New FinnCap note TP 137p3 Aug 2022 22:55
Touchstone is preparing for the start of pre-commissioning and commissioning operations for the Coho (TXP 80%) gas facility and pipeline on the Ortoire block, onshore Trinidad. Once the system is commissioned, the Coho-1 well is expected to ramp up to gross production of 10 mmcfd (8 mmcfd, 1,333 boepd net), doubling Touchstone’s output. This news should be well received by the market as the project has been delayed by over a year due to the pandemic, which has weighed on the share price. It represents the onset of a major growth phase for Touchstone as it brings onstream its Ortoire block gas discoveries – Coho is expected to be followed by the larger Cascadura facility once final environmental approvals for this project are received, which should boost net output to more than 10,000 boepd, over 8x current production. On top of this, Royston still has long-term oil development potential, while Phase 2 of Touchstone’s highly successful Ortoire exploration programme is still to come.
Coho first gas in sight. Touchstone has submitted a notice to residents surrounding the Coho gas facility and pipeline that pre-commissioning and commissioning operations are to commence. This notification is required a minimum of five business days before operations begin. The precommissioning consists of testing all electronics, alarms and operating systems in the facility, testing of the flare and emergency shutdown systems, as well as nitrogen purging of the system. This will be followed by commissioning, with gas from the Coho-1 well gradually introduced into the facility and pipeline. This should keep Coho on track for the latest guidance of reaching full production in August.
- Cascadura awaiting environmental approval. Touchstone is still awaiting the approval of the
Cascadura Environmental Impact Assessment (EIA) application before development operations can begin. The EIA application was initially submitted last December, and two EIA Review and Assessment Reports (RAR) have been received from Trinidad’s Environmental Management Authority (EMA). Management continues to engage with the EMA to address the outstanding issues. Once approvals are received, construction of the surface facility, access roads, liquids pipeline and future development drilling locations can proceed. We currently assume a Q4 startup date for the Cascadura facility, although this will ultimately be determined by the timing of the EIA approval. Initial gross production of 11,500 boepd (9,200 boepd net) is expected from the Cascadura-1ST1 and Cascadura Deep-1 wells.
Under starter’s orders. Touchstone shares have struggled in recent months due to development delays at Coho and Cascadura, plus a relative lack of leverage to higher international oil and gas prices. However, what Touchstone lacks in oil and gas price leverage it more than makes up for with its growth trajectory, with the start-up of Coho representing the onset of a transformational multi-year growth plus explorat
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