Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Thanks RR, as ever appreciate these updates.
'we would note that both ourselves and PETRONAS are continuing to engage fully with the Government of South Sudan and are all working together in country as we continue to progress the transaction to its expected completion.'
I guess they wouldn't be saying anything too different either way but the phrase 'expected completion' does suggest that it could be positive for us after all.
O&W, your posts are pretty ironic given your posts on other boards
On PRD 'Must admit I am new here, but I would like to ask those who have been around a while, why are a few posters intent on spreading negativism, yet presumably holding shares here? It's so boring.'
On HZM 'All the clever dick "I got out ages ago with a profit" crowd are dominating the posts here now. What a shower.'
You've made your point already that you reduced your holding by 90% just before suspension so not sure why you feel the need to continue with your smug posts. Pretty immature stuff from someone professing to be wiser.
PT V
The market also expects strong EBITDA growth from Touchstone over the next couple of years, with Touchstone’s EV/EBITDA multiple falling from the highest amongst its peers to one of the lowest over this period. As Touchstone delivers on its cash flow potential, investor confidence should build in these estimates helping the shares to re-rate.
PT IV
With 205 development drilling locations already identified across the portfolio (predominantly in its legacy oil business) as well as 24 exploration locations on the Ortoire block alone, management has no shortage of drilling opportunities for years to come. Importantly, Touchstone has environmental permits already in place to drill up to 8 additional wells on Cascadura and two additional wells at Coho to fill facility capacities – regulatory delays were one of the key causes of the delays to the Coho and Cascadura developments. As a result, the next leg of Touchstone’s growth should be swifter, lower-risk and come with significantly lower capital intensity with the majority of infrastructure already in place, drilling conditions better understood, and a dedicated drilling team in place using a walking rig to minimise downtime. All gas from the Ortoire block is sold to the Trinidad National Gas Company at a fixed price contract (currently ~US$2.2/MMBtu), providing a steady, predictable cash flow stream. This gives management the space to consider the best use of surplus funds, which could include more capex, dividends, buybacks or acquisitions.
Touchstone looks to be nicely teed up. The hard work has been done, with management putting in place the building blocks (infrastructure, rig, drilling approvals, gas sales contract, new acreage) to deliver further significant growth in the coming years. Valuation Our risked NAV-based price target of 87p/sh remains unchanged. However, we view this as a conservative valuation from which Touchstone can build. A period of consistent operational and financial delivery is needed to rebuild investor confidence and demonstrate Cascadura’s free cash flow potential, which in turn provides the resources to further develop and explore its large onshore Trinidad acreage position. Noteworthy is the fact that this valuation consists almost entirely of producing assets. We give very little value – just 4p/sh – to the significant exploration potential contained on the Ortoire block, let alone consider the extensive acreage expansion currently being finalised. As more details of the prospects and drilling plans emerge, we expect this valuation to rise.
PT III
2024 budget to be revealed in mid-December Management has been focusing efforts on the Cascadura development and limiting investment elsewhere across the portfolio this year as the balance sheet has been tight, albeit no fund raise or additional debt is needed. This will change significantly in the coming months, with cash flow expected to jump sharply to ~US$4m per month at current Cascadura output (the first monthly gas payment will be received on 25 October), allowing management to consider increased activity across the portfolio in 2024. Specific details of the 2024 work programme and capex budget are to be announced in midDecember, but the near-term focus is expected to be on development opportunities that leverage Touchstone’s underutilised infrastructure: - Attempt to fill the current Cascadura facility capacity through optimising production from the existing two wells at ~12,000 boepd (net) vs the current 10,000 boepd (net). - Drill the next two development wells on Cascadura, Cas-2 and Cas-3 (US$5.6m net each), adding separator capacity to accommodate these wells as required. - Drill Coho-2 (US$4m net), the first of two additional development wells aiming to fill the Coho gas facility capacity of 24 mmcfd (4,000 boepd), employing a second rig. - Drill five commitment wells on legacy oil acreage, utilising a third rig. Exploration set to resume The Ortoire exploration programme is then expected to resume in 2025, if not sooner, focusing on prospects near existing Coho and Cascadura infrastructure. In total, 14 potential prospects have been identified. Early candidates for drilling include the 42 bcf Gibba prospect, a step-out exploration well that could be drilled from and tied back to Coho, and Kokanee, a Middle Miocene Herrera exploration target updip from the Chinook discovery.
PTII
The second phase of the highly successful Ortoire block exploration programme is expected to start in 2025, if not sooner, focusing initially on low-risk/high-value prospects near existing infrastructure.
With the Cascadura gas development up and running, Touchstone lifted the veil on the next phase of its evolution last week with an upbeat Capital Markets Day. Since its genesis in 2010, Touchstone has grown to become the largest producer onshore Trinidad, with net production at ~10,000 boepd following the start-up of Cascadura on the Ortoire block (TXP 80%). The two producing wells on Cascadura are performing in line with expectations, quickly hitting the initial target gross output of 60 mmcfd (10,000 boepd) following first gas earlier in September. Cas1ST1 is producing at 40 mmcfd from a 600ft perforated interval, while Cas-Deep is delivering less – 20 mmcfd – although this is from just a 200ft perforated interval within the 500ft deeper reservoir section, so higher rates should be possible in the future. In addition, Touchstone’s portfolio contains further significant organic growth potential. There is sufficient infrastructure in place across the portfolio to produce over 42,000 boepd (gross), most of it at Cascadura, which has gross design capacity of 200 mmcfd of gas and 5,000 bpd of liquids (38,333 boepd), plus Coho, which has gas capacity of 24 mmcfd (4,000 boepd). Essentially, all the infrastructure is already in place for management to deliver on its next milestone target of doubling net production to ~20,000 boepd. In anticipation of the start-up of Cascadura and the step change in cash flow this brings, management has been actively expanding its exploration acreage position this year, high grading its portfolio within the Herrera turbidite fairway. In January, Touchstone agreed an asset exchange, transferring its Fyzabad, San Francique and Barrackpore blocks in exchange for the Rio Claro and Balata East (plus deep horizons) blocks offsetting its Ortoire block. This was followed in June by the award of the Cipero block in the latest Trinidad competitive bid round. It has also entered into negotiations with the Trinidad and Tobago Ministry of Energy and Energy industries (MEEI) for the Charuma Block to the north of Cipero. These acreage additions are still to be finalised but offer the potential for Touchstone to lock up a large swathe of this prospective exploration play, providing drilling running room for years to come.
Gearing up for the next leg of growth Touchstone lifted the veil last week on the next phase of its evolution with an upbeat Capital Markets Day. The start-up of Cascadura has catapulted Touchstone to the largest onshore producer in Trinidad, with production of ~10,000 boepd. However, with 205 development drilling locations identified across the portfolio as well as 24 exploration locations on the Ortoire block alone, the portfolio contains significant further organic growth potential to exploit. Moreover, with most of the infrastructure already in place to produce over 33,000 boepd of net production, alongside the necessary drilling approvals, Touchstone’s next leg of growth should be smoother and deliver very strong returns. - Chasing 20,000 boepd. The start-up of Cascadura has gone smoothly, with the wells performing in line with expectations and boosting net production to ~10,000 boepd. Cash flow from this project over the coming months will allow management to start raising activity levels across the portfolio in pursuit of the next target milestone of 20,000 boepd. Near-term, the focus is expected to be on low-cost development opportunities that leverage Touchstone’s significantly underutilised infrastructure at Cascadura and Coho. Critically, environmental permits are already in place to drill up to eight additional wells on Cascadura and two on Coho to fill facility capacities, eliminating the risk of regulatory delays. As a result, the next leg of Touchstone’s growth should be swifter and lower risk, and come with significantly lower capital intensity. - Building blocks in place. All gas from the Ortoire block is sold under fixed price contract (paid monthly in US$) providing a steady, predictable cash flow stream. This gives management the space to consider the best use of additional funds, which could include more capex, dividends, buybacks, or acquisitions. Touchstone looks to be nicely teed up. The hard work has been done, with the building blocks in place (infrastructure, rig, drilling approvals, gas sales contract, significant new acreage) to deliver further strong growth in the coming years. Our risked NAV based price target of 87p/sh remains unchanged. However, we view this valuation as conservative as it consists almost entirely of producing assets, with very little value given to Touchstone’s considerable exploration prospectivity. - Exploration set to resume. In anticipation of the step change in cash flow Cascadura will bring, management has been expanding its exploration acreage, high grading its portfolio within the Herrera turbidite fairway. While still to be finalised, asset exchanges, licence awards and licence negotiations look set to secure Touchstone a dominant acreage position across this play and make it the largest onshore acreage holder in Trinidad.
TiL, don't forget Save have an objective of a further acquisition completed by end of year, and AK reiterated that at the last meeting, so whether we come back or not by December, we should hopefully have another one in the bag by then.
Been locked off grid most of the day. Understand the concerns but personally am chilled. Naira was a one off charge, so frustrating but no more than that. Most of the issues have been discussed and can see both sides. AK has a lot to lose if this doesn't work out and when choosing an investment the CEO is right up there as possibly the most important consideration. I'm pretty much in the Zengas camp in terms of views today, and certainly not worried long term about this investment. Back on Monday when I'll have WiFi again!
Possibly LST, though I would imagine most likely after publication of the admission document and the formal contract between the two. So maybe 60 days from tomorrow? Maybe why they are scrabbling round for a loan.
Interesting: 60 days from notice of acquisition
22.Assignment
(I) A contractor shall not directly or indirectly assign all or parts of the contractual rights and duties under a petroleum agreement to a third party, including an affiliate, without the prior written consent of the Ministry.
(2) The assignee shall fulfil all applicable requirements under the laws of the Republic and shall be a person with the requisite technical competence, sufficient experience, history of compliance and ethical conduct and financial capacity to adequately fulfil all obligations of the petroleum agreement and any other requirements stipulated by the Ministry.
(3) Any transfer of ownership interests in a contractor which directly or indirectly results in a change of ownership control in the contractor shall be subject to the prior written approval of the Ministry and notice of the transfer shall be announced in the Gazette and made available by any other appropriate means to inform interested persons. For the purpose of this Section, direct or indirect ownership of 50 per cent or more of the shares, or a majority voting power, shall be deemed to entail control in the contractor.
(4)Consent in accordance with subsections (1) and (3) of this Section shall not be unreasonably withheld.
23.Pre-emption
(1) Where a contractor decides to dispose of all or part of its interest under a petroleum agreement, the National Petroleum and Gas Corporation shall have the right of first option to acquire the interest on the same terms as agreed to with the potential buyer.
(2)If the agreed consideration is not a monetary value, the National Petroleum and Gas Corporation shall have the right to pay the corresponding monetary value of the agreed consideration.
(3)The National Petroleum and Gas Corporation's right of pre-emption shall lapse unless exercised within sixty (60) days after receiving notice of the acquisition.
Interesting, thanks TiL. I guess for us it's whether the govts. we are dealing with pay any credence to them and if not what is the recourse. For Chad it was the international arbitration, but not sure if that's applicable to SS?
Not lazy at all. it's a valid question. You had a year from the admission document for Chad to the point shares were suspended. More than enough time if you felt that it was mad to try and do a deal with them. Obviously you didn't then and are just acting with hindsight.
Porthmeor, assuming you are actually invested, you had more than enough notice that AK was hunting aquisitions in West Africa, and more than enough time to sell up if you didn't like the feel of the Chad aquisition, almost a full year in fact.
Thanks Zengas. The amounts received by Fenikso from LOGI each month so far have been in the order of $800,000. Save get 25% of this until the $16m debt is repaid so looks like we'll be getting about $2.5m a year for the next 6-7 years.