Touchstone Exploration Share Discussion Threads

[stockport loser] 14/8/2021 17:57

Agree, and also the Cas development drilling also has alot of scope to add reserves, as pointed out in hour recent meeting with a now Txp holder.We all will have differing view points in our roles as armchair CEOs, for me a 10%dilution to an asset that can add 30% to the share price is a good ROI. PB in the past has made good calls on placings, he has also said there will be no placing when there then has been. I think a placing would be a good move on Royston success. What if Cas doesn't come online till Q4 2022? No one can predict the micro or macro in these times.To lose a year would not help shareholder value.

[sunbed44] 14/8/2021 17:41

Db great posting

[davidblack] 14/8/2021 16:16

Stockport that new drill didn’t come to the island to sit idle.

But Cascadura does need to get drilled out to deliver that 200mmcf pd or $250k per day which is the engine that will pay for the exploration. $7.5m after tax a month.

Will be nice to get the existing first two Cascadura on production delivering the initial 80mmcf or $100k per day Q2 2022. That will pay for one drill running continuously 365 days a year.

[sirmark] 14/8/2021 16:00

84p breaks next week and 78p it is !!! Just the charts. Worth selling and buying back "maybe" not that I would

[sirmark] 14/8/2021 15:59

Ready to watch this drop next week !

[stockport loser] 14/8/2021 15:48

If after Royston there is no exploration till the back end of 2022, the effect on the share price will be far more negative than any placing.Many will sell out rather than wait 8 months for Cas to come online.

[che7win] 14/8/2021 15:05

Or it could be that Ngms has ruffled sirmark on the PANR board"Not a good day ngms just like your txp where you also feel the need to discuss us.... Hhhm might be interesting if we all start posting all the negatives over there about their cos !!! I'm fact you're on been as well you're not willing.... Seems like you're only willing to spread the weary word about Panr but as we know your not exactly consistent!Good weekend"Sirmark, I know nothing about PANR but I welcome you as a future TXP shareholder ?

[ballymoss18] 14/8/2021 14:03

Nice to see new posters desperate to get onboard, the word is starting to spread.

[davidblack] 14/8/2021 14:02

Really with Royston and four more drills in the next four months? It’s going to be boring clearly!

[sirmark] 14/8/2021 12:15

Looks like a return to the 60's on the cards

[onedayrodders] 14/8/2021 11:40

Great work Pro

[herman007] 14/8/2021 11:34

The assumption that fast tracking exploration does not add value is to some extent flawed in my opinion. The idea that the oil and gas is not going anywhere and thus any delay does not effect value, assumes that a dollar tomorrow is worth the same as a dollar today. We know that is not the case, especially not in the stock market. Secondly, the demand for oil and gas in the future is uncertain, especially beyond 15-20 years. This will effect the valuation of pure oil and gas companies in the years ahead, which is an argument for a high exploration and production activity. Thirdly, the share price, aka value creation, is heavily influenced by triggers. Frequent drill results will contribute to keeping a good momentum and preventing the share from falling back in the vacuum of news, and letting traders dominate the share by trying to time this news flow. Last but not least, the timing of exploration and the size of the exploration budget should depend on the form and cost of financing available. If TXP can increase loan financing significantly, I think that exploration activities should increase beyond what has been communicated. As for a placing, it would obviously not be in our interest to have a large placing at 80-90 Pence, but with a major success at Royston a placing of e.g 30-40 million USD at the 250-300P levels would not be a problem, especially not when it can be combined with a loan facility to significantly increase the activity level. In case Royston fails, I agree that a placing should be avoided in the short term and exploration delayed until 2H22, this because the terms of such a placement would be rather unnatractive to the company.

[retsius] 14/8/2021 11:23

Pro

Absolutely brilliant, I have thought of all these points you mention but would be unable to express them in a coherent fashion.

You should be on the board of Touchstone!
R.

[pro_s2009] 14/8/2021 10:51

Below is a copy of my email to Paul Baay, the CEO, sent today.

To: Paul Baay
Cc: Stacey Gundersen

Dear Paul,

I hope you are well. The world is starting on the path back to normality, its not going to be quick but its underway now and hopefully it continues.

The progress being made continues to be good and I am very happy to see the news that Royston-1 has now spudded and the loan facility has been extended to be able to draw from it until year end.

Royston-1 is a very exciting drill and fingers crossed you can get into and through the 7bc right the way down to the sub-thrust. The 7bc being never drilled into in the past will offer a lot of excitement and potential upside, and so will a poke into the sub-thrust if the drill can make it that far.

To keep you updated (although I am sure you already are), the current large "short" position being held in London continues, this being around the 9 million shares level.

This is seen on Euroclear, being the number of shares loaned from CREST. There are discussions among shareholders about whether this is a short or a hedge, suffice to say that 9 million shares have been borrowed from CREST and someone is paying a recurring fee to borrow those shares, and has sold them into the market creating the share price weakness we see.

A few shareholders have contacted me (and between them and myself this represents a few million shares of Touchstone) and asked me to write to you to express their views, which I will so do below.

This email will likely be posted on public Bulletin Boards so therefore to not distract you or burden you with having to make a reply and to avoid questions of "did he reply" - please do not reply to this email. Its not trying to teach you to suck eggs, its purely some shareholders wanting their voice heard, and asking me to do so in an email.

Their concerns are regarding this "short" position and how, whoever is behind it, may be going to try to influence the board of Touchstone, directly or indirectly via whatever influence, to accept a dilutive placing ahead with the excuse being "fast tracking 2022 exploration (and/or Royston development)".

Whilst I remain confident that Touchstone can progress to Cascadura production being on line without the need for any further dilution by issuing new shares, they have raised their concerns and so wanted these concerns aired to you, therefore I am passing this on.

The company currently has a debt facility of 20 million dollars, and there has been some talk, rightly or wrongly, that this may be extended up to 50 million US dollars, or indeed a new facility may be utilized.

Touchstone now has the 2020 year end reserves report with which to take on additional debt funding and the expectation is that a new upgraded reserves report including Cascadura-Deep-1 for the first time will be coming for 2021 year end reserves report. Pending any Rosyton-1 success this may also include Royston for the first time and on top of that, there may be more oil moved into 1P status following the 4 pending wells in the South West and any positive results from the pressure testing at Chinook-1 will add a little Cruse gas as well, not to be sniffed at, literally.

With a new improved reserves report at the end of 2021, enhanced debt funding seems the obvious non-dilutive way of advancing in 2022 until Cascadura is online and throwing off cash.

So, given the companies current proven reserves and with Cascadura production due to significantly increase the companies incoming cash flow not too long in the future, they would like to express their desire that the board of Touchstone consider the following points:

1/ Exploration be pushed back until after Cascadura is online and generating significant revenues, to H2 2022 if necessary. You cannot lose value by delaying, you can lose value by diluting and then failing with exploration spend. Therefore all focus should be on getting Cascadura online while minimizing other exploration related expenditure to avoid any unnecessary equity dilution. There is no value creation in "fast tracking" exploration. The oil or gas will remain there to be discovered, whether you drill it in March 2022 or December 2022. Its going nowhere if its there, it can wait.

2/ RBL or similar debt facility (or enhanced facility) to be put in place in Q1 2022, as and if required, to fund any development drilling and development requirements until Cascadura is online and generating those significant revenues. Can the 20 million loan facility be extended to 50 million ? With a new 2021 upgraded year end reserves report can a new 50 million facility be put in place where part of it pays back the current 20 million facility and the remainder is used to fund Royston surface facilities (if needed in the success case) and also a couple of Cascadura development wells in H1 2022 ?

3/ That the board please avoid any temptation to issue shares for cash after any Royston success, when no doubt there may be lots of people "knocking on the door" trying to offer money for new shares. Particularly someone who must get hold of 9 million shares to return them to CREST having borrowed them.

At this juncture in the companies development there is a major cashflow generative development due to be online late in H1 2022 in Cascadura, or as some people jokingly say "CashCowdura". To issue shares to fast track exploration is not creating value and would dilute value in the short term. All future exploration should wait until Cascadura is online and then be generated from cashflow. Any requirement for Royston development (eg surface facilities) again should be funded via debt.


As I said earlier, this is just their thoughts and opinions that they wanted passed on, and so I have done so.

My only personal comment would be that the current share price weakness being seen is in my view completely related to the lack of clarity on future funding given the ongoing delays and further delays to Coho and Cascadura. The short position is obviously suppressing the price and it becomes a "downwards spiral" as people will sell due to a low weak share price, which in turn creates even more weakness, creating even more selling, allowing the share price to be manipulated downwards and held low. Confidence is currently shot and that short position is making sure, at the moment, no confidence can be rebuilt. A new or enhanced credit line announced in 2022 will make everyone "breath" and be confident there is no discounted placing ahead to get cheap shares from.

On another note one thing that will not sit well with people, following Chinook, is any delay to flow testing in the event of any discovery at Royston. One hopes that testing equipment has been reserved and in the event of any success there will be an immediate move to flow testing without any delay.


Fingers crossed for Royston success ahead and stay safe and thank you for your time in reading this. Keep up the good work.

All the very best,
&&&&

[pro_s2009] 14/8/2021 10:51

Below is a copy of my email to Paul Baay, the CEO, sent today.

To: Paul Baay
Cc: Stacey Gundersen

Dear Paul,

I hope you are well. The world is starting on the path back to normality, its not going to be quick but its underway now and hopefully it continues.

The progress being made continues to be good and I am very happy to see the news that Royston-1 has now spudded and the loan facility has been extended to be able to draw from it until year end.

Royston-1 is a very exciting drill and fingers crossed you can get into and through the 7bc right the way down to the sub-thrust. The 7bc being never drilled into in the past will offer a lot of excitement and potential upside, and so will a poke into the sub-thrust if the drill can make it that far.

To keep you updated (although I am sure you already are), the current large "short" position being held in London continues, this being around the 9 million shares level.

This is seen on Euroclear, being the number of shares loaned from CREST. There are discussions among shareholders about whether this is a short or a hedge, suffice to say that 9 million shares have been borrowed from CREST and someone is paying a recurring fee to borrow those shares, and has sold them into the market creating the share price weakness we see.

A few shareholders have contacted me (and between them and myself this represents a few million shares of Touchstone) and asked me to write to you to express their views, which I will so do below.

This email will likely be posted on public Bulletin Boards so therefore to not distract you or burden you with having to make a reply and to avoid questions of "did he reply" - please do not reply to this email. Its not trying to teach you to suck eggs, its purely some shareholders wanting their voice heard, and asking me to do so in an email.

Their concerns are regarding this "short" position and how, whoever is behind it, may be going to try to influence the board of Touchstone, directly or indirectly via whatever influence, to accept a dilutive placing ahead with the excuse being "fast tracking 2022 exploration (and/or Royston development)".

Whilst I remain confident that Touchstone can progress to Cascadura production being on line without the need for any further dilution by issuing new shares, they have raised their concerns and so wanted these concerns aired to you, therefore I am passing this on.

The company currently has a debt facility of 20 million dollars, and there has been some talk, rightly or wrongly, that this may be extended up to 50 million US dollars, or indeed a new facility may be utilized.

Touchstone now has the 2020 year end reserves report with which to take on additional debt funding and the expectation is that a new upgraded reserves report including Cascadura-Deep-1 for the first time will be coming for 2021 year end reserves report. Pending any Rosyton-1 success this may also include Royston for the first time and on top of that, there may be more oil moved into 1P status following the 4 pending wells in the South West and any positive results from the pressure testing at Chinook-1 will add a little Cruse gas as well, not to be sniffed at, literally.

With a new improved reserves report at the end of 2021, enhanced debt funding seems the obvious non-dilutive way of advancing in 2022 until Cascadura is online and throwing off cash.

So, given the companies current proven reserves and with Cascadura production due to significantly increase the companies incoming cash flow not too long in the future, they would like to express their desire that the board of Touchstone consider the following points:

1/ Exploration be pushed back until after Cascadura is online and generating significant revenues, to H2 2022 if necessary. You cannot lose value by delaying, you can lose value by diluting and then failing with exploration spend. Therefore all focus should be on getting Cascadura online while minimizing other exploration related expenditure to avoid any unnecessary equity dilution. There is no value creation in "fast tracking" exploration. The oil or gas will remain there to be discovered, whether you drill it in March 2022 or December 2022. Its going nowhere if its there, it can wait.

2/ RBL or similar debt facility (or enhanced facility) to be put in place in Q1 2022, as and if required, to fund any development drilling and development requirements until Cascadura is online and generating those significant revenues. Can the 20 million loan facility be extended to 50 million ? With a new 2021 upgraded year end reserves report can a new 50 million facility be put in place where part of it pays back the current 20 million facility and the remainder is used to fund Royston surface facilities (if needed in the success case) and also a couple of Cascadura development wells in H1 2022 ?

3/ That the board please avoid any temptation to issue shares for cash after any Royston success, when no doubt there may be lots of people "knocking on the door" trying to offer money for new shares. Particularly someone who must get hold of 9 million shares to return them to CREST having borrowed them.

At this juncture in the companies development there is a major cashflow generative development due to be online late in H1 2022 in Cascadura, or as some people jokingly say "CashCowdura". To issue shares to fast track exploration is not creating value and would dilute value in the short term. All future exploration should wait until Cascadura is online and then be generated from cashflow. Any requirement for Royston development (eg surface facilities) again should be funded via debt.


As I said earlier, this is just their thoughts and opinions that they wanted passed on, and so I have done so.

My only personal comment would be that the current share price weakness being seen is in my view completely related to the lack of clarity on future funding given the ongoing delays and further delays to Coho and Cascadura. The short position is obviously suppressing the price and it becomes a "downwards spiral" as people will sell due to a low weak share price, which in turn creates even more weakness, creating even more selling, allowing the share price to be manipulated downwards and held low. Confidence is currently shot and that short position is making sure, at the moment, no confidence can be rebuilt. A new or enhanced credit line announced in 2022 will make everyone "breath" and be confident there is no discounted placing ahead to get cheap shares from.

On another note one thing that will not sit well with people, following Chinook, is any delay to flow testing in the event of any discovery at Royston. One hopes that testing equipment has been reserved and in the event of any success there will be an immediate move to flow testing without any delay.


Fingers crossed for Royston success ahead and stay safe and thank you for your time in reading this. Keep up the good work.

All the very best,
&&&&

[stockport loser] 14/8/2021 10:23

Exploration success certainly does add value and keeps interest, as you well know momentum is everything on Aim. Yes to monetize Cas is the keystone to the long term success and value of this company, but we all know in terms of share price appreciation drilling Kraken would have the highest impact. Again on Aim the anticipation is usually where the money is to be made, less so the reality.

[che7win] 14/8/2021 10:19

Malcy post seems agreed on valuation:Touchstone has suffered unduly in ratings terms after an incredible start to its drilling campaign in the Ortoire Block in Trinidad. It was as if the market thought that they could go through an extensive drilling campaign without a dry hole although the total project has been an unqualified success. Whatever Royston brings you could double the share price back to the previous high and it would still be a cheap sharehTtps://www.malcysblog.com/2021/08/oil-price-touchstone-prospex-block-trinity-and-finally/

[che7win] 14/8/2021 10:01

Davidblack, Correct, payback of 4 Wells should be under a year.Current production is paying for all their admin/staff/operating costs etc. and still producing $5m free cash flow per year after that.It makes sense for them to increase production on legacy side as new production will mostly go to bottom line on top of this.As in my previous post, they should be able to get to near $20m cash flow from legacy oilfields + Coho.That alone is 11.25p cash flow per share (using 225m shares).So just on Western oilfield production and Coho, I reckon current share price is underpinned.Add in Cascadura, and exploration of Royston, we can easily see 250p per share as possible.After Royston, who knows, but this is incredible offer Mr Market is making right now, I'm happy to accumulate.

[pro_s2009] 14/8/2021 09:56

DB, exactly.

The 2021 year end reserves report will see a significant uplift due to Cascadura Deep 1 flow test results and of course a bit from Chinook Cruse flow test results. Also, those 4 wells in the South West will move more into 1P. So its going to be a big upgrade in total. (Those pressure tests at Chinook Cruse are all about adding more proven reserves to the 2021 year end report)

So there should be no problem getting a new loan in early 2022 - or expanding the existing one.

The only need for new funds in H1 2022 would be surface facilities needed at Royston in the event of a discovery - and that can be paid for by debt.

If they expanded the facility from 20 to 50 million, they could also pop a couple of development wells into Cascadura in H1.

[davidblack] 14/8/2021 09:49

A nice mix of 60-70% focusing on production and 30-40% on exploration would be a nice balance.

The Coho delays and the EIA on Cascadura must have refocused their minds on the legacy assets too for quick turn around.

[davidblack] 14/8/2021 09:46

I was just hoping those four new wells could pay for themselves over 24 months.

So 220 barrels at $26 netback. Those wells could then be immediately refinanced on long term credit.

Anything above that would be a big win.

Anyway that would then move the focus to drilling up those Cascadura producers while the existing wells get hooked up in Q1 2022.

[pro_s2009] 14/8/2021 09:33

Accelerating exploration does not add value. I am happy to wait 6 months (eg Jan to June 22) to start exploration phase 2 in H2 2022 and not have any further dilution.

A key point in my soon to be sent email to Paul.

First payment on the current debt is Q3 2022, but with a new and upgraded reserves report due year end I want to see a new an upgraded lending facility in place.

Eg new facility for 50 million put in place Q1 2022 with which full repayment of the current one is done
And the new facility funds Royston development while cash from operations funds exploration in H2 2022 onwards.

First payment on this proposed new loan then would be Q3 2023.

[che7win] 14/8/2021 09:28

On King Suarez post:

Imho, immediate cash flow:
1. We brought in $1.2m cash flow from operations this past quarter.

Future cash flow, by year end:
1. Four shallow Wells - another $1.4m per quarter expected - flows straight to bottom line.
2. Coho should produce $0.5m per month, $2.0m per quarter.

So $4.6m cash flow per quarter alongside board stating that liquidity remained "strong", as it ended the second quarter with cash of $11.21m, a working capital balance of $4.67m, and $7.5m drawn on its term credit facility, resulting in a net debt position of $2.83m.
They can access the outstanding $12.5m available balance before the end of the year - I think they might do that if Royston is successful.

Board is adamant that they won’t do an equity release, they are navigating company and managing cash liquidity until Cascadura comes online.

After that, they will not be able to spend cash flows solely on exploration, debt repayment and dividends should be expected.

Can I just say - Royston is bigger than all previous Wells combined, success there is worth 150p a share.
We are under the radar.

[davidblack] 14/8/2021 09:14

Interesting that they plan to drill those new four short holes in the legacy area this year.

Yes it’s a licence requirement but the Ministry of Energy wouldn’t have minded if it was undertaken over a number of years but no TXP plans to complete them within months of getting the licence renewal.

Feels like they are clear that the results can be quickly monetised at $1m a hole. Also assuming they do hit oil they can probably be refinanced for more than the drill actually cost on debt, so it may be a smart cashflow move too whilst they test the new drill?

Anyway the first of those wells may be finished before Royston or shortly after, so there is more news than people think.

[11_percent] 14/8/2021 08:54

If Royston is a success I can see a placing to accelerate exploration. Why waste a year?

====

I would go with that. A Royston success would see an uplift in the share price and PB would be able to get a placing away at a good price.

=======================================

This is a post from King Suarez on an other BB. It puts some numbers o our situation.
====

Good morning gents,

What these TXP results tell us are:

1) Working capital balance of $4.6m - this is the excess of current assets (cash + receivables) over current liabilities. Since we do not have a balance sheet breakdown to go on, I am assuming current liabilities include some committed costs associated with the 4 x legacy wells to be drilled in Q4.

2) TXP have drawn $7.5m of the debt facility, leaving them in a net debt position when taking into account the smaller working capital surplus. There is another $12.5m which can be drawn.

3) We expect the legacy oil wells to cost around $1m each? So $4m.

4) Royston I don't know, but assuming c$5-7m?

5) So that leaves TXP close to zero liquidity as at end of the year, BUT last quarter generated $1.2m positive cash flow over and above 'paying the bills', so that will help.

6) Coho looks like it will come online late 2021?

It is not out of the question that TXP may do a small-ish placement of say $5m-$10m to give them a bit of buffer between now and Cascadura development, which looks sometime H2 2022.

That said, the boost (hopefully) from legacy production drilling in Q4 and Coho should contribute further to positive cash flow from current oil production (Coho brining in $0.5m a month and if we use the current netbacks and assume another 600bopd from Q4 legacy drilling then that would add another $0.5m cash flow a month) so TXP are not in any financial difficulties, but I doubt they will generate enough to fund Cascadura development (this is expected out of additional/new debt/RBL?) and certainly not enough to fully repay this current $20m debt facility (assuming most/all will get drawn) until Cascadura 1 comes online.

I don't know how much each development well at Casca will cost, but surely only a couple of $m each since we have already drilled the appraisal wells and the infrastructure is being built and paid for by NGC, so stuff just needs tying up?

In short, a small placing might be done, for prudence, but I don't see it as a necessary requirement?