Touchstone Exploration (LON:TXP) has delivered its first quarter 2025 results, with Cavendish highlighting several strategic developments that position the company for future growth. Despite a temporary dip in production, the company is making decisive moves to strengthen its asset base and unlock value for shareholders.
For the quarter ending March 31, Touchstone achieved an average production of 4,317 barrels of oil equivalent per day (boepd), generating revenues of US$11.1 million. While production saw a natural decline compared to the previous quarter, the company successfully offset part of this with new production from its Cascadura-2ST1 and Cascadura-3ST1 wells, which came online in November 2024.
James McCormack, Director of Research at Cavendish, stated: “The STCBL transaction is expected to add 2,000boepd of low decline net production, with opportunities to increase production via infill and exploration drilling and facility optimisation.” He noted that Touchstone has assessed the net 2P reserves at 5.6 million barrels of oil equivalent, which highlights the value of the acquisition priced attractively at US$5.1 per barrel.
The company has also secured a US$30 million six-year term loan and raised £15.375 million through a private placement. These funds will be used to fully finance the Shell Trinidad Central Block acquisition and support the company’s 2025 investment plans, which include drilling the Cascadura-4ST1 and Cascadura-5 wells and initiating development at the newly acquired Central Block.
Drilling operations at Cascadura-4 faced temporary delays due to rig repairs and wellbore instability but are scheduled to resume by the end of May. This sets the stage for upcoming production additions later in the year, aligning with the company’s growth strategy.
Touchstone ended the quarter with a net debt of US$33.3 million and a cash balance of US$5.7 million. Despite the temporary operational challenges, Cavendish maintains a target price of 53.1p, representing a significant 176% upside from the current share price of 19.3p.
On a Final Note
Touchstone Exploration is navigating short-term challenges while firmly positioning itself for long-term success. The strategic acquisition of the Shell Central Block, coupled with planned development activities and secured financing, supports Cavendish’s positive outlook on the company’s growth trajectory.
