Touchstone Exploration Inc. [TXP-TSX, LSE] shares rallied Thursday February 6 in active trading after the company said it has confirmation of a significant liquid-rich natural gas discovery at an exploration well in the Republic of Trinidad & Tobago
Confirmation of the discovery comes after the company completed flowback testing of the first stage of the Cascadura-1ST1 well. It is located on the Ortoire exploration block, which the company sees as an exciting new opportunity for both Touchstone and the onshore oil and gas industry in Trinidad.
Touchstone shares advanced on the news rising 23% or 12 cents to 64 cents on active volume of 2.62 million. The shares are currently trading in a 52-week range of 18 cents and 52 cents.
Touchstone is a Calgary-based international upstream oil and gas company with operations in the Republic of Trinidad & Tobago. The company ranks among the largest independent onshore oil producers in Trinidad, generating 87,000 bbls/d of crude oil and 3.3 billion cubic feet of natural gas per day in 2018.
It currently has an 80% working interest in Cascadura-1 and is the project operator. The other 20% interest is held by Heritage Petroleum Co. Ltd., a Trinidad & Tobago state-owned oil and gas company.
Cascadura-1ST1 production testing began on February 4, 2020, with the first stage testing the lower most 162 feet of a total of 777 feet of identified pay in the Herrera formation.
The average flowback rate during the final 14-hour test period was 5,180 barrels of oil equivalent per day, including 27.1 million cubic feet per day (MMcf/d) of natural gas and 660 barrels per day (bbls/d) of natural gas liquids.
A total of 27.3 million cubic feet of gas (4,550 barrels of oil equivalent) and 630 barrels of natural gas liquids were produced during the testing period.
Field analysis indicated liquid-rich gas with no hydrogen sulfide and no produced water.
The well is expected to be shut-in for a two-week pressure build-up test, following which the company anticipates completing and testing an additional 450 feet of identified pay.
“The Cascadura production test results represent a dramatic change for Touchstone, as it confirms the monumental resource potential of the Ortoire exploration block following the earlier success of our Coho-1 well,” said Touchstone President and CEO Paul Baay.
“Furthermore, the test results are only attributable to the lower most portion of the well, and with 450 feet of contiguous sand to be tested, the full potential of the structure is yet to be defined,” he said.
To put these results in context, Touchstone’s average daily oil production for the quarter ended September 30, 2019 was 1,729 bbls/d.
The modelling from the final test results at Coho-1 supports initial gross production rates between 10 to 12 MMcf/d (approximately 1,667 to 2,000 boe/d), with Cascadura now set to provide a further step change.