Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
Totally agree with all of the above.
Paul previously mentioned that Cascadura (when only 1st well had been tested ) was worth about 380 million in a private transaction. Cascadura deep will come on at 50% to 75% of the flow rate of Cascadura 1, I think safe to now assume Cascadura is now worth 500m usd + or 1.70 pounds per share.
It is getting to the point where it's time sh*t or get off the pot, they need to spud Royston and plan to test it as soon as it's ready. None of this waiting 6 months for testing like with Chinook. I have held this share for 8 years now and only increased my position, but even my patience is starting to wear thin. We all understand that timing is iffy, and exploration is risky, things happen but when you don't have a buyer locked in.. And you still tell us to expect cashflow by May..
Paul should never have promised coho cashflow in May when Shell hasnt signed on and no other buyers were in place, it's a big miss and management should never have predicted cashflow when such an important piece was still in the air. I would much rather they under promise and over deliver ie Cascadura than whatever this is.
Both follow up video interviews were kind of weak, what's the point of paying for Directors talk if the person asking questions sounds like he is falling asleep? The questions were exactly the same, never thought I'd say I miss the old interviews at proactive.
I think Touchstone is large enough to get Paul on Bnn or CNBC or something similar.
I did not like the 1500 bopd comment because they are at 1275 bopd as of December 31st, and presumably lower today. PB, needs to be better prepared and have a good story, the market is hung up over a 5 million dollar busted/or misinterpreted well at Chinook. We want to hear about the seismic and spud at Royston, the follow up well at Steelhead, plans to drill the up dip oil drill at Chinook etc. Unless they're planning on some c02 injection, or new well drilling, we really do not need to hear about the western fields. Especially an outdated number, which is no longer relevant.
The uncertainty at Chinook is disturbing, the follow up interview was kind of weak.
PB went from 'we hope to announce a significant gas discovery on March 25th' to admitting they went 3 for 4 during the interview this morning . You can't talk about how there is still a lot of work to do, and also say that you went 3 for 4.
Previous presentation led us to think that Chinook could have 4 to 8 gas development wells at an average of 20 mmcfpd. By the end of 2022, I was hoping that we would be generating 5 million dollars per month from Chinook. This rns took us from $60 million a year in cashflow by the end of next year to a science project real quick. They have to know that talking about potential oil in place is meaningless until we have some actual targets and planned wells. Until then, I am reducing my estimate of ye cash flow from 210 million to 147 million and my intrinsic valuation at the end of 2022 by about $1.75 usd per share to about $4. I'm glad the well is not abandoned, but till we find out more its not worth much. Would have been nice to get some new positive information
Coho - almost on stream, 6 million per year so worth about $25-$30 million?. When is Ngs going to buy the pipeline?
Legacy Fields @1275 bopd, @ $20 netback - about 10 million per year but declining. Must drill 3 or 4 wells here to maintain production, we don't want this to go away. Probably worth something if sold today but really just there to cover overhead for now.
Cascadura: value unchanged - about $380 million - about $1.81 per share if liquidated.
Cascadura Deep - hoping for positive test results soon, should increase known reserves by at least 20% at Cascadura and allow them to put 8 development wells on the play. With Chinook becoming exploration, maybe they can fast track the development at Cascadura? Would love to see them talk about this when the test results come back.
8 development wells would yield about 160 mmcf per day or 8 million per month from Gas plus cashflow from 2000 (end of 2021)-5000 barrels (end of 2022?) of condensate. If everything goes to plan Cascadura + Deep is worth more than $500 million dollars. About $2.50 per share
Royston : 0 value today but well spudding hopefully by eom with a 60 day drilling window. Hopefully it can get 10,500 feet and find up to 1 tcf of gas. Hopefully they can test it right away, would be great if they could confirm this. If Royston is a hit, we will get to drill the Kraken in 2022! Paul previously said they can use 5 development wells here and in the Pareto presentation could mean another 10,000 boepd by end of 2022
No mention of Steelhead lately, would be nice to know if they still plan on drilling it right after Royston. I know there are many moving parts but in the last presentation where Paul mentioning it, he said they would go up the road and drill it right away. Would really love to know if they plan to test Royston right away after the drill if they find 'pay
Hi Scott,
After a quick relisten Pb said a rig will be arriving in April / May for Royston, he never specified that it was the telescoping rig that we expect to arrive during q4 from Canada. Safe to assume it is a rig that is already in Trinidad.
The rig they have in mind must be capable of going to 11,500 feet, if they have to stop early like at Cascadura, to high gas pressure, well we will just have to live with that reality. It would be a good problem to have Right now the market is pricing in bubkis for Chinook or Royston. Whoever is selling at these levels must not fully appreciate what they are doing.
We can't expect the market that allowed us to buy a misspriced security in the first place to always reflect the full business value of the company at all times. There is nothing embarrassing about it, all it means is we have more opportunities to add to our positions at a healthy margin of safety. Perhaps the people selling their shares do not fully understand what they own? It seems like a reasonable assumption to make.
Paul Bay said Cascadura was worth 380 million usd alone
Coho will be on soon producing 500k per month
Cascadura Deep - potential 25-30% increase in reserves
Chinook - TBD - hopefully announced in the next week or so, but hopefully our third Gas play capable of 100 mmcfpd maybe some liquids?
Royston - Spudding April or May - possible tcf of gas?
Steelhead - next exploration play for end of Q2/Q3?
Kraken - 2022 Target at Royston - 1.5-3 tcf?
Legacy Fields - Currently producing 1275 bopd @ 20-25 netbacks - paying bills, 200+ future drilling locations, 4 planned.
I think $500 million usd is a good starting point for Cascadura. We aren't paying anything for any of the other plays right now..
Sorry Scott, I was referring to the two posters who said they were or had lightened up.
In 2022
Touchstone has applied to have two drilling pads at Cascadura and two at Chinook. Up to 4 wells from each one, at an expected average of 20 mmcf/d.
Up to 320 mmcf/d - Roughly 180 million give or take in operating cashflow if Chinook comes in as expected.
5000+ bopd of liquid from Cascadura
Royston is potentially another 5 development wells or another 100 mmcfpd. Another potential 60 million and hopefully more liquids. Remember if Royston is a hit they will take the rig a km down the road and drill Steelhead. No telling if/what we find there but at this point Management has earned my trust.
As another poster pointed out at the oil prices even the western fields become interesting. I like modeling $25 netbacks@ 1300 bopd, maybe 1450 if they drill 4 wells.
Then we have this new updip prospect in Chinook.
Lots of places for Paul to put the drills to work, I'd much rather see them reinvest all the cashflow drilling high roi projects and wait to issue a dividend till we exhaust all the best roi projects.
There is a ton of uncertainty, we do not know what Chinook has or will flow at, but Touchstone must know enough to be planning development wells. I wonder what they think the COS right now at Chinook?
If I'm not mistaken Scott, Paul said the plan is to drill 8 developmental wells at Cascadura and they expect them to come in at 20 mmcfd each or about 160 mmcfd. Cascadura/Cascadura Deep alone are bigger than the central block. We need the telescoping rig to drill another well to get to the true Cascadura Deep Target Depth. So much upside, just in one play. Chinook, Royston, etc are all Gravy at the price levels. If today's Ev was a Billion, I would understand the cold feet. But at around 420 m?
I owned the shares on the way down to 10p and back up. Unfortunately did not top off at the bottom, but I don't like to anchor my opinions based on the past. I do like to think like a business owner, and my shares represent a interest in that business and the share price is simply the reflection of a bi polar Mr. Market.
Let's play some socratic solitaire, if you owned all Touchstone , and someone was offering you to buy some of the business from you at an enterprise value of about 420 million today, roughly the value of one of the wells you drilled in the last year and ignoring every other play
would you sell some or all of your stake?
I don't really care what anyone else thinks but you guys are totally nuts.
I'm about as far from the oil industry as possible so admittingly a lay man's opinion but having to stop drilling twice at Cascadura, due high pressure, and finding more than 400 million dollars at a cost of about 12 million dollars is concerning?
If anything it tells me that this stuff is commercial. Cascadura deep is totally derisked at this point and I don't doubt for a second we have commercial gas at Chinook. Even if we do not, it's not like it's priced in at all at this point.
Go ahead and lighten up before the test results come out, it totally makes sense to wait this long but to sell out before the news. This is why the stock market transfers money from the inpatient to the patient.
Also this is a stereotype but Doctors and Dentists make some of the worst investors. This guy can keep his 100k out of Touchstone and wait till after the test results come back and we find out exactly how much gas and liquids Touchstone will get from the 1300 feet of pay at Cascadura, and 700 feet at Chinook. I'll keep all my shares and maybe top off again, I like the risk/reward at these prices.
Warren Buffett always said oil ceo's create value by finding reserves at a low cost. Paul Bay and Team increased 3p reserves at a cost of $0.76 per barrel in 2020 and that's not reflecting what they test in Chinook and Cascadura Deep.
Touchstone's enterprise value is worth roughly as much as one play- Cascadura.
Touchstone's proved reserves do not reflect any reserves for Chinook or Cascadura Deep. We'll know what how much they found there by the end of April/early May.
At today's prices you get Chinook, Cascadura Deep, Royston, Kraken, Steelhead, 21 future targets, Coho western fields for free.
If everything goes to plan, roughly by the end of 2021 Touchstone will have about 2000 barrels of liquid (@$15 netback 11 million ), 110 mmcfd gas (66 million), oil (12 million) = 89 million in operating cashflow! This assumes 5 development wells coming on at an average of 20 mmcfd gas by the end of the year.
In addition to finding out the flow rates at Chinook and Cascadura Deep, Touchstone is gearing up to spud Royston. If Royston is successful, they think they can drill 5 more development wells and extract about 100 mmcfd, maybe some liquids. This is the same well Shell drilled and had found more than 700 feet of pay. If Royston is the largest prospect, and Cascadura Deep drill found 1300 of pay.. Make your own inferences.. But none of this is priced in today.
If Royston is a hit, that's when things really get Kraken because one of those wells will probably be taken down to 15k feet. This will be the most expensive well Touchstone will drill in the foreseeable future. They will also drill as many as 11 more development wells at Chinook and Cascadura.
By the end of 2022 we might have
Western Fields (1400 bopd)
Coho (10 mmcf/d)
Cascadura (160 mmcfpd) +5000 barrels of liquids
Cascadura Deep (they still have not drilled to their target depth, the new rig should be capable of reaching it, could be a good question to ask at the next Q&A maybe 2022? 2023?)
Chinook (160 mmcfpd) +liquids? + oil?
Royston 100 mcfpd + liquids? + oil?
Kraken..?? !
Steelhead??
Let's do a little more math, if we assume the average chance of success is 34%, and there are about 20 remaining wells. That means for a exploration cost of about 100 - 120 million we should get 7 currently unknown oil/gas plays that could be worth billions.
Going 4 for 4, has definitely created a lot of hype, but it also somewhat derisked the remaining prospects and at today's prices we get that exploration upside for free.
Definitely agree, you never know what someone will buy or sell their shares for, all you have control over is what's in your hands.
We now know that
1) Ngc contract will be completed in the next 30 days
2) Cascadura deep is about to spud, will require about 40 days drill time to reach Td. We should know how many feet of pay they find by December 24th.
Correct me if I'm wrong but worst case, they don't find anything commercial and turn on the tap for the lower block of Cascadura, so that they can produce the other 5000 boe/pd that they can't handle with the existing pipe. Basically tails we win big, heads we have a developmental well that we would have had to drill anyway.
3) Coho comes online, February q1, offsets some of the lost production from the oil fields.
4) Testing results Q1 for Chinook and Cascadura Deep if we hit paydirt.
I am not very excited about Cascadura deep, if it does in fact connect with the hydrocarbons at Chinook, we have at least a miles worth of hydrocarbons, maybe oil.
5) 700 feet of pay at Royston, drilled to 12k feet in q2.
Value:
Cascadura (380 million) / 180 = $2.05 usd
Chinook (200+ million ) Value.. Who knows, if connected this could be worth billions. Already described as world class, would be surprised if it's not at least 200-300 million.
Cascadura Deep: see above, basically a free exploration option
Royston : Bigger than Cascadura..
All together this company is worth Billions of dollars currently selling for around 240 million usd...maybe this will be a 10- 15 cent dollar in hindsight at current prices.
Cheers!
First time poster, I have enjoyed reading the comments for some time and wanted to chip in.
Touchstone would love to get on with it but that's not how government approvals work. Especially in covid times, everyone is working from home, and everything takes a lot longer to get processed. Paul said that it looks like they were a few weeks away from getting approval in the director talk video. Last I checked Trinidad was an Island and Island Time was still a thing. Put a lime in your coke and chill
Same goes for the Natural gas contract, they are now talking about this being worth several billion dollars! I think between Chinook and Cascadura, we have somewhere between 500 and a billion dollars worth of gas. Add 50-100 million for Coho and Oil assets minus 15 million in debt and you have a stock with assets worth somewhere between 535-1085 million dollars with Cascadura Deep and Royston, plus 21 other targets still to drill. They are 3 for 3!
In my mind, the block has been derisked thanks to the amazing job the geologists and management have done. If you know of any other business that can spend 5 million dollars and turn it into an asset worth 300-500 million please in 12 months time, please let me know. I am a very happy long-term shareholder and will continue to hold all my shares. That was not the case a few years ago, but I am glad I never sold a single share and I couldn't be more proud of the work this team has done. Cheers!