Morning Flow - Touchstone Exploration and more...

Market Update: Monday 15 June 2020  Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd President Energy (AIM:PPC): Drilling to commence in Paraguay PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field


Oil & Gas Daily Flow

Non-Independent Research; Marketing & Sales Commentary - MiFID II exempt information – see disclaimer below


Market Update: Monday 15 June 2020 

Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd

President Energy (AIM:PPC): Drilling to commence in Paraguay

PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field

Energy Prices         

Brent Oil US$38.0/bbl vs US$37.9/bbl on Friday

WTI Oil US$35.1/bbl vs US$35.7bbl on Friday

Natural Gas US$1.72/mmbtu vs US$1.79/mmbtu on Friday


Oil Price News

Brent and WTI oil futures finished lower on Friday after hitting a multi-month high earlier in the week

In the futures market August WTI settled at US$36.51, down US$3.29 or -8.27% and August Brent finished at US$38.73, down US$3.57 or -9.22%

Prices initially held up on the back of the OPEC+ agreement to extend its output cuts

However, throughout the week, the market started to question demand, dampening the potentially bullish impact of the supply cut extension

Among the major concerns were a gloomy outlook for the US economy by the Federal Reserve, worries over a surge in new COVID-19 cases and rising US supply

Concerns over future demand increased after the Fed said that it expected unemployment in the US to be c.9.3% at the end of 2020 and that it would ‘take years to fall back’

Interest rates are expected to stay near zero at least through next year


Gas Price News

Natural gas prices remain weak as weather patterns have shifted modestly cooler for this week

At the same time, LNG volumes have slipped, and the latest storage injection pointed to a long slog, dependent in part on consistent heat over the summer, to bring supply and demand into balance

As the week ended, daily balance data shifted weaker, with production marginally higher to end the week, and LNG volumes dipping back under 4.0Bcf level


Company News

Touchstone Exploration (AIM:TXP): Cascadura-1ST1testing suggest flow rates of up to 9,700boepd

Share price: 50p, Market Cap: £92m

Touchstone has announced the final production test results from the Cascadura-1ST1 well on the Ortoire exploration block.

The final test results comprise both the lower test (6,056 to 6,218ft) and the upper test (5,570 to 5,915 ft).  

The upper test suggests an Absolute Open Flow (AOF) natural gas rate of 390MMcf/d at the sandface.

In addition, the final 24-hour extended flow test rate, limited by capacity of surface test equipment, averaged 5,472boepd, 86% natural gas, at a final sandface drawdown of 4%.

Pressure data suggests that the well was still cleaning up at the end of the extended test period.

The Condensate Gas Ratio ("CGR") was 28bbls/MMcf of 55° API condensate produced during the extended flow test.

On the lower test, low and buildup test results suggest an AOF natural gas rate of 92MMcf/d at the sandface.

The final 24-hour extended flow test rate, limited by the capacity of surface test equipment, averaged 5,157boepd, 87% natural gas, at a final sandface drawdown of 12%.

The CGR here was 26bbls/MMcf of 55° API condensate during the extended flow test.

Gas analysis indicated sweet, liquids rich natural gas with no hydrogen sulfide and no entrained water.

The Company has also confirmed that based on the data obtained during both tests, the Cascadura-1ST1 reservoir appears to be unbounded within the area of investigation, confirming a larger pool than originally anticipated.

Absolute Open Flow Potential (AOFP) modelling indicates that it is reasonable to design for an initial gross production rate of between 7,750 and 9,700boepd (6,200 to 7,760boepd net) based on estimated gross rates of 40 to 50MMcf/d of natural gas and 1,100 to 1,400 boepd of condensate.

Our take: A very positive outcome for TXP in our view, the low sandface drawdown, high reservoir pressure, and rapid recovery suggest a sizeable reservoir with significant production potential. The Company will likely require additional drilling and production at Cascadura to fully understand and optimise production from the structure.


President Energy (AIM:PPC): Drilling to commence in Paraguay

Share price: 1.7p, Market Cap: £21m

President has announced an update on its Paraguay asset and its drilling plans for Rio Negro in the second half of the year.

Locations have been identified for two new wells which President is planning to start drilling within the next four months.

The first well will be the Las Bases 1001 development well targeting proven un-produced attic gas in the Las Bases structure with 6bcf of total recoverable reserves; target depth is 1,700m and P50 well rate is 100,000 m3/day (605boepd) and estimated costs of US$1.9m.

The second well will be the Estancia Vieja EVN-x1 exploration well.

This will target a new and so far un-drilled independent structure for both gas and oil to the north of the producing Estancia Vieja field; P50 case is oil production of 40m3/day (252bopd) and 60,000 m3/day of gas (350boepd).

Target depth is 2,000m with estimated costs of US$2.5m completed.

In a success case, the whole of the Estancia Vieja north structure will be opened up with an estimated 14Mmbbls of Oil in Place and 26Bcf of Gas in Place which will require up to a further 6 wells.

Once completed, the wells can be placed on stream fairly quickly.

There are no 2P reserves booked for the Estancia North structure in the current independent audited 2P Group

The term of the Pirity Concession, being the principal asset of the Company in Paraguay, has benefited from an extension of time due to force majeure, the result of which means the Concession period extends until the first quarter 2022.

In the event of successful drilling, this period will be extended further into a long-term production licence. 

Our take: President benefits from operating in a low-cost environment, and today’s update demonstrates the value of the Company’s conventional onshore wells in central locations with the benefit of owning and operating the regional pipelines and infrastructure in our view.


PetroTal (AIM:PTAL): PTAL confirms oversubscribed placing ahead of reopening the Bretana oil field

Share price: 11p, Market Cap: £76m

PTAL has confirmed it has raised gross proceeds of US$18m issuing 141m new shares and 71m warrants, representing an 11% discount to Friday’s close.

The placing shares will represent approximately 17.3% of the enlarged share capital.

The Company intends to use the net proceeds of the placing for ongoing development of the Bretana oilfield and to enhance working capital. 

In particular, the net proceeds will be deployed by the Company in connection with the proposed reopening of the Bretana oilfield which is anticipated to occur in July.

Our take: A good result for PTAL, underlining continued investor support for the sector despite unprecedented oil price volatility. Given the recent fall in global oil prices and the temporary shut in of the Bretana oil field, the Company has quite rightly sought to preserve liquidity. The fundraising and the arrangement announced with Petroperu today provides a significant boost to the Company’s liquidity position and flexibility to prepare for the reopening of the Bretana field, which is expected to occur in July. 


Research – Oil & Gas

Sam Wahab - 0203 470 0473



Richard Parlons – 020 3470 0472

Abigail Wayne – 020 3470 0534

Rob Rees – 020 3470 0535  


SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London



+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.


Sources of commodity prices


Oil Brent, WTI


Natural Gas




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Recommendations are based on a 12-month time horizon as follows:


Buy - Expected return >15%

Hold - Expected return range -15% to +15%

Sell - Expected return < 15%

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