Touchstone Exploration Inc (LON:TXP) Chief Executive Officer Paul Baay caught up with DirectorsTalk for an exclusive interview to discuss their latest operational update, being ahead of schedule, the nine-month licence extension and what shareholders should be looking out for in the months to come.
Q1: You announced earlier an operational update, highlighted by the spudding of the Cascadura Deep-1 exploration well. Paul, can you just talk us through the announcement and the key points that we should be aware of?
A1: The purpose of the announcement was just to keep everybody well informed, especially in these choppier markets that we’re seeing.
So, we spudded the Cascadura Deep-1 well, which will be our fourth well on the Ortoire block, so we’re really excited about that.
We got an extension of the license for nine months, the initial stage of the license which is really key, it’s going to allow us to drill a couple more exploratory wells before we have to go to declare commerciality and I think it also really shows the support from the Trinidad government in what we’re doing.
The other thing is we were just trying to give people also a little bit of an update on the natural gas contract that we’re continuing to negotiate, I know it’s a key thing so we’re trying to keep everybody informed on that.
The other thing we talked a little bit about is we are going to be able to accelerate the testing of the Chinook well, probably by about a month, just because we’ve been able to practically put some things in place that are going to allow that.
So overall, I think what the announcement is saying is things are busy.
Q2: As you mentioned, spudding was ahead of schedule, how has it affected your plans and how was it achieved? How come it was ahead of schedule?
A2: I think the way we achieved it was partly the weather, it’s tail end of the rainy season but we actually got to about 10 days of really great dry weather so we were able to move things quicker than we thought going from the one well site to the other.
The other thing is that we’re getting a little better at it as we go along, we’ve learned some things and some things that we can do so I think that’s critical in what we looked at so we were ahead of schedule on that.
I should mention though that we also, in the release, talked about being a little behind schedule in bringing our COHO well on production and that’s somewhat COVID-related in that we took a little longer to get some of the government approvals than we required. All in all, I think a little slippage under the current circumstances, it’s going to be understood.
Q3: Just talking about government approvals, the Trinidad and Tobago Ministry of Energy and Energy Industries gave you a nine-month extension on the Ortoire license. What does that actually mean for Touchstone Exploration?
A3: I think it means a couple of things.
I think the one big takeaway that shareholders should have is that the Trinidad government is really receptive to oil and gas exploration in the country and helpful to make things work for us as best as they can. With the combination of COVID and weather and everything else, what we requested was just to get a little bit more time so we could drill a couple more exploratory wells, which we’re now going to be able to do with Cascadura Deep and Royston. It also allows us to plan now, over the next couple of years, how we can do the development plan.
So, it was really significant and it was not a really hard negotiation, again, they were really supportive.
The other thing that they did is they allowed us to cut the amount of seismic that we had to shoot, originally it was going to be 80 kilometres and they’ve said now, they’re fine if we just do 20 kilometres. So, it saves us some money and, quite frankly, we didn’t need the additional seismic so again, a win-win, I think.
Q4: Obviously, there’s a lot going on at the moment at Touchstone Exploration, but what should shareholders be looking out for in terms of news flow over the coming months?
A4: I think between now and Christmas, there’s three things that are going to happen. The biggest news will be the drilling of the Cascadura Deep well, where we’re going to encounter three of the Herrera sheets. We’ve only tested one of those so far, really at the first Cascadura well so we’re going to go to 10,000 feet, about 4,000 feet deeper than we did on the first well. That obviously could have a huge impact on future drilling and reserves and production so I think that’s probably the biggest thing.
Second thing will be the natural gas contract which we’re in the final stages of getting, I think people will be relieved once they see what’s there and it’s a great contract, we’re going to get paid in US dollars. They’re building all the infrastructure, the pipelines, gas plants, everything we need so it’s kind of the best of all worlds for us in that.
The final thing that’ll come down, probably not until beginning of January, will be the testing of the Chinook well and then we’ll know what kind of rates we’re going to get out of Chinook.
So, very, very busy news flow over the next 90 days.