TIDMTXP
RNS Number : 7064Z
Touchstone Exploration Inc.
25 May 2021
TOUCHSTONE PROVIDES OPERATIONAL UPDATE
CALGARY, ALBERTA (May 25, 2021) - Touchstone Exploration Inc.
("Touchstone", "we", "our", "us" or the "Company") (TSX, LSE: TXP)
provides an operational update, highlighted by the recovery of
pressure gauges from the Cascadura Deep-1 well on the Company's
Ortoire onshore exploration block in Trinidad (Touchstone 80
percent working interest operator, Heritage Petroleum Company
Limited 20 percent working interest).
As previously announced, the Cascadura Deep-1 well was completed
over a 199-foot-thick interval in Sheet Four of the overthrust
Herrera Formation. Following production testing operations, the
well was shut in for a pressure buildup test on April 11, 2021, and
the pressure gauges were recovered on May 17, 2021.
Cascadura Deep-1 Testing Highlights
-- Buildup test data showed no depletion with a final bottomhole
pressure of 4,746 psi, confirming a substantial liquids rich gas
discovery.
-- Analysis of buildup data showed the test was unbounded with a
minimum radius of investigation of 1,500 feet, confirming the
significant size and reserves potential of the pool.
-- While the well test data indicated that the formation was
damaged, we are confident that the well will require no stimulation
and that flow rates will be consistent with those during testing
(average flow back rate of 22.9 MMcf/d of natural gas and 449
bbls/d of NGLs).
-- Natural gas produced during the production test was
approximately 94 percent methane with no hydrogen sulfide and NGLs
consisted of 57 degree API condensate with no associated hydrogen
sulfide.
-- There remains approximately 560 feet of potential pay above
the completed zone which can be evaluated in future
development.
Operational Highlights
-- The COVID-19 state of emergency in Trinidad currently has not
had a significant impact on the Company's day-to-day operations,
although related restrictions are causing delays to construction
and field work.
-- The design for the main production facility at Cascadura has
been completed with an initial production capacity of 90 MMcf/d
(expandable to 200 MMcf/d).
-- Requested to complete an Environmental Impact Assessment
("EIA") on the Cascadura development project that will enable us to
undertake a pre-approved multi-year program including drilling,
completions, facilities, gathering lines and the main sales
infrastructure without the time intensive application process that
would have previously accompanied each individual workstream.
-- Royston location preparation has been delayed due to COVID-19
restrictions impacting construction, with the well anticipated to
spud in June 2021.
-- Royston seismic program continues with 149 of 370 shot holes
drilled and data acquisition anticipated to commence mid June
2021.
-- Coho surface facility is nearing completion and awaiting pipeline installation and tie-in.
-- Chinook-1 testing continues with the planned completion of
the Cruse sands currently awaiting regulatory approval.
Paul Baay, President and Chief Executive Officer, commented:
"I am pleased to report that the downhole gauges recovered from
Cascadura Deep-1 have provided excellent data, and the information
has increased our confidence in the substantial size of the pool's
reserves and its potential deliverability. The data is consistent
with the previous testing performed at Cascadura-1ST1, and we are
encouraged by the lack of any boundary limits observed on the
reservoir.
The team continues to move all of our projects forward under the
COVID-19 restrictions that were recently enacted in Trinidad. We
continue to have a comprehensive COVID-19 protocol in place in
collaboration with our industry partners, and we are committed to
the safety and well being of our employees, contractors and the
residents of the communities we operate in. For the most part, our
routine operations remain uninterrupted, and we will recommence the
affected operations as soon as we can safely do so.
I remain confident that we will spud Royston-1 in June despite
recent construction delays due to COVID-19 emergency health
measures. The drilling of Royston-1 will complete the first phase
of our exploration program at Ortoire. The second phase is expected
to include the Steelhead and Guabine prospects targeting the
Herrera and Karamat Formations, as well as our Cretaceous prospect
at Kraken. The phase two exploration program is anticipated to be
performed in parallel with development programs at our confirmed
Ortoire discoveries. Our future capital projects are anticipated to
commence following the start of production from Coho and Cascadura,
as these discoveries are expected to provide the funding for our
future development and exploration programs. "
COVID-19 Update
A state of emergency was declared in Trinidad and Tobago on May
15, 2021 with a curfew between the hours of 9:00 p.m. to 5:00 a.m.
in an effort to combat the rising number of COVID-19 cases and
deaths. The state of emergency was an enhancement to other
restrictions that were already in place including limitations on
non-essential businesses and services. Our operations have been
granted essential service status but some of our suppliers have
not, which has resulted in partial delays to our current
exploration activities. The state of emergency has not materially
affected our base production operations but has impacted the
preparation of the Royston-1 well access road and the shipping of
the third-party rig to Trinidad.
Regulations that were due to expire on May 23, 2021 have been
extended to July 4, 2021. This is separate from the current state
of emergency, which will be debated in Parliament and will continue
until necessary for up to three months. However, we will continue
to manage our operations in accordance with domestic regulations
and only proceed when we have access to all the required services
available for safe and cost-effective operations.
Cascadura Deep-1 Testing
The pressure recorders were recovered from the Cascadura Deep-1
well on May 17, 2021 and provided 44 days of data that included
initial completion pressure, isochronal flow and shut-in buildup
data. During the buildup period, the Company observed bottomhole
pressures returning to pre-test levels, with a final shut-in
pressure of approximately 4,746 psi (Cascadura-1ST1 test one
(lower): 4,762 psi, test two (upper): 4,715 psi). The buildup data
suggested that the formation was damaged to some extent during
drilling, with an estimated skin of between +4 and +7
(Cascadura-1ST1 test one (lower): +0.1, test two (upper): -1.1).
Based on flowback observations, the Company believes that the well
will continue to clean up once on production. No boundaries were
observed during testing, with a radius of investigation of over
1,500 feet, confirming previous results observed at
Cascadura-1ST1.
Gas analysis at Cascadura Deep-1 displayed a methane content of
93.7 percent (Coho 98.6 percent, Cascadura-1ST1 test one (lower)
93.3 percent) while NGL analysis indicated 57 degree API condensate
(Cascadura-1ST1: 53 degree API condensate). No hydrogen sulfide was
observed in any samples, and no produced water was recorded during
testing.
James Shipka, Chief Operating Officer, commented:
"The data gathered from Cascadura Deep-1 reinforced our
interpretation of the Cascadura structure and is extremely
encouraging for the production potential of the well. This test
completed 199 feet of a total of 1,007 feet of reservoir observed
in the overthrust Herrera section, and there remains nearly 560
feet of high-quality sand above the existing zone in the Sheet
Three section for future development. Given the nature of the
Herrera sands, the existing completion should efficiently drain the
gas and associated liquids trapped in Sheet Four. Flowback testing
suggested that the formation had been damaged during drilling, and
the buildup data quantified the magnitude of the damage. We believe
that the well will clean up during production and that no
stimulation is required at this time. We are now focused on
bringing both Cascadura wells onto production as well as completing
our comprehensive field development plan to efficiently exploit the
potential of the Cascadura structure."
Cascadura EIA and Main Production Facility
The Company has been advised by the Trinidad Environmental
Management Authority that an EIA is necessary for the Cascadura
development project. While this will require considerable upfront
work, once completed it will allow us to roll out a multi-year
program including drilling, completions, facilities, gathering
lines and the main sales infrastructure. The Company is expecting
to receive the requirements for the EIA on May 28, 2021. While this
will initially delay the project, it will bring predictable and
clear timelines for Cascadura operations moving forward. The
Company will provide further information on anticipated timing of
the EIA as it becomes available.
We have completed the design for the Cascadura main production
facility and will be soliciting bids for the required components
and construction of the surface facilities. The design contemplates
an initial production capacity of 90 MMcf/d (expandable to 200
MMcf/d as development progresses) with the ability to recover and
sell all free liquids from current and expected future wells.
Royston
Touchstone is currently waiting on availability of the necessary
soil stabilization materials to complete construction of the
Royston-1 access road and surface location. Access to these
materials is dependant on our suppliers being able to comply with
the current COVID-19 restrictions. The drilling rig is in the final
stages of pre-spud preparation and will be available to move
immediately upon the completion of the access road. All drilling
personnel are on the ground in Trinidad and have cleared the
required quarantine protocols.
Independent of the drilling of Royston-1, we are currently in
the process of acquiring 2D seismic data with 149 shot holes
drilled to date out of a total of 370. Weather has been favorable
thus far, and we are targeting to shoot and record data commencing
the second week of June 2021. This data will provide information on
possible development drilling at Royston, along with optimizing the
location for the future Kraken well to test the Cretaceous
Formation.
Coho
The Coho facility construction at the Coho-1 well is nearly
completed and we expect to commence testing in the next three to
four weeks. The Company is currently awaiting final direction from
the National Gas Company of Trinidad and Tobago regarding the
preferred delivery point for Coho gas volumes. Once this has been
provided, the Company will begin pipeline construction which is
anticipated to take 60 days subject to weather conditions.
Chinook
The testing of the Herrera zones at Chinook-1 has been
completed, and the Company will move up-hole to test the Lower
Cruse Formation which indicated gas while drilling. The Cruse
Formation appears to be aerially extensive with hydrocarbons having
been observed and produced throughout the Ortoire block and the
surrounding area. Gas shows were encountered at the nearby
Cascadura project while drilling, and the Company looks forward to
testing the commercial potential of these sands.
In the Herrera zones, test three of the Chinook-1 well was put
to pump and, after seven days, showed very limited to no new-fluid
inflow with only load fluid and minimal oil being recovered. The
well was shut in for a buildup period at which time the well
experienced a substantial surge of reservoir fluid and solids from
the formation. This inflow appears to have encapsulated the
downhole assembly in sand, and following several attempts, we
believe the pump to be unretrievable. This zone will be abandoned
as we now focus on the shallow Cruse completion.
The Company has identified two additional locations
significantly updip from the original Chinook well to evaluate the
economics of the Chinook structure in the Herrera Formation. Given
the limited inflow observed during testing and the skin damage
reflected by the Cascadura Deep-1 testing, the Company is confident
that the Herrera section of the Chinook-1 well was damaged while
drilling. We are evaluating alternative drilling designs to limit
possible reservoir damage in any future wells at Chinook.
Touchstone Exploration Inc.
Touchstone Exploration Inc. is a Calgary, Alberta based company
engaged in the business of acquiring interests in petroleum and
natural gas rights and the exploration, development, production and
sale of petroleum and natural gas. Touchstone is currently active
in onshore properties located in the Republic of Trinidad and
Tobago. The Company's common shares are traded on the Toronto Stock
Exchange and the AIM market of the London Stock Exchange under the
symbol " TXP " .
For further information about Touchstone, please visit our
website at www.touchstoneexploration.com or contact:
Touchstone Exploration Inc.
Mr. Paul Baay, President and Chief Executive Officer Tel: +1
(403) 750-4487
Mr. James Shipka, Chief Operating Officer
Shore Capital (Nominated Advisor and Joint Broker)
Nominated Advisor: Edward Mansfield / Daniel Bush / Michael McGloin Tel: +44 (0) 207 408 4090
Corporate Broking: Jerry Keen
Canaccord Genuity (Joint Broker)
Adam James / Henry Fitzgerald O'Connor / Thomas Diehl Tel: +44
(0) 207 523 8000
Camarco (Financial PR)
Nick Hennis / Billy Clegg Tel: +44 (0) 203 781 8330
Advisory on Forward-Looking Statements
Certain information provided in this announcement may constitute
forward-looking statements and information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. Such forward-looking statements include, without
limitation, forecasts, estimates, expectations, and objectives for
future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or
"should" occur or be achieved.
In particular, forward-looking statements in this announcement
may include, but is not limited to, statements with respect to the
Company's focus, plans, priorities and strategies; the impact of
the COVID-19 pandemic in Trinidad and the ability of the Company to
carry on its operations as currently contemplated; the quality and
quantity of prospective hydrocarbon accumulations; well test
results; the Company's exploration and development plans and
strategies, including anticipated drilling, future drilling
locations, production testing, development, tie-in, facilities
construction, the timing thereof and the benefits to be derived
therefrom; regulatory approvals, including completing regulatory
applications, achieving such approvals and the expected timing
thereof; and the sufficiency of resources and available financing
to fund future capital expenditures. Although the Company believes
that the expectations and assumptions on which the forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because the Company can
give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. Certain of these
risks are set out in more detail in the Company's 2020 Annual
Information Form dated March 25, 2021 which has been filed on SEDAR
and can be accessed at www.sedar.com. The forward-looking
statements contained in this announcement are made as of the date
hereof, and except as may be required by applicable securities
laws, the Company assumes no obligation to update publicly or
revise any forward-looking statements made herein or otherwise,
whether as a result of new information, future events or
otherwise.
Oil and Gas Matters
References in this announcement to production test rates and
initial flow rates are useful in confirming the presence of
hydrocarbons; however, such rates are not determinative of the
rates at which the well will commence production and decline
thereafter and are not indicative of long-term performance or of
ultimate recovery. Additionally, such rates may also include
recovered "load oil" fluids used in well completion stimulation.
While encouraging, readers are cautioned not to place reliance on
such rates in calculating the aggregate production for the
Company.
Abbreviations
bbls/d barrels per day
MMcf million cubic feet
MMcf/d million cubic feet per day
API American Petroleum Institute gravity
NGLs natural gas liquids
psi pounds per square inch
Competent Persons Statement
In accordance with the AIM Rules for Companies, the technical
information contained in this announcement has been reviewed and
approved by James Shipka, Chief Operating Officer of Touchstone
Exploration Inc. Mr. Shipka is a qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
Companies and is a Fellow of the Geological Society of London (BGS)
as well as a member of the Canadian Society of Petroleum Geologists
and the Geological Society of Trinidad and Tobago. Mr. Shipka has a
Bachelor of Science in Geology from the University of Calgary and
has over 30 years of oil and gas exploration and development
experience.
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END
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