Touchstone Exploration (LON:TXP) Chief Executive Officer Paul Baay caught up with DirectorsTalk for an exclusive interview to discuss their latest Cascadura update, potential production & growth, drilling of other wells and what investors should be looking out for in the coming months.
Q1: Paul, we’ve seen this morning an update for your well at Cascadura, what were the key highlights from this update?
A1: I think the key takeaway from it are that it looks like it’s a very large liquids-rich gas well. We didn’t really know when we cased the well that there was going to be oil or gas and I think what we’ve seen is the best result we could’ve seen which was an initial liquids-rich test. Unfortunately, I think the big takeaway there is the equivalent we have there for doing the testing just wasn’t large enough for the volumes that we were seeing so we’ve had to shut it in and bring in some bigger equipment.
So, that’s the takeaway, I think.
Q2: So, in terms of next steps, does this mean that you have to alter your plans in anyway. What are the next steps?
A2: The next steps are really pretty simple on this one, we’ll just bring in the test equipment probably over the next 10 days and bring in, what we call, a ‘three-phase separator’ so that we can separate any oil from gas and anything else that comes out. So, just getting proper volumes to determine potentially the size of the reservoir.
No real alterations in the plan, just some different equipment.
Q3: What does this announcement mean for Touchstone Exploration in terms of potential production and growth?
A3: I’ve got to be a little cautious here, I’m overly excited about what we’ve seen there, the high pressure and the volumes that we’ve seen, this looks certainly larger than the COHO well that we’ve tested.
It tested up to about 17 million cubic feet a day, we’re seeing something that looks like its potentially significantly larger than that. It looks more like some of the wells that were drilled in the late 1990’s by Shell at Carapal Ridge so those wells are ultimately going to produce hundreds of Bcf so I think it’s really a gamechanger from that point of view.
Q4: These results, they must surely validate everything you are doing? How are you feeling about the other wells, as you mentioned COHO earlier?
A4: Well, COHO hasn’t changed, we’ve now done the full production test, we’ve done an analysis, it’s just a matter now of getting it tidy. We’re surveying the lines, we’ve actually got contractors putting together bids and the plan hasn’t changed there, we’ll bring it on by right at the end of the first half of this year. I’m excited about that, it’s just it kind of overshadows some of those things at this point and I guess that’s a good thing.
Q5: Finally, what are the major landmarks for investors to look out for over the year from Touchstone Exploration?
A5: I think the number one thing is going to be the test results in the next 2-3 weeks and we’ll get those out as soon as we have them, just as we did with this particular one. This may not have been a full release as some people would’ve liked to have seen but our feeling was that we need to keep people updated with whatever the news is and that was the reason for putting that out today. The next big step will be the actual results from the well in a couple of weeks.
Following that, we’ll lay out a plan for when to drill the next two wells on the Ortoire blocks, we’ve got two left to drill. The plan right now is to have those drilled by the end of the third quarter and those are independent structures so separate to COHO and separate to Cascadura.
Quite frankly, it will be figuring out what to do with all the hydrocarbon, there’s various pipelines around, various areas that we have to go. Early indications, we were hoping to take some of this volume to an existing plant but early indications is that’s it’s just not going to have the kind of capacity that we’d see coming from the various wells. So, we’re going to find a different tie-in point, that’s not a bad thing, that’s just a reality.