Touchstone Exploration (AIM:TXP) unveiled to investors this morning that it has spudded the Chinook-1 exploration well its latest exploration test in the Ortoire block in Trinidad.
The Chinook-1 well is targeting hydrocarbon prospects in the Herrera formation, the same geologic horizon that was targeted in the firm’s successful Coho and Cascadura discoveries.
Touchstone said the exploration well is expected to be drilled to a total measured depth of 9,880 feet, with drilling operations anticipated to take approximately 40 days and is the third of four earning exploration wells under its Ortoire Exploration and Production Licence.
Paul R. Baay, President and CEO of Touchstone said the spudding marks the next phase of the program that has already delivered two successful natural gas wells in just over a year.
He said, “The Chinook well is being drilled in proximity to the original 1959 well and will further evaluate the turbidite concept eastward from the original Coho discovery.
With the assistance of a 3D seismic survey, we are now expecting to move up structure to target the Herrera sands.
In addition to the initial work undertaken at Chinook, we have made progress across the Ortoire block, commissioning the previously announced Cascadura area independent reserves evaluation as well as commencing the Coho-1 tie-in project.”
Shares in Touchstone have increased over the past three months from 38.75p in June and were trading 0.67% lower this morning at 75p following the announcement.
Meanwhile, the group announced that it is also progressing with the tie-in of its Coho-1 natural gas well, with facilities construction and pipeline preparation underway.
The group also released results for its second quarter confirming average daily crude oil production of 1,396 barrels per day, compared to 1,589 barrels per day in the first quarter of 2020 and 1,768 barrels in the second quarter of 2019.
It also generated an operating netback of $10.73 per barrel despite realised price reductions of 36% and 51% from the prior quarter and the second quarter of 2019, respectively.
The company reported that meaningful cost reductions were achieved, with operating costs down 28% while it slashed its net losses to $2.74m from $9.24m in the previous quarter.
Touchstone said it has enhanced its financial flexibility and reduced the overall cost of borrowing by refinancing long-term debt, withdrawing $15m of a new $20m facility to repay a former C$20m term loan.
It also highlighted to investors that it remains financially flexible despite a weak commodity price backdrop and exited the quarter with $6.89m cash and net debt of $8.4m.
“I am happy to report that the Company finished the period with a healthy cash position with increased financial flexibility through the new term loan, a position that has been further buoyed by monetizing our Trinidad government issued bonds in July,” added Baay.
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