Hydra BlogFirst off, Touchstone (TXP.TO, last at $2.20)
released results from its Cascadura Deep well, logging a total of 1,315 feet of pay across several zones within the Cascadura structure, including some new ones. Due the abundant high-pressure gas up-hole, the company just didn’t have the horsepower to drill to the targeted total depth, but when you have to stop drilling a hole because you’ve got too much gas pay to deal with, that’s technically not much of a problem from my vantage point. Bottom line, some more molecules were added today with much thicker pay in the well relative to the discovery well. The result doesn’t change my view much and I actually trimmed some stock today, simply from a portfolio management standpoint, as this has become a giant position for me after ringing the bell on it in May. I think that no matter what happens from here on out, TXP is on a path that ends with it either (a) being bought, or (b) generating free cash flow like crazy once the Cascadura-Chinook field is on stream. At this point I really just don’t have the information required to even ballpark where TXP sits in terms in terms of resource potential but Cascadura seems to be heading towards the higher end of the reserve report range and Chinook seems to be on the same general spectrum (i.e., “hundreds” of BCF) in terms of size potential. Chinook should be tested soon (testing is expected to start later this month) with results perhaps in late December or January, by my best guess. I’m still waiting for a gas sales agreement with NGC and to see Coho on stream, but all in good time I suppose. Royston will still be hanging out there as the next Big Target for H1 2021 (Q1?) to keep the market’s speculative juices flowing and remember that Cascadura Deep is still on the table, including the potential relationship of that deepest target to the gas pay found in the lowermost zone at Chinook (which would add even more scale). Overall, it sure seems like TXP is going to get to a TCF at Ortoire, so it’s all going to come down to commercial terms and optimal production rates to determine what it’s worth, so I really want to see those commercial terms just as much as more gas molecules at this stage… though the molecules are most welcome anytime.
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