Touchstone Exploration Share Discussion Threads

[shrewdmole] 11/10/2017 13:08

What's the major holdings?

Or free float?

S

[brasso3] 11/10/2017 12:38

Zengas

Thanks for the TXP tip. I joined the party at 10p this morning.

[mount teide] 11/10/2017 12:23

L2 continuing to look very strong; 2 v 2 @ 11.5p v 12.00p

Over 8.0m volume in the last 1.5 trading days against 2.1m in whole of September 2017!

[mount teide] 11/10/2017 11:11

L2 2 v 2 @ 10.75p v 11.00p

Another move up underway.

[jungmana] 11/10/2017 09:41

this was released 3 months ago. very informative about the company;

Name of share is: Touchstone Exploration
AIM listed High Risk
We are acting as agent in a 7.25p placing. We are charging 5% and £75 admin fee
Settlement date: 26 June
Spread: CAD 17-18 cents (9.5-10.5p) Current market size is: TBC

Reasons to buy:

Touchstone Exploration is an independent oil producer with onshore low risk operations in Trinidad.
They are one of the largest onshore independent oil producers in Trinidad. Touchstone are currently producing 1,280bopd with a plan to increase to 2,000bopd by end of 2018. They are operator of around 78,000 gross acres of exploration and development rights.
They are coming to AIM to increase liquidity and are raising £1.5m to assist with the ramp up of current development plans. Current market cap is CAD$14m (£8m). Post raise will be £9.5m.
There are other UK listed firms operating in Trinidad that provide an easy comparison of valuation. Similar independents in Trinidad are Trinity Production & Exploration (TRIN.L), Range Resources (RRL.L) and LGO (LGO.L). Touchstone trades at a significant discount to these peers:
Market valuation per flowing barrel (Canadian dollars) -
Trinity $34,352
LGO $37,907
Range $63,047
Touchstone $11,538.

Market valuation compared to reserves (Canadian dollars) -
Trinity $4.04 per barrel 2P
Touchstone $0.94 per barrel 2P

Even without the predicted increase in production there is potential for significant re-rating in value just from Touchstone moving to a valuation more in line with its peers.
After a period of cost cutting brought on by a weak oil price environment, the company has announced plans to ramp up activity levels with a capital programme initially comprising 24 well recompletions and four new development wells. Five of the recompletions have already been undertaken so far.
The recompletion work is low risk and the company has an excellent exploration record with a 100% success rate for the 36 wells drilled to date.
Shore Capital expect this work to translate into “healthy production growth” and estimate an average 1,450bopd for FY2017 and 1,700bopd for FY2018. Risked NAV based on this is CAD$0.55 per share – GBP 31p
The proposed raise will add to these numbers. Shore thinks as a result of the additional funds being available the new development well figure will increase from 4 up to 10 by the end of 2017, production will increase to around 2150bopd for FY2018 and profit is expected to be as high as $9m ($20m operating profit) from a previously expected breakeven as per the current research note. Pro-forma figures will be included in an updated research note after the raise is completed.
Touchstone has a strong management team, notably CEO Paul R. Baay who has led TXP since 2010 (increasing production from 135 to 1300bopd). Previously he founded True Energy where he increased production from 350boepd in 2000 to 20,000boepd by 2007. Part of True Energy was sold for $200m in 2012. Paul Baay and Chairman John Wright own 7% of TXP.
The company has a sound balance sheet. In response to the downturn in oil prices the firm reduced G&A expenses by 39% since 2015 (from CAD$10m to $6m) and reduced operating costs per barrel by 19% to around CAD$21 (USD$15.5) over the same period.
The firm has just released Q1 2017 Results on 15th May and the had CAD$13m cash on hand (compared to CAD$8.4m in cash at the end of 2016).
All in all Touchstone Exploration offers increasing production, increasing netback/profitability, a solid management team and a solid balance sheet. The move over to AIM will hopefully lead to a re-rating as they move to a valuation more in line with peers.

[jungmana] 11/10/2017 09:01

Shrew - that's exactly what I have been saying on trin and cerp boards but the just won't listen.Zengas, your 1% holding is looking great right now.well done mate

[shrewdmole] 11/10/2017 08:58

On te numbers above this has to be worth £25-30m market cap and more as production increases. We've also got the hugely anticipated tax reforms.

S

[shrewdmole] 11/10/2017 08:57

This market cap is ridiculous for the economics of the assets.

Cash generative and low opex.

If they keep an eye on costs by the time the first loan payment is due they would have more than enough cash at hand to clear it.

S

[falia] 11/10/2017 08:56

OK IN @ 10.5

[mount teide] 11/10/2017 08:36

LW - historically, decline rates have generally been low across their blocks.

[zengas] 11/10/2017 08:36

Shrewd, well thanks.
30th June 2017 Cash $9.9m with $6.1m of cash generated from operations in 2016.
$15m 5yr loan with no repayments of principal until Jan 2019.

Q4 16 opex $19.89, Q1 17 $17.53, Q2 $23.53 increased activity (Page 12).
Finding and development costs on P1 = $6/b (Page 8)
Operationally cash flow positive (page 15).

This should improve further as production has gone up and continues to rise as well as an improvement in oil prices, not to mention the possibility of improved government terms for all operators.

[jungmana] 11/10/2017 08:26

LW - clearly says 1500 is the guide( average production)

[jungmana] 11/10/2017 08:24

Very strong management here in Baay and Wright. The two have very strong track record of building an oil company and together own 7% of shares.Also we have a good institutional holding here.

[che7win] 11/10/2017 08:21

11p offer, got to be quick at these prices, market cap £11m, peanuts IMHO.

[lw425] 11/10/2017 08:21

One negative is that production as stated in the RNS from 14th Sept was 1500 down from 1591 in August.

Does that suggest decline issues??

[mount teide] 11/10/2017 08:17

Strong buying from the opening bell - L2 4 v 1 / 10p v 10.5p

[shrewdmole] 11/10/2017 07:41

Zengas

Trust your well.

What's the production costs per barrel on txp?

Shrewdie

[brasso3] 11/10/2017 04:45

Zengas

It is also my style to seek out the skeletons in a company. I have only started looking into TXP as you pointed it out to me the other day. I agree that it looks good value on P2 reserves and production. You know AIM very well and valuations and share prices are driven more by sentiment and emotions than numbers. CERP is on a roll at present and as Carpadium (post 28) pointed out this is down to Leo Koot and his team and their excellent turnaround story. CERP (formally LGO) nearly went bust last year under Neil Ritson/ David Lenigas. TXP is relatively new to AIM and has not attracted such a large following at present.

Mount Teide

LK is being very conservative with the 550 number and rightly so. His aim is to under promise and over deliver and lets judge him in 3 months time on that. I expect they will achieve 700 - 900 BOPD by year end and they are completing one workover a month until year end. The programme did not really get underway until late Q2 2017.

[mount teide] 11/10/2017 00:21

Brasso - '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.'

Well, if thats the case then Leo needs to get over to Trinidad sharpish, don his overalls and get his hands dirty, because to date in H2/2017, CERP's daily production figure has been overwhelmingly below the average figure mapped out for each month in H2/2017 in order to reach the 550 BOPD year end target, which is what they need to go cash flow positive.

According to the recent Company Presentation, the daily production figure is still below the 436 BOPD average figure achieved under the old management in H1/2016. And it also states CERP has a 950 BOPD target for the end of H1/2018.

550 BOPD by end of 2017 and 950 BOPD by end of H1/2018 would be a great achievement starting from an average of 327 BOPD in H1/2017.

If Leo however, is telling the City he is actually aiming for 1,000 BOPD by the end of 2017, then should he fail and end up getting little better than the conservative 550 BOPD target given to the market(very likely considering the production figures achieved to date in H2), then he is putting himself at considerable risk of damaging his credibility within barely 6 months of taking the helm.


AIMHO

[che7win] 10/10/2017 23:31

What do others think of the tax changes and its effect here? Should help prospects, TRIN management thinks so:TIDMTRINTrinity Exploration & Production03 October 2017Trinity Exploration & Production plc("Trinity" or "the Group" or "the Company")Trinidad and Tobago 2018 Budget HighlightsTrinity, the independent E&P company focused on Trinidad and Tobago is pleased to note proposed reforms encouraging investment in the energy sector included in yesterday's Budget Statement in Trinidad, which could have a positive impact on future trading for the Company.The Statement specifically addresses the Energy Tax Regime:We have started a review of the energy tax regime in order to simplify and rationalise the terms of both Production licences and Production Sharing contracts. The main objectives of this reform are to encourage investment in the energy sector and raise the Government's revenue-takeCritical areas being addressed are:-- Making the Supplemental Petroleum Tax responsive not to price but to underlying profitability;-- Extending the Supplemental Petroleum Tax to gas, which is now the country's main petroleum product;-- Reconciling and simplifying the fiscal regimes applicable to the exploration and production and production sharing systems; and-- Standardising and uniformly applying appropriate royalty rates to all crude oil, condensate and gas.Negotiations between the energy companies and the Government are well advanced and we expect to be in a position to present the new oil and gas fiscal regime before the end of this year.*Bruce A. I. Dingwall CBE, Executive Chairman of Trinity, commented:"This could prove to be an extremely important change for the Company in terms of bottom line economics and Company valuation. The Government is aligned with Trinity in seeking to increase oil production and once the terms of the changes to SPT are clear we will then be in a position to quantify what the effect on the Company will be."On the face of it this announcement looks like good news and we continue to work hard on building on the strong first half and look forward to updating the market further in due course."* extract taken from full Budget Statement available here Enquiries:

[zengas] 10/10/2017 22:08

Brasso - no i'm not being defensive (just my writing style - so apologies if that has come across that way). Don't get me wrong I have nothing against CERP. If I did I could chip on the CERP board but don't. CERP won't be profitable either even at 1k bopd taking into account cost of sales which does give a small gross profit but admin will wipe it out (see the accounts). CERP had circa $6m debt/liabilities also. I said they would be either debt increasing or dilution (raised £3m yesterday and in process of another £1m).

Re Schroders, Any institutional holding in a company is welcome. North Energy Capital of Norway have in the last 2 months taken up over 5% of TXP.

(As of 28th Sept 2017 Goldman Sachs own 1.3%, ABI 14.5% and Celisa Captal 6% of North Energy)

[carpadium] 10/10/2017 21:51

I know where Schroders have put their money and know the reason why they choose to back Columbus in Trinidad. Leo Koot.

[wheniamfree] 10/10/2017 21:45

They’re already producing at 1590bopd which may show further increase on Q3 results, that is fact so how have they not increased?

That also excludes the 4 additional wells being planned for year end so id expect 2000bopd.

Nobody is dissing CERP they are merely highlighting the obvious fact that TXP should be 3-4x it’s current value on comparison to its peers who are doing exactly the same thing.

Now where would you put your money with such an obvious abondance of upside potentials?

[lw425] 10/10/2017 21:39

All the facts here point to mid teens this week.

Production is over 1500 bopd with 4 new drills by end Dec.

15p is only 15m market cap.

Only about 100m shares in issue so should move up sharply now.

[brasso3] 10/10/2017 21:36

Zengas

You are being very defensive and I was only adding my own observations to your comparison. I did not even comment on TRIN!

CERP do not have a drilling programme planned yet you have referred to a 10 well programme. They are doing workovers only at present some of which cost less than $10k a well and have yielded increase of 25 - 50 BOPD. You are correct to point out that the BoD have done an excellent job raising £4m at a price of 5p which was above the 30 day average share price and far beyond the year low of sub 2p.

You state that TXP are aiming for 2000 BOPD in 2018 but over the last 5 years have failed to increase production from the 1200 - 1300 range. I am not saying they will not increase production but history can give an indication of the future.