Touchstone Exploration (LON:TXP), the Trinidad-based oil and gas producer, has taken a significant step forward in securing its future growth with a well-supported capital raise and term loan to fund its ambitious FY25 investment plans. According to Shore Capital’s latest update, the company has successfully addressed previous uncertainties by securing both equity and debt funding necessary to advance its development strategy.
The company completed a private placement of approximately US$20.5 million, issuing 75 million new shares at 20.5p, representing an 11.8% discount to the previous day’s closing price. This equity raise is expected to finance the drilling of the Cascadura-4ST1 and Cascadura-5 development wells, as well as two new wells on the newly acquired Central Block asset.
The Central Block acquisition, now fully funded, is a transformational move for Touchstone. A US$30 million six-year term loan will finance the purchase of Shell Trinidad Central Block Ltd, providing Touchstone with a 65% operated interest in a high-potential gas asset. The deal is projected to add approximately 2,000 barrels of oil equivalent per day in net production, 94% of which is natural gas, with pricing tied to international LNG benchmarks.
Analyst James Hosie of Shore Capital highlights that this funding milestone marks a pivotal moment for the company’s outlook. He writes: “We expect this progress to be viewed positively by the market, addressing the previous uncertainty around Touchstone’s financing plans – both the Central Block purchase and its FY25F capital budget were subject to financing.”
The revised FY25 strategy remains focused on Touchstone’s core strength—gas production. The drilling plan now includes two new wells on the Central Block in place of some of the original Cascadura targets. This “drill-to-fill” strategy is expected to boost net production to between 8,000 and 9,000 boe/d in the second half of FY25, compared to around 4,300 boe/d in February.
Shore Capital also notes the potentially accretive nature of the Central Block deal. While the equity raise has some dilutive impact, the post-tax NPV10% valuation of US$42.9 million for the acquired assets suggests the acquisition could more than offset this. Shore’s 35p/share fair value estimate is under review pending updated guidance following deal completion.
On a Final Note
Touchstone Exploration’s latest moves reflect a clear and confident approach to growth, underpinned by strategic acquisitions and a commitment to expanding production. With funding secured and a sharpened operational focus, the company is well positioned to deliver its FY25 targets and potentially unlock greater shareholder value.
