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Touchstone Exploration shares rise as house broker highlights Trinidad switch trades

“We reckon that considerable running room remains for Touchstone’s shares," said Shore Capital analyst Craig Howie.
oil and gas operations
Touchstone shares were up just under 10%

AIM market newbie Touchstone Exploration Inc (LON:TXP, CVE:TXP) continues to strengthen amid a broader re-rating of Trinidad focussed oil and gas stocks.

It had been a tough time for oil firms generally - and certain Trinidad-based oilers have had their own specific problems - though in recent weeks there has been something of a resurgence.

READ: Touchstone Exploration a 'stand-out operator' suggests broker Shore

Better crude prices, driven higher by hurricane disruption, was a factor, whilst a new tax regime has also boosted investor sentiment towards the Trinidad sector.

Touchstone shares were up just under 10%, changing hands at 12.32p on Thursday, marking a rise of some 40% in the past month.

Elsewhere, refinanced Trinity Exploration & Production PLC (LON:TRIN) and rebooted Columbus Energy Resources PLC (LON:CERP) are up some 55% and 135% respectively over the past three months.

READ: Trinity Exploration & Production offers exposure to a high margin cash generative story – broker

That said, Shore Capital analyst Craig Howie in a note highlighted that investors are favouring Touchstone noting evidence of ‘switching into Touchstone from other Trinidad names’.

“We reckon that considerable running room remains for Touchstone’s shares, which continue to trade at a meaningful discount to the comparable companies and transactions we have identified.

“Accordingly, we remain of the view that Touchstone has emerged as one of the most interesting relative value plays in our small cap E&P coverage universe.

“Given the share price exuberance surrounding Schroders’ recent investment in Columbus, we also highlight the institutional support that Touchstone itself enjoys (from names like City Financial and Norwegian fund North Energy Capital), along with the effective execution of its production-led strategy and our recently-upgraded FY2018 forecasts.”

Shore Cap, Touchstone’s house broker, values the company at 29p per share which, according to Howie, is “undemanding versus peers and much more consistent with typical valuations.”

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