An independent evaluation of Touchstone Exploration’s (LSE:TXP) Ortoire block has confirmed that prospects identified by the business (LSE:TXP) are of ‘significant size’. Touchstone released details of the Prospect Evaluation report, conducted by GLJ Petroleum Consultants, on Thursday.
GLJ estimates that Touchstone’s contingent resource targets have a 95% chance of commerciality. The consultant suggests that Touchstone’s share of prospective resources will be between 4.39m to 53.2m barrels while its portion of contingent resources will be in the region of 1.5m to 5.3m barrels.
The report also puts Ortoire’s Net Present Value (NPV10) at between $10.5m to $86.86m. Meanwhile, the projected costs for developing the block’s contingent resources came in at $10.2m for 2019. Finally, its prospective resources are expected to require an estimated budget of $5.67m this year. These figures are based on an estimation of Touchstone’s future net revenue using forecast prices and costs as included in the prospect evaluation.
The Ortoire block is situated to the east of Touchstone’s current producing blocks in Trinidad. The firm expects to begin drilling the block in the first half of 2019. Its first target will likely be Corosan, a prospect located just north of Shell’s Carapal Ridge discovery. Carapal Ridge is part of the Central Block and is Trinidad’s largest onshore gas-condensate discovery in 50 years.
On Tuesday, in an exclusive online presentation with ValueTheMarkets, Touchstone’s president and chief executive officer, Paul Baay discussed Ortoire’s potential and gave further details on the company’s plans to explore it.
In the presentation, Baay explained the challenge to the team had been to understand the geology of Carapal Ridge and to ‘find it elsewhere on the island’. Four general prospects have been identified on the Ortoire block, and three of them – Corosan, West, and Central prospects – have the same geological profile as Carapal Ridge. The East Prospect is more like the producing areas Touchstone has drilled to date on the west side of the island.
There have been numerous wells drilled on the Ortoire block by prior operators. Many of these have been documented, with several having had associated production or hydrocarbon indications. All of the prospects evaluated by GLJ in the report have legacy wells drilled in close proximity to the identified exploration locations.
Ortoire consists of turbidite deposits which are deep deposits formed by massive gravity flows that can turn into vast hydrocarbon reserves.
Baay explains: ‘It [Ortoire] is a turbidite deposit but old technology previously missed this, and the block’s prospects were viewed as tight and challenging.
‘Developments in technology have meant that virtually half of all the massive global discoveries since Ortoire’s initial exploration have been turbidites. We applied this model to Trinidad, and it became obvious turbidites were present. This has created our Ortoire prospects, and if our model works, it is something that will be a step change for both Touchstone and Trinidad.’
Touchstone is in the process of obtaining all regulatory approvals required to drill the deposits. This includes four certificates of environmental compliance (CECs), which represent a total of 14 drilling locations. One of these, covering four drilling locations, has already been approved. Touchstone anticipates that a second CEC for four additional locations will get the green light within the next four weeks.
Baay, said: ‘This independent prospect evaluation provides confirmation that the prospects that have been identified by the Touchstone team are of a significant size and provide an excellent opportunity for a step change in reserves, production and net asset value of the Company. Proving this geological model could be monumental for Touchstone and Trinidad as it will set up a multi-year exploration and development program.’