Touchstone Exploration Q&A: Multi-billion dollar contract over the next 20 years (LON:TXP)

Touchstone Exploration Inc (LON:TXP) Chief Executive officer Paul Baay caught up with DirectorsTalk for an exclusive interview to discuss their new natural gas contract, a stable revenue stream, progress at Chinook & Cascadura and what investors should be looking out for in the coming months.

Q1: Paul, Touchstone Exploration announced an important milestone this morning, can you just talk us through the key points?

A1: I think the key thing is that it’s a natural gas contract for us in Trinidad and really what it is that it sets up to have a natural gas company to buy all and any of the gas that we produce in Ortoire block over the next 20/25 years, over the term of the licence.

The gas is going to dedicated to the petrochemical business on the island which gives us a really high load factor and world price with gas so it’s the final piece of the puzzle that monetises the asset for us.

Q2: What does it mean for the company now that you have this stable revenue stream?

A2: What it allows us to do now is we go from being an exploration company to being one that’s both development and exploration and really a full cycle energy producer now. We’re going to be generating a great deal of revenue starting at the end of the year and in 2021 when all the gas comes onto production.

We’ll obviously be self-funding and have to look at some other alternatives, down the road we’ll even be considering the dividend model which we talked about 3 years ago when we were public in London.

Q3: You also provided an operational update, can you talk us through what will be happening at Chinook and Cascadura?

A3: We actually moved the service rig in today to the Chinook location where we’ll start the first of what is probably two, maybe three tests depending on how the first one goes. In conjunction with that, we’ll go to the Cascadura deep well where we’ve got three tests lined up there.

So, over the next 6-8 weeks, we’ll be testing both of those wells and we’ll figure out what the final volumes are coming out of them so that we can tie them all in with the original Cascadura well and design everything we need to bring those on stream in the Fall of 2021.

Q4: Is there anything else that investors should be looking forward to from Touchstone Exploration over the coming months?

A4: No, I think the tests are key and I think the other thing is we are going to drill the Royston well which is the biggest target that we’ve had so far in the second quarter of next year.

I think the real key out of this announcement today is that this is probably, over the next 20 years, going to be a multi-billion dollar contract for us in revenue so it really does change the complexion and the ability for us to move forward on a very measured and exciting basis.

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