Member Info for Scott22

That is pretty obvious but also makes the next six weeks very exciting. What we have is a massive discovery confirmed by mud logs and wire line (all that is needed to announce a discovery). When I say massive I mean 400 feet of pay unbounded to deep and in a massive structure 7.8 by 1.8 km defined by very recent high quality seismic. We also have a couple of cautionary words in Shipka’s remarks about porosity below Cascadura and fine grains of sand. There is also the discrepancy between Chinook discovery announcement and actual versus anticipated test results hanging over our heads.

To battle that there are also a lot of optimistic statements about porosity similar to other producing off set wells (only central block meets that description) and upbeat remarks from Paul and upbeat tone from XM and congratulatory messages from Heritage and from Department of Energy and a lot of good press.

What we don’t have is proof that the discovery will be commercial or any preliminary reserves or any idea of what this discovery well can be produced at. That all takes flow tests and pressure build up tests and some more stuff that will be done by testing rig and crew about to move onto site. The first and most important part of those results will come first week of November, a very short horizon for more definitive information.

I cannot remember having a discovery like this confirmed in a geology that is rapidly becoming more understood - and yet having this huge range of possible outcomes. I would say there are 4 possible outcomes each of which will affect the TXP share price dramatically differently. Off course I can’t know for sure but I will give it a try.

A. Won’t flow, non-commercial. Price drops by 50%, then gradually come back to current level or above as Cascadura begins to show its power.
B. Flow is not great but commercial for sure. Looks like there will be reserves of maybe 500 BCF when all said and done. Share price doubles by end of year and slowly moves up next year.
C. Flow rates very good (like central block) and potential is for 1TCF reserves. Share price double immediately and double again by end of year with more to come in 2022.
D. Really amazing initial results with more positives from extended tests and prospect that a few development wells might might possibly give hints that total reserves might be even higher, maybe even 1.5 TCF. Off that a 5-10 bagger from here might be very possible.

Anyway these next 6 weeks are very exciting, this is where you want to be if you are investing in high risk, high reward situations. (And of course there are many other pieces to the TXP story!).

As I have nderstand it Heritage already has a deal with us on that front. They have 20% interest Ortoire. They pay nothing on commitment to drill first 5 exploratory wells, do the amended seismic program. After that (like starting now) they should be paying their fair 20% on all capex, including the next three exploration wells and all development wells. That will of course shorten time to payoff and also increase return on investment on every well.

Heritage was carried on the first five well exploration program on Ortoire Block. But from here on the have to pay 20% of all drilling and other costs on new exploration and also development wells. That will be a nice capital contribution once TXP starts punching out wells a little faster. Only fair as they get 20% of the proceeds. (Wells on most of the legacy blocks are 100% TXP for cost and also for proceeds.)

They used to give highlights about this until the found bigger fish (Coho will produce more BOED than all the other wells in the company, and it is tiny compared to Cascadura).

In general anything over 100 bopd is very good for the wells.

This report (pre-Ortoire) will give you an idea.

https://www.lse.co.uk/rns/TXP/operational-and-drilling-update-iv0verbqz25bz1a.html

Have they reported anything about the WD-4 well. That should be done.

Sorry I got the order wrong. I would like rob know when theyplan to get to the Coora block and if they will do the deep test at the same time they are drilling the shallow production well?

Starting strong and coming off a boffo end to September.

TXP will have to decide whether to test the two sheets separately. The results will come in November but the process starts this month. They will use same testing service and same testing crew - best on the island.

Other possibilities this month include Coho hook-up and some kind of up date about the first shallow well on the legacy WD-8 block by the new canadian rig. (that shoul dbe (should have been?) a short drill. And an update on the Coho development well. Paul said it was "scheduled". But he did not say when it was scheduled. "Scheduled"means on the calendar with a specific date. I hope they give us a target spud date.

Some kind of update of where they are on the Cascadura development plan would nice but likely too soon for that. Maybe December. And an update on the Coho development well - Paul said it was "scheduled". But did not say when it was scheduled. "Scheduled"means on the calendar with a specific date.

I have had my US $3-5 end of 2021 and US $5-10 end of 2022 targets inplace since 2019.

I had moved the date back 6 months without otherwise changing the numbers. But I will stick with my original target for this exercise.

223 pence (or $3 US)

All depends on the Royston test results. EOY share price may be under 223 pence by a lot, or may be way over that. By a lot.

What has been holding us back are comments about porosity and small grains of sand and worry about whether Royston will produce. It is a massive discovery. ( 7.8 by 1.2 km and 400 plus feet of pay (unbounded at 10,700 total depth). I have seen estimates from zero (won't produce at all though that seems very unlikely) to 2 TCF. You have to admit that is a pretty wide spread!!! Once there is clarity on flow tests and pressure recovery tests then the range will narrow a lot though still will need development wells to totally nail it.

popping a few corks sounds fine. Let's plan on that the day the Royston test results are released.

I think we have a window for sale price on shares until the test results are released and prove commerciality with good flow rates. The market is not accepting this well as something discovered, FinnCap seems to think it has 50% chance of being a commercial well.

IN contrast I think TXP has a firm grasp on Hererra turbidite reservoirs especially XM but I also realize they are continuing to learn from each well. They are only 5 wells into this first exploration program.

I think they were fooled at chinook because at Cascadura 1-ST and at Cascadura Deep they had gas kick back to surface under high pressure and had they difficulty controlling the wells and you how they tested (even at Cascadura Deep with some formation injury).

Because of that gas under presssure at Cascadura they used heavier mud at Chinook to control the well, and even then they had to flare some gas during drilling so there was flow of gas to surface. I think they were pretty surprised to find water with trace of light oil and that was why they studied the well for such a long time. The up dip well will be interesting but there is no reason to do that right away.

We don't have all the details at Royston but there was enough to declare a hydrocarbon discovery with a pay zone of 400 feet open to the bottom. They anticipate it is gas. They don't know how it will flow but they likely have ideas about that. Meanwhile Shipka felt compelled to throw in that sentence about porosity less than cascadura but similar to other offset wells which must mean central block. (an off set well has to be a well with production, can't be a well log).

Makes you appreciate how great Cascadura is - that is worth more than all of the market cap by double or more. And I believe Royston will add to that. I cannot believe that FinnCap says Royston is 50% chance AFTER the discovery. I think 50% would have been too low even before they started to drill this well. As I have stated I am going to continue to buy until US $2. That window may close with the test results.

If the well does not produce the shares will take another shock. (though I think that is unlikely). In that case I am sure I will pause my buying, take a deep breath, see where it settles, repeat my due diligence in great depth - and then depending on all that resume my buying. That is my plan. We are early in the story. There are lots of chapters ahead. Cascadura is worth twice current market cap.

Don't you think part of the problem is their financial reporting. They do a semi-annual operations update but the only real financial reporting is the annual report which includes prior year through June 30. Last year (fiscal year 2020) that was released on November 9 2020 so the 2021 report should be coming in a month. It is a complex business for sure but I wish they would come up with a set of very basic metrics that they could report quarterly in a concise way with the same format quarter after quarter after quarter. Good companies tend to have financial reporting that is timely, transparent and predictable. Lat years annual report had independent auditor's report (Saffrey Champness) on pages 37-46 and then a discussion of accounting polices that went from page 52-66. I actually read those parts (I always do) but I could not pass a test on that material. I really think a quarter report that is a couple of standard tables on about 4 pages with supplemental material if needed. Do this on a set day, maybe Thursday of the first week of May, August, November, and February. Let me amend my list of attributes of good financial reporting to timely, transparent, predictable, concise, helpful.

Don't worry about renegotiating the price. The profit depends on the cost to produce as well as the price it is sold at.

In Permian and Montney the cost to produce natural gas has come way down and in very best cases it is approaching $1.50 per MCF . Ten years ago it was $2.50 or higher. With inflationary pressures I think it may sneak back up toward $2 despite ongoing attempts to become ever more efficient. (there is limit to that). And the Permian and Montney producers have to pay for midstream services to build out infrastructure and to collect the gas. And there is a cost to the big pipeline companies as well, for moving the gas.

Cost of few development wells into Cascadura is VERY low compared to a constant stream of horizontal wells with fracking - just to tread water and keep production flat. Plus NGC pays for everything to the well head.

Profitability on $2.50 gas at wellhead at Cascadura is greater than $5 gas in Montney. And while western canada price may spike further, there is no guarantee that natural gas price will stay above $5 long term. It was even trading negative for a while last year. And now when prices are very high, a lot of producers are not getting it because they hedged at much lower prices after coming out of a period of shockingly low prices. So now they probably won't want to replace hedges, so they will possibly be caught in next down cycle.

My point if it is not obvious - nothing wrong about being a very low cost producer and having guaranteed price that assures huge profit margin. Nothing to worry about or complain about.

With TXP the operating costs are .05 per MCF

Agree that there is a little PTSD after Chinook because they got out a little ahead of their skis. However this has been a smashingly successful 5 well exploration program.

And the story at Chinook is not over. One up dip well (1200 feet up dip) may change that narrative. And why not have some light oil to go with our natural gas. Plus the shallow 30 foot Cruse is charged with gas and extends over a huge area. They will probably work on how to produce the Cruse some day, maybe even bidirectional horizontal wells, but why would you do that when Cascadura is proven and is just is sitting there waiting for straightforward vertical development wells that will each produce over 20 mmcf/day. And Chinook is the "worst" of the five wells, though it could jump to near the top pretty easily.

Druid, assuming for the moment that the Herrera pay is natural gas, there is no kind of calculation that can take a structure 7.8 by 1.8 km with 400 feet of gas in two sheets and still open at bottom of pipe and get a number that is less than a TCF. Simply not possible. I have similar disclaimers (natural part of investing in small explores with wild ideas and little money) but I share the excitement about Royston. And here the wild idea (gas in turbidite sands on shore in Trinidad) has already been proven and cash from those proofs (Coho and especially Cascadura) is going to take care of the not enough money part.

NGC should be keen to get this $2.50 gas flowing because it means electricity at good prices for the country, more jobs and more exports if petrochemical plants can profitably operate, more jobs and more exports if LNG trains can operate. Also overall improvement the in Trinidad economy as TXP has money to run two rigs continuously and also build facilities providing good jobs and further ramping oil and gas production. Plus there are local shareholders in and outside and of the company who will build wealth. And lastly I am eventually going to go to trinidad to meet Xavier (anyone else want to come?) which will help the tourism industry also suffering greatly during pandemic. And NGC will make lots of money too even if contracts are fixed, because volume will be ramping. And they will need workers to build the pipeline connects to east he well heads. How could they be more motivated? How could they be more keen?

Embarrassing? The natural gas hookup is 3 km away. In the Montney or the Permian the hook-up would have been in a week.

But let's get on with it. They should not do any more drilling beyond the 4 well commitment on the legacy blocks until Coho and Cascadura 1-ST and Casdcadura Deep are all hooked up to pipe. Then start one rig to drill Coho-2 and the 4-6 Cascadura development wells. At that point Royston (if the testing next month is good) may be ready to start development wells and then a second rig can go after the next three exploration wells - let's start with Kraken - too much fun to peek down there. . Let's not spend money we don't have. Why bother. Once we get going there will be plenty of money to fund two rigs and tho rigs should be able to drill a lot of wells per year.

Cascadura is awesome compared to central block but that has not yet been fully appreciated. Shipka could have chosen his words more carefully.

“Porosity was similar to prolific Central Block wells and serves to highlight truly amazing Cascadura discovery where porosity is even better. “

Or something like that..

No I have over 60,000 shares and I am still buying. But I only had 3000 for the first 6 years until I felt that Coho and Casca 1-ST validated the turbidite sands on-shore in Trinidad model and maybe changed the old adage that Trinidad was where geologists go to die. I think Xavier Moonan has also been very determined to prove that wrong. I think he has contributed a lot to the whole country, as an important educator (he is curious, enthusiastic, and inspirational) as well as a contributor to resurgence of oil and gas sector which is so very important to the economy. Paul has been important too - he is a solid leader.

Just following closely every word from Paul Baay and from XM. This is all very public. In fact they have even labelled chinook an oil discovery and they have planned two up dip wells and marked them on their most recent corporate presentation.

The new pad will be slightly to the east and north of the current pad. I have no idea how far apart they will be. Maybe they can even drill the second well from the same pad with directional drilling. I don't think so but maybe. It is not a big field.