Touchstone Exploration Inc (LON:TXP, TSE:TXP) has executed a 10-year lease operatorship agreement which sets up a round of drilling to support production in Trinidad.
The 10-year extension covers the CO-1, CO-2, WD-4 and WD-8 blocks which span the group’s legacy oil producing properties.
It was agreed with national oil company Heritage Petroleum and has an effective date of January 1 2021. It runs to the end of 2030 and was renewed on similar terms to the previous arrangements.
Touchstone now intends to drill one new well on each of the blocks during the second half of this year.
"Our suite of mature crude oil assets continues to provide consistent and predictable base petroleum revenue as we expand our operations in Trinidad on the Ortoire exploration property,” said chief executive Paul Baay.
“With the recovery of world oil prices, we are focusing on optimizing these mature assets through well recompletion and workover operations.
“The new arrangements present an opportunity for us to drill additional wells in the second half of 2021, with the expectation that any increase in production will decrease overall royalties under the revised fiscal structure.”
It is estimated that each new well will cost US$1mln on average.
Baay, meanwhile, highlighted that the new arrangements will allow Touchstone to deepen exploration opportunities identified in the areas.
“With legacy wells and new 3D seismic data from Heritage, we plan to delineate a Coora Herrera turbidite trend for future exploitation,” Baay added. “In addition, the agreements will permit us to target zero effluent discharge by the end of 2021, which is a major company-wide environmental initiative in our continued efforts to significantly reduce the environmental footprint of our operations.”