The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Cascadura
Year end 2022 2P reserves were 75.1 MMboe and an NPV10 of U$993.7m pretax or U$450.6m post tax. It’s our understanding about 70% of that was attributable to Cascadura (52.1 MMboe) based on the area up to a fault line close to pad C. The two upcoming wells have the potential to move reserve numbers up substantially. Roughly speaking the first well (drilling from Cas C pad back towards current production 2 wells), if successful, would move 3P reserves to 2P reserves of about 35m MMboe (out of the 3P number 120.6 MMboe reported in reserve number), that’s a very significant value uplift. The next well after has the potential to bring new 2P reserves (not in 3P at all) focused on the area outside the fault line but up to the licence boundary (it drills from C pad towards licence boundary), and again if successful it could add 30-35 MMboe to 2P reserves. Lastly, if they receive final government sign off on the Rio Clara block they could drill a well from Cas C pad towards and across the current licence boundary and again if successful this could add a further circa 35m Mboe to 2P, all are approximate type numbers. Hence all 3 upcoming wells have the potential to add very significant 2P reserves and valuations, back of the envelope if all 3 were successful this could add circa 90 MMboe (80% share so net 72 MMboe) more to the existing Cas 2P of 52 MMboe (their 80% net share already). The share price/valuation is currently ‘disappointed’ with Royston result, delays across the board and little upcoming exploration drilling newsflow but is completely missing how material the Cascadura drilling could be.
All 2 or potentially 3 Cascadura wells are also primed for quick production (6months tie in Cas-C to Cas-A and separators etc) into existing facilities spare capacity, the current 2 producing wells are combined at 60mmcfd gross and may potentially increase to 90mmcfd gross in the future assuming there are no geological issues. The next wells are budgeted at 20 mmcfd gross each but are actually drilling into what management interpret as a slightly more gassy (less liquids) up-dip and potentially better area of relevant reservoirs for gas. They are budgeting minimal liquids although likely there will be some. Current 60mmcf and associated liquids provides U$4m a month, a move to 90 subject to successful geology at existing 2 wells moves this to U$6m a month and if all 3 new wells are on budget that’s 60mmcf/d and another U$4m a month: in total that’s U$10m a month possible at some point in late 2024/early 2025. Annualised that’s U$120m cashflow from Cascadura possible after the next 3 wells if drilled successfully. Obviously there can be delays and poor drilling results but this should be a relatively low risk development work and there are reasons it could surprise to the upside too. It’s also worth noting the next well will be deepened to a new sheet as an exploration addition, we’d value this at zero but it’s worth me
So my prediction is up to high of 125-130 LSE when Canada opens and settle at around 115 on close. The next RNS on Cas and hopefully hitting full production on COHO will take us back to the 180’ s and upwards. Congrats to all those that held their nerve
Double production so my guess is 105 to 130. And the next financial report on the 16th Nov, if it confirms the production levels and the intended cash flow, then IMO see TXP SP being stable from the COHO RNS and no more wild SP swings until Cas news, hopefully in the first 1/4 of 23
Some TXP share holders have become so die hard, who the. go on to defend and deflect, whatever the MM market believe. As you say, good luck to those who still hold and still believe on this long long long sorry story (should have that Star Wars theme… long long.. time ago…. Anyway.. T&T is a backward thinking country and will be for the foreseeable.. While TXP mean well and have to keep the status quo with this Banana producing country, I totally understand why there’s a sell off…
2 years of my cash &!life that could of invested in bananas.
Come Monday or next Monday or the many Mondays after when is share holders still haven’t had a simple RNS update TXP will die like every other AIM company with too many BoD on share options at our expense.
Friday night rant!
A simple RNS or media update from the BOD would be all it would take to mitigate the 30m share holding of the discord group from mutiny if we’re still in the dark next week and no COHO gas or news… TXP pushed the delays onto T&T but both have become a joke in the O&G sector. But the joke is on us for not, as massive discord share holding in not demand some update with either a detailed RNS (also on the new T&T taxes) or a simple media update from one of the many BOD who are each being awarded handsomely with their options.
There’s going to be a lot of grumpy shareholders come Friday 7:30 GMT if we still haven’t had a RNS or news!
Since PB’s presentation and PB outlining the current delay is purely down to unforeseen government safety checks, I’m I the only one that now has a gut feeling that there’s a lot more going on in the T&G power trip concerning the start of the COHO gas flow. For TXP to keep absolute media silence while the SP heads back towards to 70’s is mind boggling and disingenuous to their share holders. If and when COHO does come online and the SP manages to clime above 110 I can see a major sell off for those who just wish to recoup their losses and get out of dodge and in turn rebound the SP back down towards 90-£1 until CASA is close to sign off, which I can’t see happening until Q2 or 3.
This has been so painful to witness over the last few years that by the end of the month it’s time to start listening to my gut!!
Hopefully tomorrow will see that RNS red dot that changes the above and yet another SP decline.
So TXP announce 6 moths timeline for Casadura which means, IMO, that COHO is also near to the production levels to push this timeline. Since it’s a bank holiday in Canada and there’s a presentation on the 8th Sep then I’m expecting fireworks over the next few days
This is indeed very good news for Touchstone, Trinidad and shareholders alike. Without too much repetition the development’s numbers are worth reiterating, capacity of 200 million cubic feet of natural gas per day, 5,000 b/d of liquids, 200 b/d of produced water and storage capacity of 8,800 barrels of liquids makes this a proper, world class asset.
Just to add to that the CEC includes the drilling of eight wells at two well pads (Cascadura B and C) and the establishment of associated pipelines and infrastructure within the Ortoire block which is again a major feat.
Put together with the recent moves at the COHO facility and pipeline, which in itself will be a significant milestone for Touchstone, representing the first natural gas production and expected to double current production on a boe basis, the CEC will complete a massive investment programme by Touchstone who deserve the huge rewards that will be generated this year.
After the COHO announcement last week I put a new TP of some 275p on for Touchstone which this announcement fully rubber stamps, today as I write, the shares are up another 15.8% at 113.5p which shows that there is still significant upside for investors both existing and new. When I first saw the maps of the Ortoire block with Paul it looked like a huge opportunity, with 80% of this he, and the whole management team deserve credit for bringing that into reality.
Paul Baay, joined Proactive London with news that the Environmental Impact Assessment at its Cascadura well has been completed. Speaking to Chris Rhodes, he stated the impact of this news will be ‘huge’ going forward and is very optimistic that now good relations have been established with the Environmental Management Authority, the way has been paved for ‘the next 10 years.’
Touchstone is moving ahead at ‘full speed’ and will hopefully be producing first gas maybe even by the end of this year. Make no mistake this extremely welcome news is a very big deal for the company and its shareholders. As I write the shares are up 23% which is good for shareholders but I would expect that these two announcements should put TXP up by a factor, in this case at least three times the current price would not be out of order as the numbers will be substantial.