Oil & gas junior Touchstone Exploration (LSE:TXP) has raised £9 million to accelerate work on Trinidad’s Ortoire block following an explosive start to its exploration campaign.
The firm, which is currently down 3.2% for the day at 42.6p, placed 22,500,000 shares at 40p each, a 10.1% and 3.5% discount to its five- and ten-day volume-weighted average prices respectively. The proceeds will be used to accelerate the pace of work at Ortoire, a 35,786-acre block in east Trinidad situated on highly prospective geological formations called turbidites.
Touchstone’s work at the block has got off to a flying start, with two out of two wells exceeding expectations with enormous discoveries. Earlier this month, the firm revealed that testing of its Cascadura well had 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”. Meanwhile, modelling of its Coho well in December supported initial production rates of 1,667 to 2,000 Boe/d gross.
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 114.75% higher than it did at the beginning of the year.
With £9 million now lining its coffers, Touchstone is looking to build on this early momentum at Ortoire. Given that estimated combined prospective and contingent resources across three initial prospects on the block come in at 8,237 million barrels of oil equivalent (“MBOE”) net in the best estimate case and 23,337 (“MBOE) in the high estimate case, it is not hard to see why.
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.
Back in January, Touchstone’s chief executive Paul Baay told us that his business was fully-funded to execute its strategy at Ortoire. However, this was before the organisation was lifted dramatically by its efforts at Cascadura. With a placing now out of the way, Touchstone is clearly keen to continue its pursuit of a potentially transformational opportunity at as quick a pace as possible.
If current momentum remains and the strong news flow continues, then who knows how high the company could soar?