Touchstone Exploration Q&A: Confirmation of reserves size and potential value (LON:TXP)

Touchstone exploration

Touchstone Exploration Inc (LON:TXP) Chief Executive Officer Paul Baay caught up with DirectorsTalk for an exclusive interview to discuss the independent reserves evaluation at Cascadura, the next steps for that well, what we should be expecting from the company and an update on COHO & the gas sales contract.

Q1: Paul, we saw earlier that Touchstone Exploration has announced highlights of its independent reserves evaluation. Can you tell us what this announcement shows what has actually been found at the Cascadura well?

A1: I think the big thing that comes out of this is really it’s confirmation by independent evaluator of the size of the reserves and the potential value. We’ve done a lot of internal work but it’s really great to get an independent evaluation of somebody of GLJ’s quality to confirm what we’ve been doing.

Q2: What are the next actions that you and the team are taking at Cascadura to bring this gas onstream?

A2: So, the next steps for Cascadura will be to build the pipeline, although the national gas company will build the pipeline for us right down to the edge of our lease, we’re just in the midst of finalising that documentation so that’s a 3.2 kilometre pipeline. That’ll bring the gas up to their main line and up to the industrial facility where it’ll be used for various types of processing.

On top of that, between now and when that comes on which we’re hoping in Q2 of next year, we would at least like to develop one, possibly two, developmental wells into the pool so that they could come on at maximum rates. We’re looking at about 100 million cubic feet per day, 2,500 barrels a day of liquids, those are the kind of volumes we’re looking for.

Q3: Just looking forward, what should we be expecting from the company in the coming months, you do mention the Chinook and Cascadura deep drilling programmes in the announcement?

A3: Those are two independent exploration opportunities, Chinook and Cascadura deep so they would be additive to this report that we see there now, they’re testing different structures so obviously there are significant from that point of view.

They’re also significant because they’ll further prove up the geological model that we have of this hydrocarbon bearing turbidite model that we have in Trinidad, we’re sort of two for two on the exploration side now after COHO and Cascadura. So, I think it’ll just start to build up the portfolio and we’ve identified another 11 targets on the back of that

So, what it really does is sets us up for a 5-10 year drilling programme and significant gas volumes as we move forward.

Q4: Finally, how are things progressing with COHO and GSA negotiations?

A4: So, COHO is the first well that we drilled, we’re pushing forward on getting it tied in, contractor has been awarded, pipes on the island, we’re figuring out the final logistics.

The biggest holdup on that particular project is just getting approvals from the government because they were shut down for a couple of months with COVID but they’re back up and running now. We’re looking for first gas there in October and we think that that’s going to be very helpful from a cash flow point of view.

On the gas sales contract, I’m hoping everybody can be a little bit patient with us, this is a huge contract for us, probably the biggest that Touchstone Exploration will sign. We’re just working through the various parameters of it but it’s going very well, we’re getting down to the final parts of those negotiations now and hopefully we’ll have something announced before the end of the summer.

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