WTI $41.12 -33c, Brent $43.53 -27c, Diff -$2.41 +6c, NG $2.98 -5c 

Oil price

Further from the IEA report that I alluded to yesterday where they are now mega bearish with the blindfold still on and not taking into account significant demand growth in Asia or any vaccine success. The EIA inventory stats, delayed a day because of Veterans Day showed a build in crude of some 4.3m barrels but gasoline drew 2.3m and distillates 5.4m. Refinery cap was 74.5% and gasoline demand and production was up.

Touchstone Exploration

A particularly meaningless set of figures given that the ‘strategic focus on our Ortoire exploration program which has limited capital investment and reduced discretionary field maintenance expenditures’. This is because the company has invested some $5,758,000 in exploration activities, primarily focused on Chinook-1 drilling operations and surface facility equipment expenditures relating to Coho-1 tie-in operations.

Touchstone continued to focus on discretionary cost reductions, with operating costs on a per barrel basis decreasing by 10 percent and general and administrative expenses declining by 9 percent relative to the third quarter of 2019. The figures showed a net loss of $703,000 ($0.00 per share) compared to a net loss of $1,053,000 ($0.01 per share) in the third quarter of 2019 despite a 47 percent reduction in petroleum revenues between the corresponding periods.

After previous restructuring Touchstone was already on a better financial footing and ‘maintained financial flexibility, exiting the quarter with cash of $7,673,000’.  In addition to this the company raised gross proceeds of approximately $30.3 million via a private placement completed on November 12, 2020.

Paul R. Baay, President and Chief Executive Officer, commented:
 “The Board’s focus remains on our Ortoire property where exploration activities to date have significantly exceeded expectations. Our base crude oil production continues to cover our operating costs, allowing us to direct our capital exclusively to our ongoing exploration program. The oversubscribed private placement completed post period end places us in a strong position to continue the execution of our Ortoire drilling, production testing and tie-in operations. We are currently drilling our fourth exploration well, Cascadura Deep-1, and we are in the process of finalizing a nine-month extension to the exploration phase of the Ortoire licence. Alongside this, we continue to negotiate a natural gas sales agreement with the National Gas Company of Trinidad and Tobago. I look forward to updating our shareholders as operations progress.”

Touchstone has been amazingly successful at Ortoire, even more so than expected as CEO Paul Baay says above, and in a recent conversation with me he still expresses thoughts that the lockout of successes on the block is pretty rare in global exploration. Whatever happens with the ongoing programme the solid foundations have been laid for a truly massive programme which encapsulates an extended exploration phase as well as appraisal and of course development.

This time last year Touchstone shares were 11p, today they are north of 100p, and whilst a pause for breath may be expected and with investor demand sated by the 95p recent placing I still feel that longer term these shares are exceptional value.

IOG

I noticed yesterday that IOG COO Mark Hughes is retiring for health reasons after a 40+ year stint in the energy industry. I concur with the remarks below by CEO Andrew Hockey, when I met Mark in the old IOG offices he was indeed a shining light and has done much to bring the Core Project into reality. I wish him well in the future.

Andrew Hockey, CEO of IOG, commented:
“Since he joined IOG in April 2018, Mark has played a key role in its development, guiding the Phase 1 project through the first year of implementation since Final Investment Decision and delivering the Company’s first approved Field Development Plan. He has also been instrumental in recruiting and overseeing the experienced development and subsurface teams that are executing Phase 1 as well as planning future phases of growth.

Although Mark has resigned as a director and stepped down as COO with immediate effect, he has agreed to continue to be available in an advisory role as needed to ensure a smooth transition. The selection process for his successor has started and we expect to appoint a new COO in due course. We have an experienced team in place covering all the key disciplines and I have every confidence that they will continue to deliver Phase 1 as planned.

We wish Mark the very best in his future retirement and are extremely grateful for all his dedication and expertise over recent years, which have helped to lay the foundations for IOG to become a successful UK operator and material gas producer.”

KeyFacts Energy Industry Directory: Malcy's Blog