RE:Company main value is it's Casc reserves and they shoulddrunk@noon wrote: undergo a major drop due to the underperformance of the wells. This is the likely reason they have been scrambling to make aquisitions--which of course they have no money for.
Another way to look at it ....
Touchstone has been investing in infrastruture the past two years before they can drill alot of holes.
With no processing capability prior to drilling wells to exploit the reserves, how would they be able to get the gas in the ground to market in the first place ? They spent a bit of money on pipelines that run from Cascadura C Pad back down to the Cascadura A processing facility, . Hook up fomr the two new wells being drilled in Q1 2025 will be ra elatively quick hook up to the pipeline passing through the B Pad from Cas C to Cas A..
Current production revenue is more than paying off the two debt repayment schedules of $1,500,000 and $625,000 per quarter. Debt level has been starting to come down. The company should have roughly $8.5 million in the bank end of December, depending on how much they pay some creditors back prior to year end. End of Q3 TXP had about $6.5 million cash in the bank.
As for the Central Block acquisition. You're looking at a processing facility that woud cost around $50 to $60 million to build today. Touchstone is acquiring it for $23 million. Current stable production is producing a rough guess of $4.5 milion in revenue per quarter.
Hypothetically .....
Assuming “stable” production on Central Block (Big Assumption)
Heritage currently has a 35% working interest in the Central Block
Current production:
18,000 mcf/d X 65% = 11,700 mcf/d
200 bbl/d x 65% = 130 bbl/d
Price assumptions $3.50/mcf for gas and $70/bbl liquids
(Prices were undisclosed in the acquisition announcement)
$3.50/mcf X 11,700 mcf/d X 91 days = $3,726,450 / qtr $70.00 /bbl X 130 bbl X 91 days = $828,100 / qtr Additional revenue per qtr for TXP from Central Block = $4,554,550
Based on current credit facilities TXP has, approx. 7.5% interest rate for funding of Central Block.
$23,000,000 X 0.075 = $1,725,000 per annum / 4 = $431,250 / qtr interest expense
Loan payments of $1,500,000 per qtr gives TXP cash flow of
approx. $3 million / qtr minus taxes and royalties or,
Loan payments of $2,500,000 per qtr gives TXP cash flow of
approx.$2 million / qtr minus taxes and royalties
Central Block production could give TXP enough cash flow after quarterly repayment schedule for rework, processing plant maintenance and/or a possible new hole or two which could accelerate cash flow from the Central Block which gives Touchstone higher gas prices than their Cascadrua gas production. Also gives Touchstone an opportunity to just drill the four more wells at Cascadura at B pad first then back up to C Pad in 2025 and then move to Coho and Gibba which are in close proximity to the Central Block processing facility.
JMHO and I could be wrong, but ......
I've added another 30,000 shares to the collection in the past week
GLTA !