Touchstone Exploration (LON:TXP) Chief Executive Officer Paul Baay caught up with DirectorsTalk for an exclusive interview to discuss the significant oil discovery at Cascadura, confidence in the remaining two wells and what investors should look out for in 2020.
Q1: We saw earlier an exciting announcement made to the market with regards to your well at Cascadura. What does this announcement mean for Touchstone Exploration in terms of potential production and growth?
A1: I think what it really does is, it’s transformational, it’s a step change for us.
I think from a production point of view, we’ve always thought that these kind of wells bring on 400-500 barrels a day, having said that, this zone ended up being 4 or 5 times thicker than we thought it was going to be.
So, we still have to wait and see but we’re really encouraged with what we see.
Q2: What are the next steps then in terms of further testing and potential production?
A2: So, the next step will be, we’ll complete the well in January but we going to have to start from the bottom up, the zone is too big to complete it all at once so we’ll prioritise it. We’ll start off with the lower 170 feet and then we’ll move up through January and February to test it and flow it to tanks and we’ll see what happens after that.
Q3: Do these results at Coho and Cascadura, both ahead of expectations, give you significant confidence for the remaining two wells in the programme?
A3: Yes, I think it’s de-risked the play a little bit but having said, they are all exploration wells and as we move down through the programme, they get less defined. So, certainly, I think this really encourages the geological model and we just want to not get ahead of ourselves here with the next two wells.
Q4: In terms of investors, what are the major landmarks that they should be looking out for from Touchstone Exploration in 2020?
A4: Well, I think the first one will be obviously the testing and seeing what kind of flow rates we get, this is obviously an oil zone so it’s going to give us a bunch of follow-up locations and really sets the programme for really 2020/2021/2022 so that’s going to be the first landmark on this well.
We will drill the other two exploratory wells in Q2 and Q3 and quite frankly, they look as interesting if not bigger from a target point of view than what we had originally thought Cascadura was going to be.
So, a couple more exploratory wells and then hopefully we get a development programme kicked off in 2020 as well.