Friday saw Touchstone Exploration (LSE:TXP) reveal an increase in its 1P and 2P reserves in an independent evaluation based on its expected results for full-year 2019.
The report, which was prepared by GLJ Petroleum Consultants, showed a 6% increase in 1P reserves to 11,840 million barrels of oil equivalent (“MBOE”) and a 14% rise in 2P reserves to 22,056 Mboe. Meanwhile, the firm replaced annual production by 193% on a 1P reserves basis and 519% on a 2P reserves basis. All of this equates to a realised after-tax 1P NPV(10) of $83.7 million, up $4 million on the previous year, and a 2P NPV(10) of $153.9 million, a 6% year-on-year jump.
The results are the first to include reserves associated with Touchstone’s Ortoire block on the east of Trinidad. Specifically, they encompass the Coho discovery made in December, where modelling has supported initial production rates of 1,667 to 2,000 barrels of oil a day (“boe/d”) gross.
However, it is worth noting that the reserves figures do not cover the Cascadura discovery that Touchstone’s made in February. Testing of the Cascadura well delivered an average flow back rate of 5,180 barrels of oil equivalent per day (“Boe/d”), confirming a “significant, liquids-rich natural gas discovery”.
To put these figures into context, Touchstone’s average oil production sat at 1,729 barrels a day (“bbls/d”) in the three quarters ended 30 September 2019. The massive boost that the two discoveries could drive has not gone unnoticed by the market, with Touchstone’s share price currently 71/3% higher than it did at the beginning of the year.
“The Company’s independent 2019 reserves evaluation reflected the strong performance of our base production and included the first reserves associated with our discoveries on the Ortoire exploration block,” said Touchstone’s chief operating officer James Shipka.
“With gross working interest 2P reserves of over 20 Bcf (approximately 3.4 million boe) assigned at Coho, the Company has exceeded the best estimates of the recoverable gas in the pool compared to the independent evaluation report prepared for the Company in the prior year. With the second stage of the production test at Cascadura-1ST1 expected to commence this weekend, we look forward to updating our shareholders on this material discovery and the impact it will have on corporate reserves.”
Friday’s update comes just two weeks after the company raised £9 million to accelerate its work at Ortoire in a bid to double down on the substantial progress it has already made on the block. Specifically, Touchstone will use its placing proceeds to support the drilling of a further Ortoire exploration well at a prospect called Chinook.
The cash will also go towards the second stage of testing at Cascadura and providing additional working capital ahead of the drilling of a fourth exploration well later this year.
To watch our recent, exclusive shareholder presentation and Q&A with Touchstone chief executive Paul Baay, please click here.
