Shares in AIM-listed Touchstone Exploration (LSE:TXP) jumped nearly 12% this morning to trade at a high of 53p after final test results from its Cascadura well in Trinidad and Tobago indicated that the well is larger than initially anticipated.
The latest exploration drilled through the upper and lower tests of the well and found that the gas there is sweet and liquid-rich, with no hydrogen sulfide and a deposit large enough to allow gross production of between 7,750 boe and 9,700 boe per day.
Touchstone Exploration is already active in the Caribbean country and is generating income from gas and oil produced at a second location, but it is increasingly shifting its focus onto Cascadura which is expected to be a richer acreage. In the first quarter of this year the company sold on average 1,589 barrels a day, which was lower than the 2.121 bbl/day produced a year ago because it had already started redirecting funds from the more mature production into exploring Cascadura.
Touchstone’s share price has been contained in the 10p-20p range from when it listed in 2017 till December, when it first started talking about Cascadura in more detail. Further news about exploration lifted the share price in February to 48.5p but then a dip followed as the coronavirus bit. Eventually shares revived in May after the firm raised a $20 million seven-year loan from the local Republic Bank to spend on a more in-depth look at the deposit.
Touchstone Exploration unaffected by coronavirus
Touchstone Exploration’s activities slowed down only moderately during the corona outbreak as Trinidad managed to pass largely unscathed by the virus. Trinidad has had a total of 123 cases since the beginning of the pandemic and only 8 deaths, allowing for businesses and operations to return back to normal before many other locations.
Unlike other Caribbean islands where most of the foreign currency income stems from tourism, Trinidad and Tobago is far more industrialized andit is an established location for oil exploration and extraction. Spain’s largest oil producer Repsol has been operating in the country since 1995 with four offshore production blocks and a major gas discovery made in 2017.
For Touchstone Exploration the next step will be additional drilling and production at Cascadura as part of fully understanding what lies below the surface to optimising future production plans. Petroleum Consultants GLJ are due to complete an independent reserves evaluation in July. The firm’s next set of results is due at the end of June.