Touchstone Exploration plc (LON:TXP) has confirmed quarterly production growth following its acquisition of Shell Trinidad Central Block Limited, with its Central Block assets delivering improved output, premium pricing, and solid economics. According to a 15 July 2025 update from Cavendish, the company realised net production of 1,965boepd in Q2 2025, up 2% on the previous quarter, supported by plant optimisation and ongoing development work.
Touchstone finalised the Central Block acquisition in May 2025. The early operational update indicates effective integration, with site surveys already completed for two new multi-well pads, potentially enabling further expansion by year-end. These results nearly double output from its Coho and Cascadura fields, previously TXP’s primary production areas.
Premium Gas Pricing Drives Revenue Uplift
The integration of the Central Block brings more than just capacity. Gas sales from the block are achieving significantly higher realised prices, thanks to two separate sales contracts—one linked to LNG exports and the other to Trinidad’s domestic energy market.
- LNG-linked sales: Realised an average of US$6.15/MMBtu, equivalent to US$4.00/MMBtu net after marketing and transport deductions.
- Domestic market sales: Averaged US$4.33/MMBtu.
In comparison, TXP’s Cascadura and Coho production in Q1 realised c.US$2.28/MMBtu, indicating a material benefit from the new asset’s commercial terms.
For January to April 2025, gross revenue from Central Block gas and condensate sales reached US$9.9 million (US$6.8 million net). Based on annualised figures, Cavendish estimates the acquisition value at just 1.4x trailing revenue and US$5.10/boe of 2P reserves, making it a financially compelling transaction.
Capacity Uplift and Strategic Synergies
The acquisition expands Touchstone’s overall footprint, increasing its net acreage to approximately 149,000 acres, while adding an extra 80MMscf/d of gas and 10,000bbls/day condensate processing capacity. This enhances the company’s total takeaway capability to over 72,000boepd, offering room to scale output without immediate bottlenecks.
Located within the prolific Herrera geological fairway and neighbouring Touchstone’s Ortoire block, Central’s positioning presents clear operational synergies. Coho’s natural gas is already being processed through Central’s infrastructure, streamlining logistics and supporting margin preservation.
Financial Guidance Suspended Pending Funding Visibility
While recent production results have been positive, Cavendish has left its financial forecasts and target price under review, awaiting clarity on how Touchstone plans to fund the remainder of its FY25 work programme. The firm’s updated forward guidance is contingent upon securing a financing solution.
TXP ended Q1 with £20.9 million in net debt and a market capitalisation of £35.5 million, leaving some balance sheet pressure as expansion plans progress. Nonetheless, historical profitability metrics remain robust:
- FY2024 EBITDA: US$20.6 million
- Adjusted EBIT Margin: 25.4%
- Adjusted EPS: 3.2c
Despite this, weak share price performance has weighed on sentiment, with the stock down -55% over the past 12 months, although recent updates could start to provide a platform for recovery.
In Summary
Touchstone Exploration’s early operating gains at the Central Block underscore its strategic value. With premium gas pricing, low-cost reserves, and immediate infrastructure synergies, the acquisition delivers a production and revenue uplift at attractive multiples. While financial guidance has been put on hold pending funding clarity, the integration is already yielding operational benefits. With further drilling potential planned and production capacity available, Touchstone appears well-positioned to scale growth—so long as funding is secured.
