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Touchstone Exploration reveals final production test results for transformational Ortoire well (TXP)

19 Dec 2019 | by: Patricia Miller

Thursday saw Touchstone Exploration (LSE:TXP) reveal final production test results for the transformational Coho-1 well on its Ortoire exploration block in Trinidad.

The development comes after Touchstone’s share price soared last month on the news Coho-1 had far exceeded expectations, marking a ‘new era’ for its operations. The firm said the average natural gas flow rate for the final testing period on the well was 17.5 million cubic feet of gas a day (mmcfd), equivalent to 2,917 barrels of oil equivalent a day (boepd). The average stabilised test rate over 11 hours was 11.8 mmcfd (1,963 boepd). Assuming that further pressure testing on Coho-1 confirms a gas flow rate in this range, Touchstone could comfortably double its current average daily production (1,871 boepd).

In Thursday’s update, Touchstone said that a final 24-hour extended flow test rate on Coho-1 was confirmed at 11.6 mmcfd (1,925 boepd) at an average sandface drawdown of only 8.8pc. Meanwhile, the business said modelling support initial production rates of 10 to 12 mmcfd (1,667 to 2,000 boepd) gross and 8 – 9.6 mmcfd (1,333 – 1,600 boepd) net. Finally, flow and build-up test results suggested an absolute open flow rate of 46 mmcfd -approximately 7,671 boepd. Elsewhere, Touchstone said it encountered no physical subsurface boundaries during its test period, and that gas analysis indicated pure, sweet, dry product with 98.7pc methane and no hydrogen sulfide.

Chief operating officer James Shipka added: ‘Final testing of the Coho-1 exploration well displayed natural gas rates that greatly exceeded the Company’s expectations and is expected to materially contribute to our near-term growth. With production testing and analysis completed and verified independently, the Company has a clear indication of the potential of Coho-1 and is moving forward to bring the well on stream in the first half of 2020.’

Ortoire covers 35,786 acres in east Trinidad where it is based on previously-untested geological formations called ‘turbidites’. These have grown in popularity hugely since the 1970s (Ortoire was mostly drilled in the fifties and sixties) and are responsible for some of the world’s most significant oil and gas discoveries over the last 20 years alone.

Touchstone has identified three key, initial oil and gas drilling locations across Ortoire – Corosan (gas), Ortoire West (an oil target on which the Cascadura prospect is based), and Ortoire Central (oil). Numerous additional exploration targets – including a deeper Corosan gas prospect and another called Ortoire East – will be tested at a later date.

The firm has also commissioned GLJ Petroleum Consultants to complete an independent evaluation of its three initial Ortoire prospects. This work gave the opportunities total risked recoverable volumes, for the combination of prospective and contingent resources, of 9,237Mboe net in the best estimate case and 23,337Mboe net in the high estimate case. These figures equate to a Net Present Value 10 (“NPV10”) of C$108.3m in the best estimate case and C$302.5m in the high estimate case.

Touchstone soared to a record high of 21.6p a share earlier this week when it announced that cased-hole wireline logs from a well drilled on Ortoire’s Cascadura prospect have indicated crude oil pay totalling 1,037ft from 1,374ft of gross sand. Specifically, 80ft of oil pay was hit in the regional Lower Cruse sands at between 1,030 and 2,134ft, and 180ft was encountered in the Upper Herrera formation between 4,198 and 4,994ft for the first-ever time. Meanwhile, 600ft of oil pay was met in the Middle Herrera horizon at between 5,516 and 6,162ft – also for the first time – and 177 feet was hit in the Lower Herrera at between 6,162 and 6,350ft.

Touchstone now expects to complete and test the successful well in the first quarter of 2020. President and chief executive Paul Baay said the well results far exceed any of the company’s pre-drill expectations and even establish ‘a new development stage for onshore drilling in Trinidad’.

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