International investment in the energy sector hinges on a competitive tax framework. Touchstone Exploration’s president and CEO, Paul Baay, highlighted this crucial factor during the Energy Conference at the Hyatt Regency. With energy companies facing tax rates of up to 60%, compared to a maximum of 35% for other commercial sectors, there is an urgent need to reassess these levies to encourage exploration and long-term investment. Baay emphasised that revising the supplemental petroleum tax on oil would be a straightforward solution to attract international capital.
Baay also addressed Trinidad and Tobago’s bureaucratic landscape, noting significant improvements over the past two years. He observed that regulatory processes have been streamlined, reflecting a genuine commitment to facilitating business operations. However, he urged policymakers to consider a broader approach—accepting a smaller share of a much larger industry rather than maintaining a high stake in a declining one. He remained optimistic about the country’s energy future, citing upcoming large-scale projects, including the Manatee Project, which will contribute to production growth in the coming years.
Looking ahead to 2025, Touchstone Exploration anticipates a strong year with multiple drilling projects aimed at expanding its gas production. A major milestone for the company was the December 2024 agreement to acquire Shell Trinidad’s Central Block Ltd (STCBL) for US$23 million. Pending regulatory approval, this acquisition will integrate an additional gas facility into Touchstone’s operations, connecting them to both petrochemical plants and the LNG market. Once finalised, this move will solidify Touchstone’s position as the largest onshore gas producer in Trinidad and Tobago. The Central Block currently generates 18 million cubic feet per day (MMcf/d) of natural gas and 200 barrels per day of natural gas liquids, with Heritage Petroleum Company Ltd holding the remaining 35% interest.
Baay explained that this acquisition aligns with Touchstone’s long-term strategy. Shell’s primary focus remains offshore, leaving the Central Block underutilised. For a smaller player like Touchstone, this presents a prime opportunity to leverage the site’s potential and enhance production efficiency. The facility’s unique capability of extracting natural gas liquids before sending gas to the market adds further value to the acquisition.
On the topic of acquisitions, Baay addressed Touchstone’s unsuccessful bid for Trinity Exploration and Production, which was ultimately secured by Lease Operators Limited. The competing offer valued Trinity at approximately US$34.18 million, exceeding Touchstone’s assessment of the company’s worth. Despite this, Baay remained pragmatic, stating that their valuation discipline was key in determining the bid’s feasibility.
Touchstone’s financial outlook for 2024 is set for significant growth. However, the company is recalibrating its capital allocation due to a 23% production decline at its Cascadura facility in the Rio Claro field. This drop, driven by natural production declines, was anticipated. As a result, the company is fine-tuning its investment strategy to optimise efficiency. Despite this short-term adjustment, Cascadura remains a world-class asset, and the company continues to explore opportunities for increased production through its newly acquired Shell facility. With ownership of the infrastructure, Touchstone gains greater flexibility to enhance output at sites such as Coho, where previous capacity constraints had limited production.
With strategic acquisitions and a positive investment outlook, Touchstone Exploration is poised for sustained growth. The company remains committed to unlocking the full potential of its assets while advocating for tax reforms that will benefit the broader energy sector.
Touchstone Exploration Inc (LON:TXP) is a Canadian-based, international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. Primera Oil and Gas is the Trinidadian subsidiary of Touchstone.
