Touchstone Exploration is repositioning its Trinidad assets with a sharpened focus on oil development and infrastructure growth, revealing a strategic evolution that investors will want to watch closely.
Touchstone Exploration’s latest reserves report signals a calculated pivot in its Trinidad operations, spotlighting crude oil development as the company adapts its resource strategy for long-term value. While overall reserve estimates dipped slightly, the shift reflects a more refined methodology and a future-focused operational plan.
An independent reserves evaluation by GLJ Ltd placed Touchstone’s total proved plus probable (2P) reserves at approximately US$671 million in pre-tax future net revenue—an eight per cent reduction year-on-year. This decline was driven primarily by technical adjustments at the Cascadura field and a shift from volumetric to material balance reserve assessment methods. President and CEO Paul Baay explained that the new approach aligns more closely with actual production trends, offering a more accurate projection of asset performance.
Proved reserves were revised down by 14 per cent to 29,070 Mboe, and 2P reserves dropped by 26 per cent to 50,063 Mboe. However, crude oil reserves posted an increase, bolstered by promising developments at the Cascadura-3ST1 well and successful drilling activities across the WD-4, WD-8 and CO-1 blocks. This gain underscores Touchstone’s strategic reweighting towards oil assets, even as it continues to stabilise gas production.
Touchstone retained solid reserve life indices of 8.7 years for proved reserves and 12.9 years for 2P reserves. The company remains committed to growth, with upcoming drilling in the Rio Claro block presenting new oil development opportunities. Infrastructure advancements in 2024, including the completion of the Cascadura C pipeline and facility expansion, have enhanced processing capacity and production reliability.
The fourth quarter of 2024 saw robust production results, with 5,287 boe/d, contributing to an annual average of 5,734 boe/d. Key contributors included the Cascadura-2ST1 and 3ST1 wells, both successfully brought into production. The company also advanced oil development through the drilling of CO-374 and CO-375 in the CO-1 block.
Operational hurdles such as the brief 13-day pause at Cascadura-3ST1 and the suspension of Cascadura-4 drilling due to a mud pump failure have been managed effectively. A replacement pump is expected in Trinidad by mid-March, allowing drilling to resume without significant delays.
Despite revised figures, Touchstone’s asset base remains resilient. Its 1P net present value discounted at 10 per cent (NPV10) now stands at US$354.4 million—a modest five per cent drop—while 2P NPV10 declined by eight per cent to US$671 million. These figures exclude the strategic acquisition of Shell Trinidad Central Block Ltd, which provides direct access to the liquefied natural gas (LNG) market. A separate reserves evaluation for this acquisition is pending and expected to enhance the company’s long-term outlook.
With forecasted capital expenditures of US$124 million for 1P reserves and US$203 million for 2P reserves, Touchstone remains committed to enhancing productivity and unlocking new value. Its developed producing reserves were reported at 6,836 Mboe, with an additional 1,232 Mboe in developed non-producing reserves.
Baay emphasised the strength of the company’s current infrastructure, noting that the transition from exploration-led operations to production-focused growth is well underway. Touchstone’s after-tax NPV10 for proved reserves stands at US$178.8 million, down just seven per cent, while the 2P after-tax NPV10 of US$308.5 million reflects a ten per cent decrease.
Looking ahead, the company will continue to focus on oil production expansion, infrastructure optimisation and unlocking further opportunities across its extensive asset base. Touchstone’s strategic emphasis on oil and infrastructure development positions it for resilient growth and increased investor confidence.
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.
