The share price of Touchstone Exploration (LSE:TXP) has been quietly consolidating just above 13p and looks well positioned to make a move on first resistance at 14.25p. There’s been little news flow from the company in recent weeks but what we do know is that the 2018, fully-funded drilling programme is well underway. In the last Operational update in March the company announced it was adding a second rig to accelerate its drilling campaign. With only one well of the ten scheduled for drilling having been reported on so far, I imagine an update with further news is likely to be in the pipeline very soon.
I highlighted the stock when it was around 11.5p in late March after CEO Paul Baay forecast the likelihood that cashflow in Q4 2018 could be as much as the previous three quarters combined. With Brent hitting $76 this week, the company is surely in great shape to fulfil that goal.
Chartwise, I note the 50 Day Moving Average (50DMA) has moved above the 100 DMA and after retesting various price steps along the way, current support is at 12.5p. That said 13p is increasingly looking like a stable platform for the next drive forward. Once 14.25p resistance gives way, the next target will be highs of 16.5-17p. I am, however, still of the opinion that Touchstone has been widely missed by the market, and believe a considerably higher valuation is inevitable all the while progress is being made to those production levels. This is of course oil we’re dealing with and problems often arise, but these are not wild-cat drills – the targeted fields are well established, so in theory the chances of success are much greater.