C$ is down (currently c. C$1.272) which means repatriation of profits in US$ from Trin will be higher than previously expected, meaning it almost wipes out the discount to Brent (12%) from a long term currency xch rate of closer to say C$1.10. Add in the hedged oil generating even more profits and it seems very strange that the price has dropped from recently bobbling along at c. C$0.30

[jamesiebabie] 13/7/2015 12:42

Laz - We have 800bopd hedged at $70.60. :)

[lazarus2010] 13/7/2015 10:50

not sure if he explained clearly the netbacks, but @ $55 Brent he says $7/bbl...I understand that to be before G&A costs are deducted? Also if the tax regime is 50%, then for every $1 above $55 they're getting an extra $0.50, so recently with Brent above $60 (I reckon c.$62 avg since Feb 2015) which means netbacks closer to $10.50 for the past 6 months.

At 2,000bopd that's $600k monthly income (again not sure if it's before G&A, but for sure it's after all opex and taxes)

aimvho dyor

[jamesiebabie] 12/7/2015 22:14

hamlette - thanks for the link, I'll add it to the header; some interesting facts.

[hamlette] 12/7/2015 20:10

Not invested here but have a mutual interest in on-shore Trinidad as an LGO investor. There is a new Paul Baay interview out on Youtube


The main interview (after the introduction) is in english.

[jamesiebabie] 12/7/2015 18:03

What's to say as I think TXP are doing little in T&T; the interesting thing for me is that Raging River [RR] are drilling all around our acreage in Viking with 8 rigs! They will be proving up resources for us for free. One rig is only a few hundred metres away; tbh I suspect RR will want to buy our acreage in the not too distant future.

[johnsmithmmxiii] 12/7/2015 15:31

You seem to have gone very quiet on this bb, that's all.

[johnsmithmmxiii] 09/7/2015 12:45

JB, you on a trip to the Himalayas w/o Internet?

[lazarus2010] 06/7/2015 18:16

what's with the sells over the pond? @ 0.20 and 0.25? Very small trades but very low prices!

[jamesiebabie] 30/6/2015 22:15

dalesman - it was more this comment.

"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"