Touchstone Exploration Inc (LON:TXP, TSE:TXP) said gas flow rates from its latest Trinidad onshore well “greatly exceeded” expectations.
In the update, chief operating officer James Shipka said Coho-1 would “materially contribute to our near-term growth”.
The absolute flow rate of the well, which is on the Ortoire exploration block, was 46mln cubic feet a day, or the equivalent of 7,671 barrels of oil.
However, after modelling Coho-1, Touchstone expects the initial production rates to be in the order of 10-12mln standard cubic feet a day – 1,667-2,000 barrels of oil equivalent.
The gas itself is described as “pure, sweet [and] dry”, containing almost 99% methane and no hydrogen sulphide.
“With production testing and analysis completed and verified independently, the company has a clear indication of the potential of Coho-1 and is moving forward to bring the well on stream in the first half of 2020," added COO Shipka.
Scope for valuation upgrade?
The shares, up almost 60% in the past month, rose almost 5% Thursday to 22p. Broker Shore Capital has a “risked” net asset value of 35p.
“With strong deliverability from the company’s maiden Ortoire well confirmed and the Cascadura oil well having also significantly exceeded pre-drill expectations, we now anticipate a meaningful upgrade to this figure,” said Shore analyst Craig Howie
The Coho-1 well is one of the smallest prospects of the Ortoire exploration programme, which bodes well when it undertakes future discovery work.
Touchstone has production assets across 10 licence blocks in Trinidad, including 208 well locations over some 7,910 acres.
Across its portfolio, the company also has areas with exploration upside, through which it has earmarked potential growth projects.