On Thursday, Touchstone Exploration (LSE:TXP) released its year-end reserves numbers revealing it had replaced 2018 production by 178pc on a proved (1P) reserves basis. This was achieved in conjunction with rising production, with Touchstone currently producing at a rate of around 2100 barrels of oil per day (bopd). 1P reserves were up 5pc to 11.222 million barrels of oil (MMbbl) with probable (2P) reserves up 4pc to 19.275 MMbbl compared with the previous year.
The net present value (NPV10) of future net revenues from 1P reserves grew by 18% year-on-year to US$79.8m. Finding, development and acquisition (FD&A) costs for 1P reserves came in at US$12.71 per barrel equating to a 2.2:1 recycle ratio based on last year’s operating netback of US$27.34 per barrel.
The figures are derived from an independent reserves report prepared by GLJ Petroleum Consultants. It is important to note the report does not include estimated resources relating to the Ortoire block which the company is focused on developing this year. Touchstone has identified three exploration prospects located on Ortoire which it is looking to drill this year. The first target will be Corosan, a natural gas prospect located just north of Shell’s Carapal Ridge discovery, which is scheduled to be drilled in June. Corosan could contain up to 50Bcf of gas which could effectively double Touchstone’s current production. The second prospect is called Balata West, which Baay says could support 30-40 wells producing 3,000-4,000bopd. Baay believes the third prospect, called OL-4, could be the most prospective of all the Ortoire targets. Touchstone raised £3.8m in a placing last month which will be used to launch the Ortoire drilling campaign.
James Shipka, Chief Operating Officer, commented:
“The updated reserves evaluation validated our strong base production and reflected the results of our successful 2018 development drilling campaign. Solid 2018 reserves growth was achieved from our low decline production base and drilling success. Capital efficiencies seen in our low finding and development costs and strong recycle ratios support our belief in organic growth through the drill bit complemented by low cost recompletions.”