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CANADIAN oil and gas company, Touchstone Exploration says it has started drilling the highly anticipated Chinook-1 well, its latest exploration test within the Ortoire block, in south Trinidad.
The news came as the company posted its second-quarter operational update and financial results, which revealed the driller received US$2.8 million in bonds from the T&T Government for past due value-added tax arrears. Touchstone disclosed that it sold the bonds to a financial institution after the end of its second quarter.
The Chinook-1 well is targeting hydrocarbon prospects in the Herrera formation, the same horizon found in the successful Coho and Cascadura discoveries.
In March, Touchstone Exploration announced test results from the Cascadura-1AT1 onshore well, which reported an average flow from the well in the Ortoire block of over 10,600 barrels per day (bbls/d).
At the time, Touchstone president and CEO Paul Baay said: “In addition to estimated production at our Coho discovery and our existing production, this well gives us a clear path to 10,000 boe/d with an estimated 75 per cent natural gas and 25 per cent liquids product mix.
Last week, commenting on the Chinook well, Baay said: “The spudding of the Chinook well marks the next phase of our Ortoire block exploration programme that has already delivered two successful natural gas wells in just over a year.
“The Chinook well is being drilled in proximity to the original 1959 well and will further evaluate the turbidite concept eastward from the original Coho discovery. With the assistance of a 3D seismic survey, we are now expecting to move up structure to target the Herrera sands.
“In addition to the initial work undertaken at Chinook, we have made progress across the Ortoire block, commissioning the previously announced Cascadura area independent reserves evaluation as well as commencing the Coho-1 tie-in project,” he added.
Elsewhere in the Ortoire block, the company is progressing with the tie-in of the Coho-1 gas well, with facilities construction and pipeline preparation underway.
Gas contract
In May, Touchstone said it had signed an agreement for the sale of natural gas and gas liquids produced from the Ortoire block in Trinidad and Tobago.
The framework agreement was with the National Gas Company (NGC) and Heritage Petroleum Company, both of which are companies wholly owned by T&T’s Corporation Sole, the entity that owns assets for the State.
Heritage and Touchstone are joint venture partners in the Ortoire block.
In the July 30 edition of the UK publication, Investors Chronicle, reported that Touchstone’s independent reserves evaluation forecast that the natural gas production from the Cascadura well would be sold at US$2.55 per million btu next year.
“Touchstone’s chief executive, Paul Bay, says direct sales to NGC will keep prices at least at the level forecast in the reserves evaluation...The company is confident of getting the Cascadura project into production in mid-2021,” according to Investors Chronicle.
The publication added: “Touchstone is at a mid-point of the ideal evolution from explorer to gas producer. It has its reserves and its buyer in the NGC. The NGC is also building most of the infrastructure needed to get the gas from the Cascadura into its network, cutting development costs. The island has the major Atlantic LNG gas processor, but Touchstone is skipping that by handing product straight to NGC.”
Touchstone, meanwhile, released its second-quarter results last week confirming average daily crude oil production of 1,396 barrels per day, compared to 1,589 barrels per day in the preceding quarter and 1,768 barrels in the second quarter of 2019.
The company noted that it saw an operating netback of US$10.73 per barrel despite realised price reductions.
It said that meaningful cost reductions were achieved, with operating costs down 28 per cent.
Financially, the company reported a US$2.74 million net loss, narrowed from the US$9.24 million it lost in the preceding quarter.
Touchstone said that it had enhanced its financial flexibility and reduced its overall cost of borrowing, by refinancing long-term debt, withdrawing US$15 million of a new US$20 million facility to repay a prior C$20 million Canadian loan.
It exited the quarter with some US$6.89 million of cash, and had US$8.46 million of net debt.