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Touchstone Unveils Substantial Reserves Increase As Ortoire Success Continues (TXP)

09 Mar 2021 | by: Anna Farley

Touchstone Exploration (LON:TXP) has announced a spectacular rise in its oil and gas reserves, once again highlighting the huge opportunity on offer across its Ortoire block in Trinidad. 

An independent evaluation for the end of 2020 showed an incredible 189% year-on-year rise in the AIM-darling’s total proven reserves (“1P reserves”) to 34,238 thousand barrels of oil equivalent (“Mboe”).

Meanwhile, proved plus probable net reserves (“2P reserves”) jumped 194% to 64,947 Mboe and proved plus probable plus possible net reserves (“3P reserves”) came in at 100,150 Mboe, a very steep climb of 236% from the end of 2019.

It’s worth noting that these figures come before the addition of any potential reserves from the Chinook-1 and Cascadura Deep-1 wells. Both were drilled at the tail end of last year to build on Touchstone’s remarkable success at Ortoire, where it has so far hit hydrocarbons with every one of its wells. The work was funded in part by a $30 million fundraise completed in November with new and existing investors.

Touchstone is now among the largest independent onshore oil producers in Trinidad. Its 2020 capital program focused on exploration activities at Ortoire, where two exploration wells were drilled.

In Friday’s update, president and chief executive officer Paul Baay said: “Our year-end 2020 reserves evaluation provides further independent confirmation of the significant opportunities that the company has in place from our Trinidad assets. 

“Our 1P reserves are now significantly higher than our 3P reserves at the same time last year, providing greater operational and financial certainty for investors, and exclude any potential reserves from the recently drilled Chinook-1 well or Cascadura Deep-1 wells.”

Compared to 2019, Touchstone’s 10% discounted net present value of future net revenues on a pretax 3P basis rose an incredible 90% to just over $1.0 billion. After tax, 3P NPV10 was 108% higher at $419.4 million.

Meanwhile, Touchstone’s realised pretax 1P NPV10 was $362.9 million, representing an increase of $160.7 million or 79% from 2019 and a 95% increase in after tax 1P NPV10 to $163.0 million.

Realised 1P finding and development costs came to $1.26 per boe, giving an 11.3 times recycle ratio using an estimated $14.29 per boe 2020 operating netback. Touchstone attributed its low F&D costs mostly to its “meaningful 2020 reserves growth from our Cascadura-1ST1 well discovery.”


So far, Touchstone has tested two identified pay zones in its Chinook-1 well. Both have encountered potential upside in light sweet crude oil, with one zone now being configured ahead of an extended production test. Touchstone will then move on to testing potential gas-bearing sands in the Chinook-1 well once this extended crude oil test is complete.

On the subject of the Chinook-1 well tests, chief operating officer James Shipka said: “This is an encouraging start to the production testing program as it confirms the presence of hydrocarbons in the sub-thrust sheet and will allow for further up-dip drilling targets based on available 3D seismic data. The sub-thrust sheet was not one of the original Chinook-1 well targets, so the confirmation of hydrocarbons in the deep section is very positive.

“Although the lower zone was considered uneconomic given the high water cuts, the reservoir displayed potential as fluid flowed to surface at over 2,200 bbls/d. Future targets structurally up-dip from Chinook-1 hold tremendous potential.”

Shipka described the second production test as “very exciting” and highlighted its potential to “result in numerous development locations.” He also noted that the Ortoire multi-target project remains in its early stages, with the Chinook-1 oil discovery adding “another layer of opportunity that we have not previously forecasted.”

Elsewhere, equipment for testing the Cascadura Deep-1 well’s main gas bearing zones has now arrived in Trinidad. This equipment has been cleared by various government organisations in the country, and is due on location shortly – fewer than 10 days from Touchstone’s announcement.

In December, Touchstone reported significant hydrocarbon accumulations at the Cascadura Deep-1 well based on drilling and wireline logging data. The well was drilled to an 8,303 feet total depth, with wireline logs suggesting around 1,315 net feet of natural gas pay from 5,455 feet to total depth.

Touchstone is still targeting initial Ortoire gas commercialisation in the second quarter of 2021. It has already obtained final regulatory approvals for the tie-in of its Coho-1 well, with construction having already begun.

Right now, the company is working with the National Gas Company of Trinidad and Tobago to start regulatory applications to tie-in Cascadura and any potential Chinook production volumes, aiming for initial production before the end of the year.

At Royston, Touchstone’s largest target so far, the company is targeting a deep gas prospect with a 11,500 feet estimated target depth. As is the case with other parts of Ortoire, a well was drilled on Royston back in the 1960s, encountering 700 feet of gas effect, but was never tested. A primary access road to the Royston-1 well has already been cleared, with road resurfacing and lease building operations already begun. 

Line clearing for a one kilometre 2D seismic program in the Royston are has also started.

Also coming up for Touchstone is an expected three-year minimum drilling services contract from a Canada-based private firm, which will supply an ultra-heavy telescopic drilling rig to Trinidad late in 2021. This will give Touchstone access to three rigs in Trinidad able to drill to depths of 10,000 feet or more.

Touchstone must use the rig for at least 120 days per year over the three-year terms and pay for an estimated $1 million of rig mobilisation costs.

“We have a lot to be excited about as we focus on converting our world class reserves to production during 2021 as well as expanding opportunities through additional drilling at Ortoire,” summarised Baay., Digitonic Ltd (and our owners, directors, officers, managers, employees, affiliates, agents and assigns) are not responsible for the content or accuracy of this article. The information included in this article is based solely on information provided by the company or companies mentioned above.

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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