Touchstone Exploration Share Discussion Threads

[king suarez] 01/9/2021 19:22

Is it a four letter word, beginning in "C"?

[rabblrouzr] 01/9/2021 19:15

Help with name of consortia that purportedly has a 9 million Short Position? ... start with a "C", I believe. Do you know if they would be connected with Cormark Securities in Canada?

[rabblrouzr] 01/9/2021 18:59

Monday is Labour Day in Canada as well as U.S.

[thebull8] 01/9/2021 15:54

Canada really is a damp squib. Labour day will be interesting - I believe Canada is closed next Monday and Tuesday

[sunbed44] 01/9/2021 13:53

DB - with less than 150k traded how can you possibly deduce that shorts may be closing. Please keep it real and balanced my friend.

[king suarez] 01/9/2021 13:36

It was a Google translate of the article Pro linked in post 22007.

[rabblrouzr] 01/9/2021 13:31

KSuarez...thank-you for posting that...what or where was the source if you don't mind?

[retsius] 01/9/2021 13:19

DB
Thanks for all your input and comments.

I feel we have turned north after a VERY GRIM six months.
Shorts now paying close attention to the SP?
R.

[davidblack] 01/9/2021 13:03

Digital stutter!

[davidblack] 01/9/2021 13:03

Looks like a few shorts might be packing up their tents and moving on?

[1corpse] 01/9/2021 12:44

200mmcf is about 33k of boe per day. Alot of revenue to consider.

[davidblack] 01/9/2021 11:49

It will be interesting as to the size of the Coho pipe as now that NGC and Shell are “Friends”; there are two more Coho targets sitting there and with the new quick Canadian drill they may be plums to be taken quickly once Coho starts to pump cash.

Just a thought.

[pro_s2009] 01/9/2021 11:44

thebull, initial production will be 100mmcf/day. The pipe will be 200mmcf/d capacity.

I think they got confused by that. End of 2022 Cascadura will be production 200mmcf/day.

[king suarez] 01/9/2021 11:05

Yes, I just Google translate the doc, for anyone who can't/couldn't be bothered, so they can read.

[mount teide] 01/9/2021 11:05

L2: 4 v 1 / 81p v 83p (rest between 85p and 95p)

[thebull8] 01/9/2021 11:03

I'm assuming this is the English translation of that document? Three points1. The capacity to sell gas is limited, since the pipe can carry 100mmcf - what does this mean? What pipe is limited to 100MMCF2. Calling legacy blocks uninteresting is a bit harsh. Could easily get production up past 5k bopd with high margins from the new wells given price of oil today is $70. I believe the original plan was it increase production to around 5k before we stuck gold at Ortoire. 3. No mention of condensates

[king suarez] 01/9/2021 10:17

"Trinidad and Tobago has been and is a fairly prolific country in terms of oil and gas production, and has enjoyed a good economy for this, since it has brought a lot of money to the public coffers via royalties and taxes, although in recent years years its wells have declined a lot and most of the exploratory activity is off shore.

The government's intention is to reactivate productive activity, and the rise of natural gas as an energy commodity worldwide, represents an opportunity, since there are many wells that were explored in the middle of the last century, especially by Shell, finding a lot of gas in some .

They were looking for oil, when they could not find it, these wells were closed again, since natural gas was not as much in demand as it is now, and transportation and storage technology was not as developed. That situation has changed, and today I bring you a company that is taking advantage of it: Touchstone exploration.

And this is when the company subject of this analysis enters the scene, buying the license to explore the land previously drilled by Shell.

On the contrary, we have that most of the license pools are in the middle of the jungle and it is necessary to open roads and even bridges to have access.

More aspects that are weighing on the company's exploratory activity are the work hour restrictions due to COVID, which limit shifts doing drilling or opening roads in the middle of the jungle.

Another thing we have to take into account is that we are in a Caribbean country and we all know how slow things work in these places, especially administrative procedures.

Having seen this, let's move on to more operational things.

The state oil company recently signed a contract to sell at $ 2.50. The Henry Hub price has since skyrocketed to 3.8, but still, let's not expect to see prices from Europe or China-Japan as this commodity is very regional due to transportation and storage issues.

The capacity to sell gas is limited, since the pipe can carry 100mmcf; The state oil company would have to build a parallel pipeline, and seeing how fast bureaucratic things go here, it could take a long time.

Paul Baay plays with the marked cards, since most of the reservoirs still have the previous well closed, and there is information from the drillings that Shell did in ancient times . He has also recognized that there are 21 pools located where to carry out drillings, so having only explored the western part of the license, the party has just begun.

Regarding financing, the idea is not to further dilute the shareholder, but to use debt and the benefit of current production, which is quite reassuring.


DIRECTIVE



Paul Baay . CEO of the company. Top Canadian executive, until the time of the Chinook-1 fail, the market's confidence in him was maximum, since each timeline that was marked was fulfilled and it was done with discovery, and this was reflected in the price, going from CAD 0.30 at the beginning of 2020 to 3.01 in February 2021.




Xavier Moonan . Geologist. It is a very good tool, since he was born in Trinidad and Tobago and knows the deposits in the area very well. He is very active in social networks, so you can follow him if you want to be up to date.





James Shipka , BSC Chief Operating Officer. Geologist with 20 years of experience especially in the exploitation of fields in decline.

These are the most interesting members, the rest of the board can be found here:

hxxps://www.touchstoneexploration.com/our-company/board/


SHAREHOLDING

We can see that the composition of the shareholders is headed by small cap funds and even some ETFs, none of them are too large positions, since most of the shares are placed in the hands of small shareholders.


As for the management team, they have shares, but they are small positions that do not give them too much power. There is alignment of interests.




THE ASSETS:


Chinook. The management was surprised in the flow test, since it had previously been said that it was a large commercial discovery. In the end, only light oil was reported in the lower layers and no gas, so it could be that they had damaged the exploration when drilling.

Any activity in this pool has been deferred to 2023, as Paul Baay believes there are better things to spend capital on right now.

Its fail has cut the bullish sentiment in the price, together with the constant delay in the start of Coho production.


Crackling . (Cascadura-1ST1)

Very important discovery, it is estimated that there is 1tcf here. In the flow test it came out at 5,427 boe / d.

It is supposed to be the cow from which much of the 2022 cash flow is taken, along with Royston, if in the end it turns out to be what it is believed (even bigger than Cascadura).

Cascadura deep

It is a layer below Cascadura, it will be another important source of income in 2022.

During the flow test it could be seen that it came out at a rate of 4,262 boe / d.

Coho. (Coho-1)

It's a 2018 discovery.

Pending production, it has been waiting for administrative procedures for more than a year and a half; the company only has to build a pipeline a few km to the main gas pipeline of the state oil company.

It has been announced by the government that it will start production by the end of the year, so cash should start coming in soon.

Royston

It is estimated that there is about 1tcf in this reservoir, with a chance of success of almost 60%.

The Spud started on August 12 and the results of the drill will take between 45 and 60 days to come out, its success is very important for the company, and after the subsequent flow test, if there is a prize, we would try to start producing as quickly as possible in 2022.

Keep in mind that this area is in the middle of the jungle and it has been necessary to build several roads and bridges to give access to the area

The intention of the directive is: if it is a success, to make development wells quickly.

Kraken

It is part of the second part of the Ortoire exploration phase, it is even larger than Royston. Paul Baay has not hesitated to call it "The Monster".

The Royston, Kraken and Steelhead area will be better delineated by a seismic survey to be done shortly.

Steelhead

There is not much information on this pool, but it seems quite large. Will be explored in 2022/3


Legacy fields


They are the ones marked in red in the image.
Most are old wells in decline that even adding Capex would add little production. They are uninteresting.

It is made up of the following zones: WD-4, WD-8, COORA, SAN FRANCIQUE, SOUTH PALO SECO, PALO SECO, FYZABAD.

At the end of 2021 a production of 5000 boe / d is expected:

1400 current legacy fields
1000+ due to work on existing wells in the legacy fields plus any new wells.
1600 from the start of Coho-1 production



THE VALUATION

We come to the most interesting part. Valuing this company becomes very difficult, since we do not know the plans that Paul Baay has in mind, and even the conditions could change between now and next year, but at least we are going to estimate what the production may be taking into account that for 2022 Coho, Cascadura and, if lucky, Royston, they should be producing.

2400 barrels from legacy wells
1600 from the beginning of Coho, although more development wells could perfectly be made to increase production, it would not be as profitable as in Cascadura, since there is more flow. Although if you want to have faster income, since Coho is in production much earlier, this may be of interest.
3 wells x 5,400 boe of Cascadura
Suppose Royston is a success and flows at the same rate (to be conservative) as Cascadura; given its size it is more logical to do more wells here, let's say 5. 5 wells x 5,400 boe = 25000

In total we would have a production of 44000-45000 barrels equivalent per day.

If we translate it to mmcf in gas, let's say they take out around 300 mmcf depending on what comes out in Royston.

Without knowing what expenses there will be, it seems difficult to value it, but taking into account that they are hedged at the beginning of the year at 2.5 usd mcf and that the current price of the Henry Hub is currently 3.85. We can see that even in the worst horizons the company would stay at very low multiples.





THE ACTION

To begin with, it must be made clear that 9% of the shares are shortened, so if Royston were a success, they would have to close the position and, we all know what it would mean, a steep rise.



If we analyze the share price, we can already see that since the beginning of 2020 a rally has been marked in the heat of the news of the discoveries and the achievement of the timeline that the management team had set, going from 15 pence to 175 in little more of one year and being truncated by the fail of the Chinook flow test and the delays in the start of Coho-1 production.

In this way, with a price of 276 million dollars, it is revealed as a great investment opportunity, if in 2022-2023 the company achieves the much-used “wall of cash”, as Paul Baay calls future cash flows. of the company."





Greetings to all, and of course, "always DYOR"

[davidblack] 01/9/2021 09:37

Nibbling higher on small volume, perhaps the corner has now turned?

Yesterday was Trinidad Independence Day but the drill at Royston was still turning at full speed and it’s now passed half way.

[trickydicky1] 01/9/2021 08:54

Basically suggesting that in a success case, it'll be generating its current market cap every year in cash, but DYOR!

Not much else other than some comments on the speed of administrative processes in the Caribbean and an encouragement to follow Xavier on social media.

[awise355] 01/9/2021 07:54

Any figures anyone can understand?

[pro_s2009] 01/9/2021 02:50

Write up.



.

[davidblack] 31/8/2021 22:35

After the fifty to one split, on balance ok.

[king suarez] 31/8/2021 20:10

A derisory offer, Leo!..