Touchstone Exploration Inc. (TSX, LON:TXP) a Calgary, Alberta based company currently active in onshore properties located in the Republic of Trinidad and Tobago was the topic of conversation when we caught up with Shore Capital Equity Research Analyst Craig Howie. We asked:
Touchstone Exploration has just published first quarter results, what were the key takeaways?
There were no surprises in Touchstone’s Q1 results, which confirmed a targeted completion and commissioning date to enable first production from Cascadura around the end of June. Cascadura will of course have a transformational financial impact and, whilst FY23F forecasts will be sensitive to the final online date, we were pleased to see guidance on timing reiterated. Preparations for development drilling at Cascadura and further testing at Royston appear to be very much on track, so it seems to be a case of “so far, so good” with regard to current activities.
How have you adjusted forecasts for the company?
Although our estimates seem conservative versus the prevailing consensus, our newly-introduced forecasts for FY24F still indicate a circa 85% year-on-year increase in revenues and adjusted EPS (to US$120m and 6.5c, respectively). Our forecasts assume a relatively measured work programme, which likely explains our below-consensus earnings expectations for next year. Touchstone will clearly be managing its expenditures prudently given past delays at Cascadura. However, our FY23F forecasts indicate that it can retain sufficient liquidity, prior to substantial free cash flow next year.
Assuming Cascadura is brought online as per the guidelines, how do you see the outlook for the company?
The prevailing share price clearly remains at a substantial discount to our revised 195p/share Risked NAV estimate, and we therefore continue to see excellent scope for patience to be rewarded as demonstrable progress at Cascadura helps to close what is obviously a substantial valuation gap.
Touchstone Exploration Inc.
Touchstone Exploration Inc. is a Calgary, Alberta based company engaged in the business of acquiring interests in petroleum and natural gas rights and the exploration, development, production and sale of petroleum and natural gas. Touchstone is currently active in onshore properties located in the Republic of Trinidad and Tobago. The Company’s common shares are traded on the Toronto Stock Exchange and the AIM market of the London Stock Exchange under the symbol “TXP”.
