Post on SA ref to TXP https://seekingalpha.com/instablog/41272106-activeeurope/5674359-touchstone-amazing-upside-still-to-come#comment-95067304 "I had a recent catch up with management and a few interesting points.
Cascadura start up remains clearly on schedule for end of June2023, NGC are now further incentivised after BP suffered a recent gas production loss of one well offshore, hence the immediate need for gas on the island is acute. NGC are working extra shifts if needed and flying in parts if needed. For TXP part they remain well on schedule and have good visibility on meeting the targets currently. Management are acutely aware of last 2 years missing timelines and I gave them every opportunity to be cautious on delivery but contrary to this they remain resolutely confident in current timelines. First gas transforms the business from a cashflow point of view and moves future drilling to self funded, it should be a material risk reduction point for the shares in lowering cost of capital/rising share price. A move for management becoming in charge of their own drilling destiny has the potential to transform the investment case over the next 18months.
Royston sidetrack well testing. It should be emphasised the first test was a ‘long shot’ but management wanted to see if there was oil present, porosity was only around 6 and no-one internally/drill team/Schlumberger expected anything much. However the next test remains in the sub thrust and has more like 12ish on porosity with a plan to perforate 2 intervals of 30ft each within what they think is much better prospectivity. Any success here in the sub thrust would add reserves and provide a good target for future drilling. The ‘main event’ is clearly the test afterwards which is the intermediate test, previously 38ft was perforated and flowed 500+BOPD. Here there is circa 20ft above and 30ft below last time test for better sand thickness and another section of 100ft below that also can be perforated. Hence we have a lot more sand thickness this time around. The hope would be that both the subthrust and intermediate tests produce some oil flow and maybe intermediate test beats management guidance of circa 500BoPD. If both tests flow the plan/hope would be to put them both on long term test comingled in a combined rate. They would then not plan to test any of the higher zones after the intermediate in this well. However if no flow rates are established higher test zones are in reserve for testing but this would be a plan B type scenario. Key point here really is that there is still everything to play for with upcoming two Royston tests. Depending on pressure they could also opt to put in a pump to help lift the oil given the weight of liquids within the pipe (10,000ft 7inch and 9 3/8inch higher up) above perforation points.
Timing/delay. Once the drilling of Royston sidetrack was complete they negotiated a decent day rate for the star valley rig for a few days to perforate the deepest section to start testing. The crew were then sent home/off island etc as no longer needed and expensive. Actual testing took longer than expected and 2 lots of swabbing plus waiting for the 10,000ft column to refill with liquid and hence the long delay, I’m still a little unsure why it took so long. From the finish of first test it’s not worth the expense of reassembling the star valley crew to use the rig again for higher up perforation and testing. Instead management chose the much cheaper option of once the rig is moved they can use a service rig but this means a delay until new Cascadura pad is finished and the star valley rig can be moved, hence the frustrating elongation of testing timelines.
The star valley rig contract runs from September to September and has a minimum number of days usage per year (also explains why willing to use it for first part of testing), hence they would like to get it drilling ASAP at Cascadura new pad site but equally they would like the certainty of cashflow from Cascadura start up, hence there is a sensible juggling act going on here to maintain a sensible prudent cash buffer within the business. There is absolutely no need for more equity. If all goes well the rig would certainly drill 2 and probably 3 wells in succession at Cascadura and long lead items for production potentially ordered after the first well drilled, taking up to 6months to arrive etc. This would hope for significantly increased Cascadura production during 2024, possibly late summer. Note the 2-3 wells would most likely add to reserves and also move reserves up from 3P to 2P and 1P in a value enhancing manner.
They await license awards. A second well at COHO looks an attractive plan but nothing scheduled in."