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Talk to me in two months when we have the well results and Cascadura is online. Stop shaking the trees, yes the raise wasn't ideal but they felt it was necessary to get Royston drilled sooner.
Why spend time on a board of a share you don't like? I thought trolls lived under bridges
Why would you do a rns to say everything is on track? .They've never done that in the past and under no circumstances are required to do so. Why would you as an owner want them to spend any extra time or resources on unnecessary fillings..
Totally unrelated and anecdotal, but I have some experience submitting paperwork to government employees, all working from home. What was supposed to take about 4 months in total ended up taking about 6 months just to get fully submitted and about 13 months to be approved. Everything takes longer than you expected due to covid and that's in the US.
Definitely agree Scott.
Some new updates from the presentation. 2 of the 3 wells have been brought on at 120 bopd. I got the impression he meant 120 bopd each but that might just be wishful thinking. Either way it should be a nice little boost to legacy production and gets them to around 1500-1600 bopd.
Paul also confirmed that they have been selling oil from Royston so I think safe to assume the test is going well.
Also another huge positive - Cascadura timeline is still safe, Eia was already submitted and Paul says Ngc will be ready before Touchstone receives all their new equipment in March. Considering the market price of natural gas, ngc has every incentive to get this online as soon as possible.
Some slightly negative updates
Paul is now saying 350k-400k per day from Coho not 450k as in previous presentations. Also confirmed we are waiting for the paperwork to be approved and are 30-60 days away. Definitely more of a papercut (btw Paul also confirmed he reads these boards so please be respectful).
Lost a year? ... Royston is proven commercial.. And you think they lost a year?
Royston Test 1 discovered 94% oil cut l, sweet crude at high pressure and unknown total depth. Test 1 alone probably comes close to doubling the value of Touchstone.. Test 2 and 3 also looking very commercial...
Coho - made some progress but ill agree this hasn't moved quickly but we are talking about 6 million per year..so we lost maybe the value of the total interest on 6 million.. Stings a little but who cares? Royston is freaking commercial.... If they came out and gave the market a estimated recoverable oil estimate or reserve report we wouldn't be having this discussion.
My simple back of the envelope math
Cascadura is worth at least 500 m today
Royston is worth 750m - 1 billion maybe more.
1.25-1.5 billion / 210 m shares o/s =$6-$7 per share with at least 750 m of that value being proven in the last 30 days.
2022 - we have Royston Deep spudding in February after which we will get a updated reserve report
Coho should finally be online
Legacy Fields should be up to 1500-2000 bopd
Cascadura should come online before the end of the year at around 40m per year..
Just to reiterate, Royston total drill cost was 8 million dollars and found 550 bopd at 94% oil cut in test one. About 350 bopd at test 3 and about to drill Royston Deep which will likely come in commercial and my guess will be we get at least 500-1000 bopd. Maybe more?
Just want to reiterate how affordable these wells are to drill and the amazing success rate, significantly above expectations, of this exploration program. If Chinook turns out to have commercial oil, they are batting 100% on what is supposed to be a 33% chance of success. If this was moneyball, the on base % would be 1000!
Very thankful to have found this company years ago when it was a net net and thankful to management and the amazing Geologists for recognizing the opportunity and having the proverbial chutzpah to execute the plan.
Paraphrasing my favorite gas/oil ceo 'Value for shareholders is created when you turn the drill bit to the right and find reserves that were not there before'.
Oh and thank you Mr. Market for continuing to provide the opportunities to buy a great business at a significant margin of safety to the underlying assets. I have no idea why anyone willingly parts with their shares at such a discount but I think it has an awful lot to do with man's inability to sit on one's proverbial hind and do nothing.
Cheers!
550 bopd at 94% cut without the optimized pipe from Test 1 and and we don't know true depth and size of the pay yet...
Test 2 was in the likeliest part to have a high water cut according to Paul and 90% is within the range of other parts of this play.
2 more weeks till we know if Test Three comes in at closer to 30-40% average water cut range seen at other parts of the well. Lets hope Touchstone gives us a huge rns on Christmas that lets us know the potential total flow rates for Royston 1 and sets up Royston Deep.
There is a whole ocean of oil beneath our feet
'550 bbls/d. The recovered oil was light, sweet crude with an average 33-degree API (corrected to 60-degree Fahrenheit) with sampling throughout flow testing indicating an average 94% oil cut'
Just want to reiterate that Royston test zone 1 was not optimized for liquids but has so far produced 550 barrels per day at 94% oil cut and they haven't even reached the bottom of the zone.
Some analysts have estimated that there is potentially 100 million barrels of oil in place. Not bad for a 8 million dollar drill...
Test 1 and test 2 were not optimized for oil. Test 3 will be. If they can optimize and get 2500 bopd on a 8 million dollar drill shareholders will be very happy.
Mr market is shaking the trees and getting the meek hands out. Same as always
I love investing, its like playing poker when your competitors are playing a totally different ******ed game.
We can't expect the conditions thats allowed us to purchase undervalued shares to change overnight so I don't. Like a few others here, I've owned Touchstone since the Petrobank days. Haven't sold a single share, only added. Lots of things have happened.
Charlie Munger once said and paraphrasing 'Mans biggest problem is the inability to sit on your ass and do nothing'
Why is that important? Well when you find a great business, thats the only thing you need to do. You don't have to fret about test results because the business is great.
What makes Touchstone such a good business you ask? They can put a hole in the ground for 6-8 million dollars and find oil/gas that will be producing 100+ million per year in cashflow. They already found one in Cascadura.
Now we get the same, if not better opportunity in Royston, Steelhead, Kraken etc (about 20 or so more exploration drills to go).
That is a great business, I mean no doubt if Royston fails to be commercial some shares will transfer from inpatient holders to businesses owners.
But who cares... The entire drill cost what 8 million? It doesn't change the business one bit if it fails. If it works, which seems likely at this point, even if its just the oil they found at test1, it more than paid for the entire drill from which we also gained tons of valuable information.
I really enjoy the real geo analysis on these bb's but you are in the wrong business if you want perfect timelines and instant gratification.
I think 5-6x is more appropriate for oil and gas based on some buy outs over the last few years but it really depends on the actual decline rates. You can also add some value for Coho2, if the economics are similar, they will drill a well producing 6 million per year declining at x for about 5 million.. What's the worth today?
Hi Matt,
Don't forget the liquids, PB previously mentioned that Cascadura can get to 2000 boepd by the end of the year and eventually up to 5000! Not worth quite as much as oil but even @$12.5 per barrel.. We are talking about 9 million in revenue run rate by the end of this year. 3 million More than coho
Where do you get your multiple from for Coho? Are you adding something for the next prospect there? Remember the production on these wells will go down... Central Block is still producing at 50%.. Almost 20 years later but we don't know if Coho will have similar decline rates. Either way, it's hard to justify a high multiple for a commodity.
I think you are being a little too conservative on the legacy assets but way too generous for Coho. I think it's should be valued closer to 35m usd, more if they can get more gas but let's stick to what's been drilled.
10x for a decaying commodity asset is far too rich.