The latest research note from Cavendish highlights a significant reserves update from Touchstone Exploration (LON:TXP), underlining what the broker describes as the scale of the opportunity within the portfolio. The note, published on 25 February 2026, reiterates a Buy recommendation and a 30.6p target price, representing a 258% upside to the prevailing share price of 8.6p.
Touchstone Exploration, an exploration and production company focused on Trinidad, has released its year end 2025 reserves report. The update reflects the strategic addition of natural gas and natural gas liquids reserves from the Central Block acquisition, alongside technical revisions at Cascadura Block B.
Strong PDP Growth and Resilient Valuation
Relative to year end 2024, and after accounting for 2025 production, gross proved developed producing reserves increased by 45% to 9.9mmboe. Gross 1P reserves declined by 5% to 27.6mmboe, while gross 2P reserves were broadly stable, decreasing by 1% to 49.6mmboe.
Despite a decrease in forecast pricing, Cavendish highlights an increase in post tax value. The PDP NPV10 increased by 34% year on year to US$89m, which is presented as around 20p per share. The 2P NPV10 increased to US$315m, or around 72p per share.
Research analysts James McCormack and James Midgley write, “The report also highlights the disconnect between Touchstone’s share price and the after tax NPV of its reserves, with GLJ assigning an after-tax NPV10 of US$89m, a 34% YoY increase. NPV10 for 1P and 2P reserves were US$183m and US$315m, respectively, a significant 59% and 173% premium to EV.”
That comparison is central to the note, suggesting the market is not fully reflecting the value attributed to the reserve base.
Production and Operational Update
Production in FY25 averaged 4,686boepd, closely aligned with Cavendish’s expectation of 4,689boepd. Fourth quarter production averaged 4,877boepd, supported by the start up of Cascadura-5 and Central Block optimisations.
Cavendish also notes a challenge at Cascadura-4, where Touchstone has determined that producing safely and reliably from the current wellbore is unlikely. This appears to be one reason the company is re evaluating and refining its Cascadura reservoir model.
Encouraging Central Block Results
The Central Block is a key focus in the latest research note, particularly following results from the Carapal Ridge-3 (CR-3) well. Cavendish reports that CR-3 encountered 1,082ft of net sand, including 1,000ft of net pay from the Herrera sand. Following perforation, clean up operations recovered natural gas and associated liquids, confirming hydrocarbon presence.
The note adds, “The result has confirmed the areal extent of a very thick Herrera section and supports Touchstone’s decision to focus on the Central block, whilst it re-evaluates and refines its Cascadura reservoir model.”
Completion operations are underway at CR-3, with first production targeted for March 2026.
Upcoming Catalysts
Cavendish points to several near term catalysts. Beyond the planned start of production from CR-3 in March, a four well drilling campaign is expected to begin in early March on the company’s WD-8 and WD-4 acreage. Following the sale of the non core Fyzabad property, Touchstone is fully carried for the drilling of three of these wells.
The Cascadura compressor is targeted for commissioning in 2Q26, which Cavendish expects to support a stable production profile and improve future forecasting and modelling.
Cavendish states there are no changes to its valuation, maintaining its 30.6p target price, and indicating that 2026E forecasts will be released alongside the 4Q25 results in March.
FY25 Highlights
- Gross PDP reserves increased 45% to 9.9mmboe.
- Gross 1P reserves were 27.6mmboe, down 5% year on year.
- Gross 2P reserves were 49.6mmboe, down 1% year on year.
- After tax PDP NPV10 increased 34% to US$89m.
- After tax 2P NPV10 was US$315m.
- FY25 production averaged 4,686boepd.
- 4Q25 production averaged 4,877boepd.
Final Thoughts
The latest research note from Cavendish presents Touchstone Exploration as a business with a growing PDP reserve base, encouraging Central Block drilling evidence, and multiple upcoming operational catalysts. While revisions at Cascadura have influenced the reserve mix, Cavendish’s analysis places emphasis on the uplift from the Central Block and the implied valuation gap between the current share price and reserve based net present value estimates.
