Touchstone Exploration Inc (LON:TXP) is the topic of conversation when we caught up with Craig Howie Natural Resources Equity Research Analyst at Shore Capital.
Q. Craig you’ve just published a note on Touchstone Exploration following the company’s drilling update. What were the key points you noted from the update?
Our note focuses on the exceptional result achieved following drilling of Touchstone’s Cascadura Deep exploration well – this has proved to be the best well drilled by the company to date, discovering significant hydrocarbon accumulations and continuing its 100% drilling success rate at Ortoire in Trinidad.
Q. How does this affect your forecasts?
We have taken the opportunity to introduce forecasts for FY2022F, which show strong earnings and cash flow progression whilst setting a conservative baseline ahead of Chinook and Cascadura Deep production testing.
Q. How do you view the outlook for the company?
We continue to see considerable remaining running room for the shares, highlighting forthcoming Chinook and Cascadura Deep testing, tie-in of the Coho and Cascadura-1ST1 wells and Royston drilling as important potential catalysts in the months ahead. In addition, the company continues to work towards finalisation of a gas sales agreement for Ortoire gas, something which we also think could provide yet more good news near term.
Q. In terms of fair value, how do you see Touchstone?
We do not have recommendations on house stocks although our Risked NAV estimate has been materially upgraded, reflecting the significant value that Touchstone has added to the flagship Ortoire project since drilling commenced last year.
