Touchstone Exploration Inc (AIM:TXP, TSX:TXP, OTC:PBEGF), the petroleum and natural gas company, has left analysts at Shore Capital feeling confident following its latest drill update.
The group announced that its initial production test of the Royston-1X well highlighted the presence of light oil at non-commercial rates.
Yet, Shore Capital doesn’t appear to be overly concerned.
The financial organisation sees these findings as “very encouraging” and leaves them “optimistic about the outlook of Royston-1X”.
The London-based company pointed out that the results relate to the “deepest and least prospective zone” and that it hopes four more tests of the well can bring back “substantive” findings.
It reiterated that last month Touchstone encountered substantial sands in the targeted Herrera formation.
“Royston-1X is the deepest exploration well drilled by the company to date and was reported to have exceeded pre-drill expectations, encountering a total Herrera turbidite thickness of 1,664ft,” Shore Capital said.
According to Shore Capital’s estimates, it believes that the Royston drill could produce 500 barrels of oils per day once it is brought online.
It is targeting a mid-2023 date for Touchstone to begin drilling.
Shares in Touchstone are down around 5% on Monday, having opened at 56p.