RE: FinnCap new note27 Sep 2021 10:17
“Another impressive drilling result from Touchstone, with its fifth and final well in this first phase of its Ortoire block drilling programme, Royston-1, encountering a substantial hydrocarbon accumulation. Royston-1 is the deepest well drilled by Touchstone to date on the block, reaching 10,700 ft total depth (TD). It was designed to penetrate the Herrera section that was observed but not tested in the offsetting OL-4 well drilled by Shell Trinidad Limited in 1965.
The well encountered over 600 ft net of Herrera turbidite sands in two stacked thrust sheets. In addition, ~30 ft of hydrocarbon pay was detected in both the shallow Lower Cruse Formation, and the Karamat Gr7a sands.
Mud logging and wireline logs indicate hydrocarbon accumulations in all three of the Lower Cruse, Karamat and Herrera sections of the well. In aggregate, 393 gross ft of hydrocarbon pay was identified from 9,700 ft down to TD, almost double the pre-drill expectation.
The discovery is thought to be natural gas and the well is being prepared for production testing of the Herrera formation in late October using the same equipment that verified the Cascadura gas discovery. Royston is thought to be the largest structure identified on the block, covering an aerial extent of ~13 sq.km.
The porosity measured at Royston-1 is lower than that encountered at Cascadura, but similar to other offsetting producing wells – Shell’s Carapal Ridge-1 discovery in 2000 produced 20 mmcfd of gas and 500 bpd of condensate on an extended well test. The adjacent Baraka-1 discovery flowed 22 mmcfd of gas and 660 bpd of condensate in 2003.
Valuation Pre-drill,
we valued Royston at 28p/sh within our 151p risked-NAV. This assumed a 430 bcf prospect and a 50% geological chance of success (GCoS). We have left the Royston resource size unchanged; however, given the lower porosity relative to Cascadura, we are increasing our assumption for the number of wells required to drain the accumulation from 5 to 10. Alongside an increase in our GCoS from 50% to 75%, this raises our risked valuation of Royston to 40p/sh and Touchstone’s risked-NAV and our price target to 161p/sh. “
Difficult to copy it all..
Trek
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