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I repeat what I posted last week. Although 2025 was a disappointing year for Touchstone, the highlight of the year was the Central Block acquisition. This morning’s news further confirms that. Any new production, which is due in February, will be sold at a significantly higher price than the current production due to the incentives in the supply contract and will help fund the next three wells, which aim to more than double Central Block’s production. We have other things to look forward too as well, including the compressor as Cascadura (which should have the same effect as a new well),

Delay and disappointment at Cascadura, the consequent funding shortfall and the failure of the summer share issue have made 2025 a disastrous year for Touchstone.

Although things can always get worse, the potential highlight of the year was the Central Block acquisition and it’s that acquisition that gives me particular hope for the future. The purchase price was good, the assets (including valuable plant and access to significantly higher pricing as output increases) are excellent, costs have been cut and production increased by reconfiguring the equipment. Better still there’s a plan to more than double production over the next 12 months by drilling four wells, the first of which should be almost complete and producing by February.

Nothing is guaranteed in the oil and gas business, so although the latest well (CR3) seemed to be going well last week (see the reports on the Discord group) we won’t know what we’ve got until stable production figures are released. However, I’m encouraged by the lack of issues so far and the seemingly new plan to start drilling the second well in the first quarter of this year.

If CR3 produces as expected, I expect that confidence will start to return and the share price recover. If it disappoints, I think there’s a good chance of a takeover (an indication of the importance of a good result is perhaps indicated by the fact that Paul Baay has spent so much time in Trinidad over the past month or two) or worse.

CR3 seems to be better understood than Casc, with Shell having done significant exploration and testing in the past. Production is also much more stable. I’m optimistic and optimistic enough to have been buying more shares over the past year as the price has fallen (following today’s purchase I now own over 2.6 million), but as mentioned there’s still a risk it could all go wrong.

When a company has a disastrous year the people running it can expect to be criticised, but if Central Block turns out to be the success that many of us hope it will be they’ll deserve congratulation.

If the information passed to the Discord group is correct (which likely depends upon no major problems having developed over the past week), we should soon have a better idea of how things are going at CR3.

Trinidad’s newish Prime Minister said yesterday about the energy sector: ““These strategic engagements are not only about sustaining production but also about creating new pathways for innovation, diversification, and sustainable growth,” she said. “By maintaining these vital international partnerships, my Government is ensuring that Trinidad and Tobago continues to harness its energy resources strategically and responsibly, securing a stronger and more prosperous future for all.”” (see https://guardian.co.tt/news/pm-touts-dragon-deal-as-energy-growth-driver-6.2.2421735.a98d9168d4 )

If she’s serious, we can expect some good news in the budget.

Trinidad’s budget takes place on Monday.

According to the Energy Chamber, these are things to look out for: “ As the country looks to the announcement of the national budget, there are a few things that urgently need to be addressed: the supplemental petroleum tax, accelerating capital allowances, and reducing the amount of VAT refunds owed to the energy sector.” See https://energynow.tt/blog/central-government-energy-revenue

Paul Baay has mentioned discussions with ministers about tax reform and has indicated that his preferred solution for VAT refunds would be to deduct the refund from any energy tax payments. Although such a reform would reduce the government’s short term cash flow, it would cost nothing and encourage investment. Hopefully, we’ll see it implemented.

Whilst there’s much more to do, the fiscal regime in Trinidad has improved considerably about the past few years. It’s not just Exxon that’s drilling, but others too - see, for example, this from yesterday https://energynow.tt/blog/start-of-drilling-activities-on-the-korikori-1-exploration-well-in-block-5

A 7.55% rise in Canada, but it’s happened before and didn’t mean anything. Successfully drilling wells on budget and increasing production are what will drive the share price up.

“Touchstone Exploration was honoured to host The Honourable Roodal Moonilal, Minister of Energy and Energy Industries of Trinidad and Tobago, for a tour of our Cascadura facility.

Our President and CEO, Paul Baay, had the opportunity to walk Minister Moonilal through the site and showcase the progress being made as we continue to invest in the country’s energy future.

We are proud to contribute to the development of Trinidad and Tobago’s energy sector and look forward to continued collaboration with the Ministry of Energy and Energy Industries.”

https://x.com/TouchstoneExp/status/1966562538444726491

It’s a called a market for a reason.

If you like a stock and think it’ll go up, buy it.

If you don’t like a stock and think it’ll go down or not go up as much as a stock you like, don’t buy it and sell it if you own it.

If you’re not sure, do some research and make a decision based upon the outcome.

I like Touchstone, think the share price will increase and have been buying more (including 160,000 or so today). I now own just over 2 million shares.

Note also this paragraph from the RNS:

“The Company has reserved all rights in connection with the May 8, 2025 private placement and will assess its position, including any losses incurred as a result of defaulted placing commitments, following the completion of its 2025 financing activities.”

If there was a binding contract for £10.5 million, which we’ve been told there was, there’s a good chance whoever breached it’s going to make a contribution to the increased financing costs arising out of the debenture.

Were it not for the fact that Touchstone has a covenant with the bank that requires it to raise over £10 million before the end of the year I doubt the share price would have declined from the twenties.

Once funding is resolved, which given the assets the company has seems much more likely than not, I think we can expect a bounce. I’ve been buying more shares in expectation of it.

You have to add directors talking interviews (all one word) to the space.

this was posted earlier on discord by nipr1: https://www.***************************/subsurface-surprises-emerging-at-cascadura-5/4121207777

A considerable amount of fresh information has been shared on the Discord group over the weekend following the recent visit to Touchstone’s operations by a couple of members (see the wiki-trip-to-trindad page). It’s well worth a read if you’ve missed it.

I’m optimistic about Touchstone, have been adding shares and may well add more. However, it seems to me that future success and share price growth is dependent upon drilling success. Cas 4 and 5, over the coming weeks, will give a good indication of whether the newly organised team is on top of things or not. There’s good reason to think it is, but the proof will be in the results.

Successful drilling will turn the share price round.

Paul Baay, at the request of shareholders grouping together on Discord and thanks to efforts of JBLondon, answered a series of questions earlier this week. They’re all available on Discord, but here’s the one concerning drilling sequence:

“John:

Apologies in advance, as this one has a few layers.

Can you walk us through the current 2025 drilling schedule and the thinking behind the sequencing? Why is TXP planning to drill CAS-4 and then CAS-5 back-to-back before hooking up either well to the facility?

If CAS-4 reaches TD and shows test results similar to CAS-1-deep wouldn’t it make more sense to hook it up first to boost near-term production-especially given the high decline rates already observed? That could be a quick win for shareholders, rather than waiting for CAS-5 to reach TD and tying both in later—particularly if CAS-5 encounters similar drilling challenges.

Also, with CAS-4 drilling about to resume, can we assume your meetings with Heritage and the external consultants have resulted in an agreed path forward?

Paul:

Let’s start with that, John. I know it’s a long question, but you’ve answered part of it already.

First of all, I think the key takeaway is we are not chasing quick wins. Some parties might be, but our focus is building something sustainable and long-term for shareholders. We want to avoid volatility and build a consistent base.

Now, in terms of the pad layout-CAS-4 and CAS-5 are literally 20 feet apart on Pad B. You can’t drill one, move off, tie it in, and then come back to drill the other without disrupting all the installed infrastructure—pipes, valves, etc. Once you commit to tying in one, it essentially blocks the other.

These pads were designed for multi-well campaigns. So, the economics and the operational flow make it clear-we drill both wells, then tie in together. Brian Cannon and the team already have all the tie-in hardware for both wells sitting on-site, pre-delivered in a C-can. We've also invested in 3D data and already have casing and wellheads in place. It just doesn’t make economic or operational sense to break that sequence.

The right thing to do is to proceed with CAS-4 and CAS-5 as planned, then move on to the Central Block wells. That’s the plan and it aligns with both our strategy and the resources we’ve put in place.

John:

Now that you’ve laid out the proximity of the pads and the sequencing issue, it’s clear. I get it now, and that question can definitely be put to bed.

Even I was thinking the LNG pricing at Central Block made it attractive to pivot early, but your explanation makes sense—it’s about executing 4 and 5 back-to-back first.”

The company’s making plenty of information available to shareholders and whilst It may or may not be that the sequence has changed since then (things happen and quickly), all this nonsense about lies is ridiculous. If drilling were easy there’d be no risk; if there were no risk there’d b

As far as I'm aware, the Discord Group is open to all, invites are frequently posted here and there's no cost (you only have to register with Discord).

It's better to read what's posted there than to read rumours of what's been posted there here.

What's been posted on Discord is that the drilling order has changed so that it will now be Cas-5, then Cas-4ST2, and then two wells on the Central Block. That post is based on "what the birds say" (presumably what people on the ground are reporting back, directly or indirectly, to the poster). It may or may not be true (we'll find out soon enough), but drilling programmes are bound to change and there are all sorts of reasons why they might (eg, equipment might be available now for one drill, but not another).

Https://wallstreetanalyzer.com/2025/05/13/touchstone-exploration-inc-tsxtxpotc-pbegflsetxp/

The key management cost figure provided early is also incorrect. It wasn't circa $4 million last year, but $3.143 million - see page 47 of https://www.touchstoneexploration.com/content/uploads/2025/03/TXP-Financial-Statements-December-31-2024-VF.pdf

Hopefully, the forthcoming reduction in directors will reduce it this year.

I’m not sure it’s fair to assume that Touchstone knew a placing would be required when the presentations took place; banks have a habit of encouraging borrowers to thinks everything’s going their way only to raise an obstacle at the last moment.

Although the placing was an unexpected detriment to a multiplying share price, I wonder whether Touchstone has done what had to be done to keep drilling (which unfortunately doesn’t appear to have gone as well as we’d have liked over the past six months) and the Central acquisition on track.

Hopefully time will prove that drilling and acquiring produced more benefit than the placing cost. In the meantime, it’s encouraging that two or three institutions/people were willing to invest £15 million in the company.

It looks as though Malcy has some new information on the placing as he’s just published this:

“So, the Central Block deal appears to be near to closing, should this happen imminently it is very good news for Touchstone for whom this transforms their business and should mean a resultant sizing up operationally and financially.

This deal is being financed by a combination of debt and equity, the former via Republic Bank and a six year $30m non-revolving package. In the raise the company has raised some £15.375m at 20.5p in a significantly oversubscribed private placement that has brought in two new institutional shareholders as well as existing backers, at an 11.8% discount with buyers over.

It’s an eminently sensible financing which makes the deal potentially accretive via the increase in netback revenue from the 2,000 b/d backed by the increase in the company’s portfolio of assets. Funds per share should also increase when we get updated guidance thus offsetting any dilution from the equity part of the financing.

Operationally the benefits of the Central Block have already been made in previous blogs, but to recap, the acquisition of Shell’s production, c.94% natural gas and using the facility to sell as LNG with the pricing attractions that carriers is highly beneficial compared to existing contracts. TXP is already planning two Central Block wells this year.

Elsewhere the portfolio will now set to drilling two wells at Cascadura and I understand that these four wells will be drilled back-to-back to ensure most efficient economics. It is the fact that these are all development wells that makes me comfortable about year-end production aimed at a respectable 8-9/- boe/d+, with 2P reserves of 5.6m boe.

Touchstone is now fully funded with an added state of the art facility enabling significant premium pricing via the LNG sales, it will have a robust balance sheet and be a much stronger beast in this particular jungle. The last few months has seen a complete turnaround for Touchstone, it has got to grips with the original portfolio with added subsurface activity promising higher production and with margins that are now rising and metrics much better.”

The Atlantic Council on what’s next for TT’s new prime minister (see https://www.atlanticcouncil.org/blogs/new-atlanticist/whats-next-for-trinidad-and-tobagos-new-prime-minister/):

“Next, declining natural gas production threatens Trinidad and Tobago’s energy security. Natural gas is the bedrock of the country’s economy. It provides low electricity costs for its citizens and, through its petrochemical industry, is responsible for more than 80 percent of the country’s export revenues. However, over the past fifteen years, Trinidad and Tobago has struggled to tap into new natural gas reserves. Few awards are given to bidders during offshore auctions—zero were awarded between 2015 and 2022—and there are limited financial incentives to encourage further exploration by oil and gas operators.

“Here, there are two areas Persad-Bissessar can focus on. First, she can work to fast-track development of commercially viable natural gas fields through tax concessions and subsidies. Second, she can take steps to diversify the energy matrix by investing in renewables. Trinidad and Tobago is primed to be a renewable energy leader in green hydrogen, onshore and offshore wind, and utility-scale solar. The country has a large electricity grid and population relative to its Caribbean neighbors, meaning that investors can invest at scale in a country that already has a track record of developing power generation projects.”