Touchstone Exploration Share Discussion Threads

[zengas] 10/10/2017 21:07

Brasso - do you read anything or only see what you want to see ? or miss completely the above post ?. Trin have significant debt incase you didn't know and CERP are taking on a further $750k being diluted. Also look at the actual cash reserve.

So what have I said is wrong since I posted that 3 weeks ago. CERP diluted yesterday/today since that post was made. They are going to drill. I don't have to attend presentations in London.

They raised £3m yesterday and 60m shares issued today.
Also in the process of another £1m open offer with 20m new shares to come.
On top of that Lind have said they are going to exercise their right to convert $750k debt.

CERP - "Confirmation from Lind that they will exercise their right to provide an additional US$750k convertible loan to the Company in Q4 2017" - signed off by Leo Koot - 4 weeks ago. That's Linds right not Cerps.

And to be doubly sure 11/9/17 - "Lind has also informed the Company that it intends on exercising its exclusive right to increase the Funding Agreement by US$750,000 (the "Second Tranche"), with the funds to be provided to Columbus in Q4 2017. - ie a further 8m shares.

LK can aim closer for 1,000 bopd but it's still well below TXPs 1500 now. TXP are aiming for a lot more than 2K bopd not only in production but growing their reserves further.

I could see your argument if there was a few million mkt cap difference but it is almost 5X in favour of CERP despite only having 1/3rd TXP revenues and current production never mind lesser reserves. Regardless of any possible push into any other territory, TXP are doing exactly what CERP are doing in terms of production, water flood opps and additional exploration potential.

[brasso3] 10/10/2017 20:37

Zengas

Your comparisons of T & T companies are based on production and reserves. They do not however take into account that TXP has more debt ($15m) and smaller operational netbacks than CERP. I have not looked into TRIN so cannot comment on that.

Also you state that CERP are planning to drill 10 wells which is not true. "Plan to drill 10 wells at $500k each = $5m so debt or dilution will rise in line and $750k" That was Neil Ritson's plan and he is history as that strategy was flawed.

PS Leo Koot has told the market about CERPs conservative target of 550 BOPD by year end but if you had of attended company presentations in London you would know that he is aiming for closer to 1000 BOPD before end of 2017.

I would agree that TXP is good value based on P2 reserves and production.

[jungmana] 10/10/2017 19:45

Zengas - good update there. So based on today's values txp should be about 45p compared to cerp and about 52p compared to Trin. Stunning undervaluation here

[lw425] 10/10/2017 18:56

Yes Jung. It's a stunning undervaluation. Zengas highlights it perfectly.


Comparative valuation from ZENGAS:

ZENGAS
3 Oct '17 - 12:04 - 880 of 891 5 0
Worth waiting on imo because sooner or later it can't be ignored on pure value level. It's doing exactly as the others in terms of forward plans.

Cerp 5.75p = £32m m/cap.
11.8 mmbo P2. 550 bopd target end 2017 - 900 mid 2018.
-------------------------------------
Trin 15p = £42.5m m/cap.
18.7 mmbo P2. 2,395 bopd with 3,000 bopd target.
-----------------------------------
TXP 8.6p = £8.9m m/cap.
15.68 mmbo P2. 1,500 bopd with 2,000 bopd target.

On a comparable M/Cap to CERP = 31p (yet TXP having 25% greater reserves and nearly 3X production). To Trin = 41p as it closes the production/reserves gap.

[jungmana] 10/10/2017 18:00

LW yes I agree. Too cheap today. Have a look at Zengas's numbers. Comparing with Trin at 15p this should be about 41p.

[lw425] 10/10/2017 17:34

Market cap is insanely low here, under 10m.

4 more wells to drilled before end of year and 2 well workovers a month

In 2018, 10 to 20 new wells drilled and 2 well workovers a month.

1591 bopd in August already.

Should be comfortably mid 20's.

i.m.o.

[lw425] 10/10/2017 15:57

Can't even buy 10000 shares at 9.5p

Can see this hitting mid teens quite easily over the next few days as retail wake up to the extreme undervaluation here compared to it's peers.

Should really be price mid 20's for now then a further rerating as the drilling upside kicks in.

[jungmana] 10/10/2017 15:54

Someone is mopping all the loose stock in 100ks.

[jungmana] 10/10/2017 14:55

At some stage they will have to let it go. I know what you mean but in last 8 years i made some good money on dual listed stocks. I can see this 2 bagging in the short term.

[che7win] 10/10/2017 14:39

I don't like dual listed stocks as much, gives MMs a way out sometimes it seems

[che7win] 10/10/2017 13:27

Dropping the bid in desperation in the face of buys keep coming in.

Serious trouble for the MMs here me thinks.

[jungmana] 10/10/2017 13:26

The 100k is a buy reported late. Playing catch up. Need 40p to get parity with Trin and about 60p for cerp.Incredible!

[someuwin] 10/10/2017 13:26

Incredibly cheap here.

[che7win] 10/10/2017 13:22

MT, I'm not surprised, it has been virtually all buys this morning, bound to be short of stock.

[mount teide] 10/10/2017 13:19

Scap are desperate for stock - now on the bid at 9.75, but willing to pay 9.84p for just 10k of stock.

[che7win] 10/10/2017 13:16

Fantastic performance, a lot of upside here.I wonder how Canada will react to the rise? TPL brings back nightmares to me.

[mount teide] 10/10/2017 13:08

Scap just jumped up to 9.5p from 9p on the bid

L2 now 1 v 1 (9.5p v 9.75p)

[jungmana] 10/10/2017 12:39

Added by selling out my last lot of CERP. Now this and TRIN are my only oilers. The herd is definitely on the way :-)

[mount teide] 10/10/2017 12:25

An incredible 2.0m shares traded this morning - mostly at the full offer price:

To put this volume in some perspective, in the ENTIRE month of September 2017 (21 trading days) there were a total of 2.1m shares traded.

L2 currently 3 v 1 (9p v 9.5p)

Looks like the lid is slowly being lifted on one of AIM's best kept and most undervalued secrets.

[sleveen] 10/10/2017 11:04

I'm sure ZENGAS won't mind if I C&P his post.

If some one can tell me how to add the Canadian share price chart, I'll see what I can do.

[che7win] 10/10/2017 10:50

Thanks Sleveen.

Is it possible to include a chart for the Canadian stock listing in the header along with Zengas's last post - if he is agreeable to that?

[jungmana] 10/10/2017 10:49

Just £8m market cap right now. Should be more like 5 times that compared to cerp or even trin imo.The herd will notice the disparity soon

[mount teide] 10/10/2017 10:39

Thanks Sleveen.


Some analysis on TXP by ValueThe Markets in July 2017 - shortly after it came to AIM:

Touchstone Exploration - positive start on AIM could cause the share price to rerate - ValueTheMarkets:

'Since Touchstone Exploration (LSE:TXP) debuted in London just under a month ago its share price has risen 20%. It now trades at 8.75p on the bid (last seen). Touchstone is an oil and gas company, with onshore operations located in Trinidad and Tobago. In its latest quarterly report the company announced oil production had increased to 1,335 barrels per day (“bopd”). As I recently reported, Touchstone’s £7.3million market cap values the company favourably compared to its direct peers on AIM. This implicit undervaluation is encouraging, but improving fundamentals suggest a re-rate could soon be on the cards.

When Touchstone came to AIM it raised £1.45million at 7.25p. The company’s plan is to increase oil production to 2,000bopd by 2018. Its pitch was it would achieve this through development of its low cost reserves (C$7.35 per barrel of 1P reserves and C$6.00 per barrel of 2P reserves) and lean operating model. One of the attractive aspects of Touchstone’s assets in Trinidad and Tobago is they are forecast to have low decline rates, suggesting both longevity of operations and resilience to the persisting low oil price.

For private investors this almost sounded too good to be true. Compared to a lot of the rubbish in the lower reaches of the oil & gas sector on AIM, here is a company presenting a credible operational plan, trading at a modest price. Better yet and the board has been talking up the prospects of dividend payments!

In the words of CEO Paul Baay, “When we set up Touchstone our goal was to create a dividend paying business. We were on our way there until oil turned south a few years ago. Moving forward this is still our plan, but it will largely be a function of where the oil price is. However there are also operational improvement we can make to ensure the business is run as efficiently as possible, including reducing drilling and operating costs.”

This sounds great, but how much is a cynical market likely to believe this story?

Judging by Touchstone’s news flow over the course of its first month on AIM, it seems likely it won’t take long for it to win over more admirers. The company’s Q2 operational report is certainly promising.

During June, Touchstone brought two wells into production on its Coora Block. Well CO-368 produced 111bopd for its first 26 days of production and Well CO-369 produced 151bopd over its first 17 days. These wells obviously had a positive effect on Touchstone’s overall production rate. In the last quarter this rose to the 1,335bopd already quoted and it rose again in the first 17 days of July to 1,455bopd.

As positive as the contribution from Coora has been, Touchstone’s attention is much more focussed on developments in the WD-4 Block. According to Baay, the company “has had the most success at WD-4, which is its largest and deepest producing block. Having not drilled wells for a couple of years because of the price environment, we completed an extensive review of our assets. As a result of this we now want to look for deeper production horizons, which will bring into play new production and new reserves. This is exciting for the island and a cheap way to conduct exploration.”

As the final part of this summer’s four well drill campaign, Touchstone also drilled two wells at WD-4 (PS-598 and PS-599). These have encountered approximately 637 feet of net oil pay and Baay says, “based on performance of other wells at WD-4 we are expecting the two wells to produce at a sustained rate of 100-150bopd.” When asked why the company had not already released initial flow rates Baay replied, “releasing initial flow rates is not our style. The data is extremely unreliable. Our policy is to wait until we have gained a good idea of stable flow rates, before updating the market.”

Assuming PS-598 and PS-599 meet the lower end of Baay’s expectations, by the end of summer Touchstone could be producing about 1,700bopd. This is not far off the target of hitting 2,000bopd by 2018. Looking to the future Baay commented, “our operational goal is to have one rig continuously drilling on the island. This will bring more wells into production and improve the company’s cash flow generation.”

This suggests the company has plans to drill more wells in the second half of the year, not least because of the importance of generating increased cash flow.

Touchstone is going to need this because one area to be mindful of is its debt. On 23 November 2016, Touchstone received a $15million loan from a Canadian investment firm. The interest rate is 8% and principal payments are due from 01 January 2019. The loan matures on 23 November 2021. Touchstone explains this in more detail in its Q1 report, but Baay believes the main point to take home is “that the company’s debt is manageable. The interest rate is reasonable considering market conditions and Touchstone has built into its plan the provision to start making principal repayments in 18 months time, from internally generated cash flow.”

Touchstone’s reported financial performance in the first quarter of the year supports Baay’s belief. Although Touchstone lost C$1.1million, this was down from C$3million the year before. However, Touchstone’s operating profit during the period (including general and administrative expenses) was C$1.3million. Assuming increased production has not led to a significant increase in operational expenditure, this bodes well for Touchstone’s next set of reported figures. These are due out on 11 August.

If Touchstone can demonstrate continued financial improvement as we move further into 2017, expect the market to sit up and take note. The £7.3million market cap could start to look cheap, as investors buy into the business’ potential.'

[jungmana] 10/10/2017 10:36

Sleeven thanks for the new thread. Hope that gets more interested here