Touchstone Exploration (TSX:TXP) — Investor Presentation

0:00 Good afternoon, and welcome to the TOUCHSTONE EXPLORATION INVESTOR PRESENTATION. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. Mhmm. The company may not be in a position to answer every question during the meeting itself. However, the company will review all the questions submitted today and publish responses to what is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Paul Bay, CEO. Good afternoon to you, sir. Thank you very much for the introduction, and I welcome everybody today. Really exciting for us today that we're we're rolling out our new new presentation and rolling out our our five year plan for what we see for TOUCHSTONE as we go forward.

0:45 And and this is a lot driven by the Cascadura facility coming on stream here in September and really changing the the magnitude of of things that we can now do within the country, and and we'll walk you through that. I'll walk you through that. I also have Scott Budow, our chief

1:02 financial officer here. So if some of those questions are around some of the financial numbers, we can talk about that at the end of the day as well. So let me start out. You know what? And you'll see the tagline on the bottom of our new our new presentation, you know, evolving towards a sustainable full cycle exploration and production company. I think the the piece that's kinda missing off of there, but we'll talk about it, is it's also a full fund fully funded model now with the cash flows that we've got going. You know, we can fund this this really exciting program as we go forward. So on that note, let me flip you over to our five year vision. You know, what we really have in place here now is this sustainable base production of over 10,000 BOEs a day, you know, that that really provides that cash flow model for us to do all the other things that we've that we've been talking about doing and that we wanna continue to do.

1:57 But the big takeaway today from this new presentation is really that first item, which is we now have about 42,000 BOEs a day of capacity for producing both gas and oil in the in the country. You know? And I I know there's been a lot of long delays. Certainly, there was a long delay on on bringing COVO on, and CAS took longer than than I think any of us would have liked. But now that we have those in place and we have all the the the permits in place to to take those facilities to full volume, it really does sort of accelerate how fast we can get that next 20,000 BOEs a day. You know, we look at that Cascadura facility. It's designed for 200,000,000 a day. Initial capacity is 90,000,000 a day plus the liquids that we're seeing.

2:44 So, you know, it's it's a very large facility for us to to fill. And then Coho at 24,000,000 cubic feet a day, you know, that's just sort of a a second add on for us. So the big takeaway, as I say today, is that that first box, that ability that we have now for 42,000 BOEs a day of production. The organic growth we talk about is the inventory of wells that we have, the drilling that we have. And, again, where the company has really changed now is, you know, we were basically an ex exploration company. We have these, you know, big peaks and valleys depending on how we the exploration was working out for us, sometimes better, sometimes not what we thought it was gonna be. What we now have is this really nice base production that's got this little ability on the exploration side to have these nice step changes if we have the exploration success that we anticipate having.

3:34 So that's that organic organic growth model. The opportunities to expand the asset base, you know, it's a combination of things. You you look to see what we did on the onshore bid round, added some more on that. There's also some opportunities for us to pick up some additional production on the island to add as long as as well as some of the technology that we've been seeing with the new three d's that we've seen in two d's. You know, we can rework some of the plays that we already have. On top of that, we're gonna continue to to keep a strong focus on our ESG. I'll talk about that a little bit more. You know, the safety part is really, really key for us. And and I think when you look at the two plants that we brought on with no LTIs, you know, I really commend the team for for focusing on that. And then the last thing that we've done in this five year plan is to to really start focusing on, obviously, becoming a much larger company.

4:25 And we think that one of the goals we should be looking at here is to join that FTSE two fifty, which puts us somewhere around a £700,000,000 market cap, sometime in the next five years. And that and that's that's our objective in what we see. So that gives you sort of a high level view of what we see in the five year plan. What what are the key things there for us when we look at Trinidad? And and what you'll notice in this presentation is our focus is gonna be 100% on Trinidad. That is what we're gonna do that you know, we think that we can be a big fish in a small pond here in Trinidad, and we really also think we understand some of the dynamics that go on in in working in in that particular country. So first of all, the Venezuelan basin, we're on the up dip end of that biggest hydrocarbon basin in the world.

5:14 The rocks here are spectacular. We've drilled 70 wells. We have not drilled a dry hole where we didn't find hydrocarbon. Some of them obviously haven't been economic to produce, but you're in a hydrocarbon window here, which is just a unique position anywhere in the world. First oil discovered here in nineteen o eight, so there's lots of expertise. You know, you look at the talent pool in Trinidad for engineers, geologists, people working in the in the industry. It's a very, very deep talent pool. So, you know, that's a really, really great opportunity for us. Demand, about 4,000,000,000 cubic feet a day is what they could use on the island. Right now, they're only producing 2.7. You can see in the bottom corner of this slide is a picture of the Pointelyse's petrochemical area, and, you know, this is being starved of gas production. They need to get more gas production. So whether it's gas or oil that we find, doesn't matter. It's going to market, and that's, you know, one of the things we love about Trinidad. Great pipeline, infrastructure. You know, even the Cascadero facility, although the facility was a big chore, you know, the pipeline was only a couple of kilometers.

6:21 I think it was actually about 1.7 kilometers, that that NGC had to build for us. So it's not like it was a huge tie in to get us into where we wanted to. We also think there's additional opportunities in Trinidad to expand that base, and and we'll talk a little bit more about those. And this is a super supportive government. You know, the the energy ministers on record are saying they wanna produce as much hydrocarbon as quickly as they can. His definition of quickly in mind may be different, but but I I think the intent is the same here. They want us there as a business, and that's a a wonderful thing. And it's a well regulated energy sector. You know? It's got a good health and safety regulation for us, and it, you know, makes it makes it so it's a good environment for us to work in. So that's why we wanna be in Trinidad.

7:08 Just wanna back up a little bit from where we've come from and and to where we're at today. And and, basically, we started in 2010 about a 143 barrels a day, bought one little property, about 650 net acres. And where you see where we're at at the end of, you know, the various transactions that we have in front of us, whether it be the property swaps that we have, the crown onshore bid rounds that we're in the midst of concluding or our big Oritrois block. You know, we now got a 126,000 acres of land, well over 10,000 BOEs a day of production. You know, it's we we always strived in some of these earlier presentations, and I know there's lots of shareholders that have been longtime shareholders. We said we wanted to be the largest independent onshore producer. We are that now.

7:55 And I think our next goal really is to, you know, to get to that that 30,000 BOE a day range in what we're looking at doing. And with this land base, we can we can get there. Just wanna back up a little bit. I'm not sure how this is coming through on your presentation, but it looks like it's sort of tripled up on mine. But it basically shows that we had, you know, this big land base has given us, you know, this big asset base, which is the 75,000,000 barrels of of reserves. And then what we end up with is this nice production base of over 10,000 BOEs a day. 2023 was a real trans transformational year for us. You know, we went from roughly 1,500 BOEs a day to where we're now, as I say, well over 10,000 BOEs a day.

8:41 We also signed up the RealClaro, the Balada Deep. We were successful on the, Sapero block in the onshore bid round. And over the last couple of weeks, with the help of our local team, we've been able to come to terms with the government on on what we can do on. So we'll be able to hopefully get that nailed down here. So this, it's been a it's been a big year for us in 2023, and, you know, everything's probably a couple months later than what we would have wanted and what we expected, but it's really great that the team got it across the line. You know, future growth, and and this is a a shot of me talking to the energy minister. And as I've said before, probably not my best body language sitting there with my arms crossed talking to him, but I think it it sort of talks a little bit to the relationship that we have in Trinidad.

9:29 You know, we we are a trusted partner in Trinidad. We've been able to deliver on what we we said we would deliver on, and we've been able to do it in a safe manner. And I think that's really important for them. So what's the long term view? And I, you know, I I honestly couldn't have sat here a year ago and given you a five year view of of where we were gonna go with with TOUCHSTONE, but it is very clear. It's very succinct, and, you know, it's really a a unique situation for us to have this ability to look at the five year growth. We've got these high quality assets that we now put together. We've got over 200 drilling locations, and I sort of define those as, you know, in the drilling locations, you end up with, you know, a type locations, b's and c's.

10:15 And sometimes when you get all the way through the a's, you know, you start to compromise on the quality. But because of this big inventory we have and every time you drill a well in Trinidad, you learn something new, sometimes good, sometimes not. But we can reshuffle that deck. And with this big portfolio that we now have, we can do that. And it's not pure exploration. It's also development wells that we can drill. And that's really the, you know, that's really the exciting part when you look at, you know, 50 development locations that we have on the books. We think that we'll probably end up going to a two rig drilling program. One of those rigs will be what we brought into the country with Star Valley, and that'll be focused on mainly our deeper operations on the East Side Of The Oritwa Block. And then we'll have another rig that will either do some of the shallow wells, let's say, at Coho in in that area and down south on some of our legacy assets.

11:04 But the whole goal here is to add that 20,000 BOEs a day from where we are today. And with that drilling inventory, we can do that. I wanna just focus a little bit on on Orotois because I I think it is really the the the short term focus of what we want. So if you look on that map, you see Coho there where we've got that gas plant, 24,000,000 a day of capacity, Cascadura where we're gonna have the 200,000,000 a day of capacity. Everything around there is really the key. That those are the key areas that we wanna we wanna focus on. But we also see 14 exploration prospects on there. And the key to those exploration prospects now is if we are successful, if they're gas, we can tie them into one of our two facilities.

11:49 If they're oil, we can obviously truck them out of there. Our focus short term is gonna be on the Cascadero area and Coho. And if you look at all those prospects that sit between there, whether it's Gibbah, Sturgeon, Char, Pike, those are the ones that we're really gonna focus on because no matter what we get there, we can bring it to the market very quickly in what we do. And then you see the expiration, and I'll talk about that a little bit more as we go forward. Before I leave here, though, I wanna talk about Royston because it's obviously still a big structure that we have on there. You know, the the Royston well is is sitting there waiting for us to get a service rig back on it to put it on the pump. I think, you know, when we saw it on logs, we were all very excited about it. It it obviously has not produced as well as we would have liked it to, but we're not done there yet.

12:37 We need to isolate some of the key zones. Right now, we have the entire wellbore open. We need to isolate some of the zones and put it on pump and see what it'll do on on pump. So long ways from being done, but we need to do some more work on it as we go forward. It's such a big structure. We found so much light oil on all these tests that, you know, it still looks very perspective to us, but I just wanna be cautious and and make sure that let everybody know we've got we've got more work to do on that one before we can prove that it's economic. So, you know, our operational footprint, we we talk about this, and and quite frankly, this is about where can we add additional opportunities. And and we think that with where we are right now, with the opportunities that we have and now we are the biggest independent producer on the island. So anything that we look at doing at this point can be what I'll I refer to as sort of tuck ins.

13:36 You know, you don't have to add a lot of people to do some of these things. You've got all the systems in place. It becomes very efficient. And, you know, basically, you add volumes without out adding all those costs associated with it. And that's really the focus, and that's that's where we think is the the advantage. We also think we've got a bit of a a geological advantage right now. We think we understand the turbidites. We understand what's going on. We've got a good set of database. We've got people that have, you know, worked up all these prospects. So pretty excited about what we've got on that point of view. As far as the summary ups up upcoming milestones that we've got, we wanna get those license executed. You know, they are a six year term, so they're not, you know, they're not something that has to be done right away when I say near term. But in looking at that Sapero block, you know, that's as close a look alike as we have to the Cascadura structure that we see in the Herrera. You know? It's it looks fantastic on seismic. It's got good proximity to Cascadura and Coho.

14:40 So we wanna move some of those things up so that as we do this development drilling program, we can slide over and do a couple of exploration wells as we go along here. We wanted to finish doing that asset exchange on on Rio Claro, and that'll happen, you know, when it happens. We have to kinda push that one one through as we do. But, you know, that's the extension of the Cascadura Pool onto the Rioclaro block, and we still there's no reserves booked for it, but we could easily drill a well from one of the existing pads that we have already built into that Rioclaro block. So, you know, that becomes a much higher priority as we get that done, and that's why we have it down as one of the milestones for the coming year. And then the final piece would be to get that Tchuruma block tied up. I I really like that block. I think it's really perspective, but it is pure exploration. It is the Cretaceous. It's the same stuff that Exxon and and Total are drilling in Suriname and and Guyana.

15:38 You know, it it is wildcat exploration. But the nice thing about the Churuma block is it's only 7,000 feet to get down to the Cretaceous and take a look. So it's a fairly inexpensive way for us to look at at at that Cretaceous play. So that's why it's a it's a much higher priority for us in what we're looking at doing. Yeah. So the investment case, you know, we've got significant production levels now. You know, that 10,000 POEs a day just changes everything. Scott and I were talking about earlier, you know, basically, we had $4,000,000 of funds flow last year. We're now doing $4,000,000 a month of funds flow. So, you know, you talk about that magnitude change. And as you ramp up these facilities, you can just kinda see how these these come about.

16:27 So the cash flows are now sustainable. You know, they can sustain a a really solid capital capital program. The fixed price gas contracts, I mean, the nice thing about them is we can predict how much cash we've got for the capital. I know some people when gas prices got very high, especially at the beginning of the war, you know, thought that we were being penalized a little bit on that side. But when you look at them now, you know, they're they're kind of in line line with Henry Hub pricing. So, you know, there's gonna be highs and lows, but, basically, what that allows us to do is have a predictable capital program. But we still get world price less a discount probably around 15 to 18% for our oil. So we still get do get the higher oil price. We still get the benefit of that as we go forward.

17:13 And, you know, Cascadero, for instance, we're producing 1,400 barrels a day of liquids right now. So it's a very, very significant number. The high quality organic growth prospects that we have, that's just basic our drilling inventory. You know, one of the advantages of not being able to drill a lot of wells in the last couple of years and be focused on these facilities is we've been able to work up all of those those prospects and opportunities. Mentioned we also think we can still continue to expand the base in Trinidad. We don't need to look anywhere else. We can we can continue to expand that base. And then the best of sort of underpinning it all is no matter what we find, whether it's oil or gas, we can get it to the market, and we can sell it fairly quickly. ESG. You know, this is something I think that really gives us a a corporate license in Trinidad. We we really you know, we always like to think of doing the right thing, and so a lot of the things that we've done aren't economically driven.

18:08 Some of them are just purely because they're the right thing to do. And and when we look at our carbon reduction, and most importantly, when we look at our increased injected water in 2021 or 2022, you know, you don't have to reinject your the fluids in Trinidad, but we just know it's the right thing to do. So we've spent the money to do that. The other one that really jumps out here is the on the social side is the lost time incidents. None of them in the last two and a half years. And when you think that we had over a 100 work hours 100,000 work hours on the Cascadura facility with no lost time incidents, you know, pretty remarkable. And if anybody ever gets a chance to see that facility, it's a very complex facility.

18:53 So, you know, I really give credit to the team for for for focusing on that. And then, you know, we look at how much money we spent in Trinidad. Virtually everything on the construction side for those facilities was done in Trinidad. Some of the parts were sourced offshore, but but it was all built with local labor on the ground and and really key. We made a bunch of, you know, proactive changes, at the board level. I know some people have asked about the size of the board, but when we look at representation of both being listed in London and Toronto and then all of our assets being in Trinidad, I think that's properly reflected when you look at the board. And, you know, the the makeup of the board looks looks like it reflects the operations that we have. And then the the last one, which is really important, is that, you know, all of our all of our employees are signed off on the code of conduct.

19:44 So that's that's right. On the financial side, it's a bit of a a snapshot. I know a lot of people would like to see a little bit more in this presentation on the on the financials, but let's remember, it's very early at at at Cascadura, although things look, you know, right on schedule for what we had had forecast. And what we'd like to do is come out with a sort of full blown projections in mid December for the 2024 year that'll include capital, production, and cash flow. And that that's our plan for going forward in what we do. But, you know, you look at this, and I really think it it magnifies the the changes. You know, you look at our production at the end of end of June was just under 2,000 BOEs a day, and here we sit over 10,000 today.

20:33 You know, you look at funds flow from operations of $800,000. That's basically three days of production at Cascadura, four days of production at Cascadura. It's just remarkable how this has changed in in what we see. So, yeah, it's exciting. It's really exciting to be able to sit here and and present to you a five year plan that includes development drilling, includes some exploration drilling. But I I really think that from our point of view, this is really the end of the beginning for TOUCHSTONE, and and the best stuff is gone forward. The company is at a much better place, a lot less risk in that we can fund the exploration, we can fund the development, we have facilities in place.

21:21 So, you know, it's it's a bit of a grown up company, and it's it's taken a while to get here. But we think that there's just some great opportunities for us going forward. So I appreciate you sitting through our our new presentation, and, hopefully, it was able to answer some questions. Paul, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab, which is situated on the top right hand corner of your screen. Paul, we received a number of pre submitted questions from investors, and I wanted to start up the Q and A session with these. The first one reads as follows. When do you expect to get paid for the money coming in from Cascadero, and what impact does that have on the drilling program, and how soon can we expect that to start? Yeah. And that's really a a key question because it's, you know, it's the fundamental sort of cash flow question. I mean, we can all sort of talk about numbers on a daily basis, but when does the cash actually hit the bank?

22:16 The schedule is that it comes in on the twenty fifth day of the following month. So whatever we produced in September will get paid, on the October 25. And that same thing happens with oil volumes roughly that way. And so, you know, when we talk about when we get the drilling program kicked off, Cascadero is a couple months later than than what, you know, Scott and his team had in the original plan. So we wanna get that money in the end of October. Just make sure everything looks good. Make sure we get some you know, if we can keep the run times the way we've got them going right now, then we can kick off that program. We can make that decision after we get that cash in the end of October. Perfect, Paul. Thank you very much. Next question here asks, can you confirm that there are no plans for replacing in the near future? Yeah. It's a that's a great question. I think sort of jokingly, every time somebody hears that I'm bringing that Scott and I are showing up in London together, They assume that we're doing a a raise.

23:11 And, you know, I have to admit in the past, they maybe weren't wrong in that assumption. But in this particular case, it just everybody can see it doesn't it just doesn't make sense. When you're generating that kind of cash that we are right now, you know, it's just a matter of when we get back to to drilling, right, not if. And so we just wanna manage things that that we do that. There's just no reason to do that. I know some people had even said maybe you could take on a little bit more debt so you could accelerate the drilling program. That that's not our intention. We're not looking at doing either of those. We're just gonna manage that capital so that we've got it going. And the other key thing of that is we wanna have a continual drilling program. I know we've talked about that before, but what we don't wanna do is have this stop, start, stop, start. We really wanna, once we get going, you know, keep going.

23:59 There's just such great economies. So if you look at Cascadura, you know, we can drill three wells off of that one pad and be nice to do them back to back to back. So if we if we wait a little bit longer to get the program going to assure we got the cash to keep that going, that's what we're gonna do. Perfect. Thank you very much. Given the extended Cascadero timeline and disappointment with Royston, how does TOUCHSTONE plan to manage short term finance so that the drilling campaign can progress? Yeah. I think I sort of answered that. I should have looked down at that. Sorry. It it it I I think that's the answer. Right? The answer is pretty simple as we're just gonna wait for the cash to build up here a little bit, and then and then we'll kick off the program. Perfect. Thank you very much. Another question around Cascadura. When do you anticipate drilling? When do you anticipate the drilling of the first two of the Cascadura development wells? Yeah. It sounds like somebody's trying to nail me down, and they're not I'm I'm not gonna get nailed down on that only because we just wanna make sure everything's, you know, run up and running as as as well as we can and just make sure everything's optimized so that we can we can put as much cash in the bank as we can in the short term. I mean, the the rig's sitting over the hole. So it's it's two weeks from when we, you know, when we decide to go. It's probably, you know, a couple weeks getting the crew down there and then two more weeks to get things up and running. So it you know, it's just it's just not gonna take a lot of time for us to to do this. And I don't you know, the whole point of giving a five year plan is we really we need to stop sort of giving dates and having people follow us on it day by day. We gotta

25:30 start delivering on the overall program. And as tough as it is for me not to give a date, because that's my nature, you know, let us do our job on our end. Let us get the balance sheet propped up so that we can do a continual drilling program. Perfect. Thank you very much. Could you give some detail on what optimization at Coho involves and also the Cascadero deep wells optimization to produce 60 MMSCF per day to 90 MMSCF per day? How long would this take? Sure. So Coho, you know, we did a ran a production log on that now that we produced a little bit, and it it really looks like we can we can isolate some of the different perfs and and possibly increase production there, and more importantly, the operating cost. So, you know, that one we're gonna do in October.

26:18 That one will get done here fairly quickly. It's it's literally a two day job, so it's not a big deal. But, you know, the real optimization at Coho is the next two wells that we drill. And I I didn't talk about that, but we have a development well at Coho that we can drill. And then we also have what I'll call a third well that goes down into the Gibas structure to the south, but it also intersects the Coho structure on the way down. So it's kind of a development well in the Coho as well as a new potential, you know, 40 or 50 BCF pool that sits to the south at Giva. But both of those wells can be actually drilled from the plant site. And if you if you were to look at our our picture that we have in here at Coho, and I'm just gonna actually flip forward to that just real quickly.

27:07 You know, basically, what we what we do is we just have two wellheads that are, you know, a couple 100 feet away from from the existing facility. If you look at this picture that's up here now, if you can imagine two wellheads on the other end of the lease from where that that radio tower is. We drill them there, and then they just get tied in. That's the real optimization of Coho is the the two additional wells that you would bring on to bring that in. Because that well is still being choked back. It's being choked back so it can it doesn't back out the shell wells on the other end of the system. So what we need to do is we gotta get more gas in there so that we can we can continue to run that for sure. Cascadura, you know, right now, we've got roughly 60,000,000 a day coming out of there, 40 from the one well, 20 from the other. We've talked about optimization.

27:58 I think what we really need to do is let's let the wells run. Let's see the pressures. Let's see where everything kinda ties out, and then we'll make a decision on whether we wanna optimize as well. You you know, we also have to make the economic decision at at at these kind of prices that we're getting. Do you wanna optimize those wells at this point? You know, if we were getting a higher price, I think the decision would be easy, but let us work on that a little bit. There may be an opportunity for us to to have that discussion if we're gonna bring on additional volumes at at Cascadero. Great. Thanks very much. Just turning to the next question. How prospective is the Chaparral block? Yeah. You know, the the Chaparral block has got basically two structures on it. It's we call them f one and f two. I I think that f two structure that we see is as good as anything we've looked at. We've got great data over it.

28:49 There are some lead wells in there. You know, it's it's it's off of proven pools whether that you call it a lookalike to CAS or you look down at the pool to the west. It's produced somewhere near a 100,000,000 barrels of oil. It just looks great. There's a old Exxon well that was drilled in there that we think is a key lead well. So we're really excited about that block. I think it's the most exciting block that we've got with the knowledge geological knowledge that we have. Perfect. Thanks very much. What is happening with the Chamorro block bid? How likely do you think it is that the license is awarded to TOUCHSTONE? They want the government came back to us and asked us to up our our commitment on that block a little bit. We we basically didn't commit hardly anything. I think we've now come back and said that we would look at drilling a 7,000 foot well there for them, and they seem to be receptive to that.

29:43 So we'll see sort of on the final end of what that looks like, but but that's that's the kind of commit we're looking at. So I I I would say I feel fairly confident on that. But, like anything in Trinidad, let's just see what happens over the next couple months. Perfect. Thank you very much. Is the land swap still going ahead, and when do you estimate that this will be complete? Yes. It is. And it's likely gonna happen on a Thursday. I sort of jokingly say that only because that seems to be the day that cabinet meets, and that means that's the day things get signed off. I just have no idea when it'll be. Scott and I said at the very beginning, we want to get it done by the end of the year, and that's still that's still on our timeline. Perfect. Thank you very much. What do the clear difficulties at Royston mean for future exploration in the block? What have you learned that you can apply to other wells?

30:34 Yeah. That's a that's a that's a really great question. I mean, Royston looked outstanding when we saw it on the logs, both the first Royston and and the sidetrack that we did. I mean, they really it really looked like, you know, a great great reservoir, and, you know, we saw lots of hydrocarbon when we were drilling it. In fairness, we we have seen light oil on every one of the tests that we've done at Royston. The issue for us at Royston is is productive capability. And, you know, there's a lot of things that we can look at. Did we damage the well when we drilled it? You know, is this thing normally pressured instead of over pressured, you're gonna have to put it on pump? You know, what what are the various things that we wanna wanna look at? And and I think what we've learned on this is, number one, how to drill these wells.

31:27 Know, I think we we drilled the second well much better than the first well. But what we really need to do is we need to isolate these zones when we test them and probably put each zone on pump when we go to test it, which is very expensive, and that's why we haven't moved back in to try that technique on the zones that we have. You know, it's probably a $250,000 for every zone that we test. So what we wanna do is wait, get Cascadero on stream. When we started to have some free cash flow, what we could do is go back there, and that's still the still the plan. You know, I think the other thing that we've that we've learned on the on the Royston, particularly on the Royston structure, is that there are a bunch of sheets here that we, you know, that are new to us, and we gotta relook. Like, we found two more sheets in that. I guess, one extra sheet in the in the second well, and it's only, you know, 300 meters away from the first well. So we can go back and relook at the seismic and look at a bunch of things in there. But it it's exploration. You know? We're we're not I I know a lot of people, including myself, are really disappointed in Royston, but but we we we have drilled three successful exploration wells on the block now. And there are gonna be disappointments. Like, when you look at this program I've laid out now, we're not gonna be a 100% on all of this as we go forward. That's just the reality of it. But what we can do is we can, you know, take our best shot on the expiration stuff and continue to do that because we can all see that's where the value gets added. When you look at Cascadero, that's how we added the value was by taking the expiration shot or a COHO.

32:54 So we need to get we need to get used to that. Perfect. Thank you very much. Next question reads as follows. When do you plan to draw the first Cretaceous well? Will this be in 2024, and will it still be Kraken? We're not we're not sure about that yet. I I I don't know exactly what the plan I think with what we've now put together at Tiruma, it may change the thinking a little bit. We may look at doing the Tiruma well first only because it's it's much shallower, but the Kraken prospect still has to be drilled. It it has to be drilled. It's it's it's a fantastic structure. We know there's light oil there. You know, we've done some analysis on the oil we got in Royston. We know it's come from the Cretaceous.

33:40 We know there's oil in the Cretaceous. Like, we we we that prospect has to be drilled. And so when is that gonna be drilled? Not at the beginning of twenty twenty four, as, you know, as I said, where our focus is to fill up those facilities. So, you know, I would hazard to say at the very best, it would be towards the end of twenty twenty four, but you might see Trooma drilled before before Kraken. Perfect world, what we'd like to do is probably have three or four Cretaceous prospects worked up, and then you would drill them all in a row. That would give you a real good idea of what was going on in the Cretaceous. Perfect. Thank you very much. The final pre submitted question reads as follows. Given the recent deep discovery by Trinity, are you looking at drilling some deeper wells at the legacy areas in 2024?

34:28 We're not at this point. I think, you know, on the Trinity deep well, let's see what they what they get on the test. I think that'll be interesting because as as we know in Trinidad, sometimes what you see on the logs isn't exactly what you see on the you know, isn't what the productive capability is. And I'm not saying that in a in a negative sense. I think that's just the reality of of of Trinidad. So, you know, I I I wish them the best in there because if they are successful, it does open up some deeper prospects certainly on our W D 8, W D 4, you know, those blocks that we have over in there. But right now, no. Our our focus would not be to look at drilling some of the deeper stuff on the West Side of the island. Perfect. Thank you very much, Paul. That does conclude the presubmitted questions. As you can see, we've received a number of questions throughout today's live event. Given the attendance and the number of questions, I don't think, Paul, you'll be able to get through all of them. But if I could just hand over to you just to read out those questions and give responses where it's appropriate to do so, I'll pick up from you at the end.

35:24 Sure. One of the questions here is how long would it take to hook up Cascadura C should it flow correctly? So those are the new development wells at CAS. And right now, we're thinking it's gonna be about six months from the time you do it. But I I I put the caution on there if if we drill all three wells in a row. We won't test the first one until we've had the third one. Obviously, we'd have to be very comfortable with what we see on the logs, but the idea would be to drill all three of them and then go in and complete them all at the same time. So, basically, what we're looking at would be another uptick in that CAS facility second half of twenty twenty four. Right, Scott? So that's what we're we're thinking right now. Next question is why is Kraken not on the exploration road road map? I think I talked about that. It it it is still very much on the road map. We're just trying to figure out when is the right time to drill it in this thing. I you know what? I I wouldn't wanna drill the cracking well when we got all these great development prospects to drill, so the the number one focus will be on the development prospects as we go.

36:27 Sorry. Just blocked myself out there. Do the team think that the porosity and permeability values found at Royston will carry through to other prospective oil targets?

36:41 You know, I it's a fairly technical question. I I think what we can say is there's been, you know, hundreds of millions of barrels of oil produced in the Herrera in the oil zones. And, you know, the the the permeability and the porosity in those zones obviously are good enough to to do it. So I think it when we when we sit with the team with with Royston, there's really two schools of thought in shop right now. We damaged this while we drilled it, and we gotta do the proper completions on it, which is what we're doing. The other school is that just as you get into some of these deeper Herrera oil charge zones, it gets a little bit tight. You know? And the one nice thing about this is if it really is oil charged, you know, there is ways to stimulate it.

37:26 You can you the nice thing is that you can always increase permeability through fracking. I'm not saying that's what we wanna do, but it is something technically that we can look at. So when I say we're a long ways from being done at that particular prospect, there is a lot more things that we can do there for sure in looking at it. Despite the Royston one x results, do the Royston one rail results still point to Royston being commercial? That's the that's that's that is the exact dilemma. You know, we got that one test of 500 barrels a day. We go on to the second well, and we can't we can't, repeat that. And we're trying to figure out why that is. Like, we're only 300 feet away or 300 feet or meters. Meters. Yeah. Meters away. So, you know, it's it's kinda we're scratching our heads a bit to try to figure that out.

38:16 In the five year plan, are you gonna continue to grant annual share ops? And if so, can the share options be linked to market cap growth and or value creation KPIs? It's a really good question. You as we've got bigger here, the board's engaged actually a third party consultant this year, Huguison, to look at our overall comp package and and see whether options still are appropriate or whether we should be looking at DSUs, RSUs, PSUs. And so they're actually in the middle of that right now. So, you know, it's a great question, and I think it it it's one that we'll come back to, and and the board's taking a good look at that. So whenever you use that third party consultant on it. So I hear you on that. Will the recent increase in barrels of oil per day be reflected at all in q three, or it will have to wait till q four to see the results on the bottom line?

39:05 Scott, I'm assuming that the ten or eleven days or fifteen days that we've got of gas production will be in this quarter. Right? Mhmm. Yeah. So we record the sales as sales even though we we don't get paid till October, so that would be in in receivables. The the payments and receivables, but the volumes will be in will be in the quarter for sure. And we'll in the MD and A, we'll break that down specifically. If anybody's ever looked at the MD and A, Scott does a great job of that. Even if you look at Coho, you can go back and and look at all the details in COHO. Let's see. Do you prioritize exploration before dividends? No. I don't I I I think they're they're pretty well mutually exclusive of of one another.

39:54 You know, it's obviously an allocation of capital, and that's really what we're gonna have a a discussion on. And it it's really deciding where the right place to send some of that cash is. The board's starting to have that discussion, but let let's be fair. We're fifteen days into production here, so, give us a little bit of time on that. But but, yeah. The the other nice thing about the expiration is most of these licenses are six year terms. So we're under no gun to get these done in the next year or two. Right? We can push some of these out as we as we go. Even though TXP has cash flow, do you see any more funding of shares? I I I think I answered that question. I I know it's my credibility is probably a little bit low on this because in the past, we've sometimes mentioned that we're not gonna do it, and then we end up doing a fundraiser. But, you know, let the numbers do the talking when you see it. Know, You we've got lots of different levers to pull here, but the biggest lever is just not starting the capital program until we've got it it fully funded. And that that is our plan.

40:57 So I'd like to give you a simple no, but I I think the explanation sorta helps people understand where we're at. When will the wells be drilled? I've I've I've answered that. I I think I'm not gonna get nailed down to a date on this. I think it's really important that we just let's get the cash in. Let's get things going, and then when we we'll start when we can have a continuous drilling program. Why not tell the the market the daily progress in ramping up Cascadura towards 90,000,000 cubic feet a day? Because there is no progress. We're at 60,000,000 a day right now. We're gonna let the wells produce for a little while and just see where we're at. So there I guess the no news is the facts. That's where we're at is the 60,000,000 a day right now. Let's just see.

41:51 What requires to be done to complete the LOA LOL asset transfer, and when do you expect to complete it? So that's the property swap. And as I mentioned, we need to get some government sign offs on that. And, Scott and I still are working with Xavier in Trinidad and hopefully get that signed off by the end of the year. Is there any progress on tax reforms within Trinidad? I don't think so. I you know, we have been engaged to talk about some of the things that the government might be able to do to encourage more operations, we've so certainly submitted specific proposals on it. But I think we've been doing this for a long time, and we know that that's that's certainly not something to bank on.

42:37 So we're not we're not looking to any of those changes, but we're definitely involved in the process if if something can come up. So be nice be nice if it would, but, as I say, I wouldn't I wouldn't count on that. Next question. If you annualize the current funds flow from operations and think through 2024, can the drilling program absorb all the cash you expect to generate, or will there be excess for debt pay down or dividends and buybacks? You'll see that in the December forecast, and that's exactly what we'll answer in December for you for sure. And you'll you'll get a much better of idea of that in in December when you see the capital. Anything you wanna add to that, Scott? K. Karen was asking questions. Are any potential using a frac in Royston? Yeah. There is potential, but we're way too early on that. Let us do the testing first to see what kind of rates we get. Let the engineers, get the pressure data, and then we'll go from there.

43:41 With a bigger budget now going forward, will you see more data collected on high impact exploration wells like crack and like the sidewall core pressure point MDT sampling? Absolutely, we will. You got Xavier really excited now. But yeah. For sure. You know, I think that's key. And we were gonna get that data when we drilled Royston. Unfortunately, the well we're starting to lose the wellbore, and we couldn't risk getting in there with the tool. So we didn't wanna leave that behind. So, yes, absolutely. That's a key to success for us is to get, some more data on those wells as we go forward. And part of that is drill the wells we wanna drill the way we wanna drill them too so we can get those tools in. But, yeah, for sure, that would be something we'd wanna do. How are you planning to get institutional investors to invest in TOUCHSTONE?

44:29 I think, you know, we've we've, we've had this discussion with, our brokers, our our nomad, and with our IR PR firm. And I think what we really need to do is you know, I think we're crossing a threshold here where we've got this base production, which which really should give some comfort to the institutions that they're not investing in a pure exploration play. And that's gonna open we think that's gonna open some doors in in what we see. And, obviously, the market cap is one other thing. So, yeah, let us let us work on that. I think days like today, we had our our capital markets forum, which was well attended this morning. You know, we're following up with a bunch of the analysts, and we definitely agree with your comment that it'd be nice to see some more institutions on the register for sure.

45:20 The question here is, have the issues with Shell been resolved at COVID? Think I talked about that. No. We we we have to do some more work on that before we can do that. Another question here. When realistically in terms of market cap would you consider to propose a dividend? You know, I I I really think that we we gotta look at this whole allocation of capital, you know, whether it's dividend, share buybacks, ramping up the cap of the exploration program or, you know, continue to drill development wells. Let's give us a little bit of time to to focus on that a little bit more. We agree that, you know, managing the capital and return of capital to the shareholders in some form is probably a good discipline, and it's something that we do wanna get to for sure.

46:16 It's just when's the appropriate time. And, really, that's the, you know, the capital allocation. How or when did Heritage Petroleum start paying their 20% share of costs, and what amount is currently outstanding? In addition, where can we be seen in the quarterly reports? I'll answer the first part of this. They they are paying their 20% now. For instance, at Casa Dura, they paid 20% of the facility. They've given approval for 20% of the next well that's gonna get drilled there. They are totally current on their costs. There's nothing outstanding. They've been a terrific partner, to be honest with you. And where do we see that in the quarterly reports? The reports are on a net basis.

47:02 We we won't see it. It's just our working interest. Scott just said all the reports are on a net basis, so you just see us record the net number in in what we see. So what you see is our share in the quarterlies. Rob was asking about a normal course issuer bid. Yes. For you know, that that that is definitely something that, you know, when you look at it. And we have the benefit of having that third party engineering report. So, you know, we can use that as sort of a back end to determine net asset value, and then we can decide whether the shares are trading, you know, below or above and whether that makes sense to have an NCIB. So yeah. It says oh, this one I gotta read. Amazing work, PV, and team to date. What are you personally most excited about in the next twelve months?

47:51 I think the thing I'm most excited about is being to finally take advantage of all the hard work that we've done in the sense of being able to drill these wells and get them on stream and really ramp up the production. Right? It's just been it feels a little bit like banging your head against the wall on waiting for some of these permits and approvals and, you know, things that are out of our control. I think the most exciting thing is the next twelve months is in our control for a change, And and that's, you know, that's not a place that we've been before. So I think that that's, you know, that's pretty exciting for us. And it's pretty exciting for the government too. I mean, when we were down there, the energy minister, you know, was very supportive, and and I think that that's, you know, another one of our keys to our success. Thanks for that comment. I appreciate it.

48:40 I like your approach to avoiding specific targets. However, I assume we can expect a good overview during the December release that you mentioned, a clear roadmap with quarterly targets. Simple answer to that is yes. That's exactly what we're looking for in December. We will give you all of that data in in what we wanna do. Are we still owed VAT? And if so, what are we doing to get paid? We still are we still are owed a a fairly significant amount of VAT, and it's it's actually a really great question because if that money were to come in, I think it would give the finance team a lot more comfort to accelerate the the drilling program when accelerate, you know, started a little bit earlier.

49:26 We're being told that we are gonna get paid here shortly. Unfortunately, we don't exactly know what that definition is. So it's one of those things that when it comes in, we could get paid. And I think we're looking at about 1,400,000 US, Scott. It's $20.22. It's probably about 2.5. Yeah. So sorry if anybody couldn't hear that. We're owed 1,400,000 for 2022. If you include 2023, we're owed about 2,500,000. These are US dollars. We are not gonna get that 2023 number, but we we could get the million and a half in for 2022, which would, you know, allow us to do what we wanna do. How are we doing for time? Good for a bit more, Ben, still? Yeah. Go. Okay. Will you look at doing some three d seismic in the future now that you have the cash coming in and building up? You know, I don't think so.

50:17 To be honest with you, there's a bunch of three d seismic that we picked up through this onshore bid round. It's the first time the government put it in a really good package, and we got you was a bunch of three d's that have been shot. They all kinda got pieced together. And I think the team, you know, James and and Xavier and the and the whole team really got this great look of the entire southern part of the island. And we're gonna reprocess some of it for sure, like at Charuma and even at Sapero. We're looking at reprocessing it. But we don't think so. And that's one of the other things where I talk about things being in our control. You know? It's not like we gotta go shoot a big seismic program to drill these wells, even the exploration wells. We can we can do them right away. So, again, it it it's pretty good spot to be. How does drilling two additional wells at Coho help increase production when Coho 1 is choked back? The the the real volumes at Coho, we need to get more gas in there, to get those volumes up. Although it's choked back, there's no way that well could do 24,000,000 a day. It just doesn't have that capability.

51:21 So that's the reason for doing the other the other wells is we need to get more production in there to get that up to the 24,000,000 a day and still be able to get into the system. And I think it's around 600 pounds pressure that that system runs at. So, yeah, it's not like we could pull the choke out of that well, and we could fill up that facility if I if I gave that impression. I apologize. It's a combination of those two things. Are you happy with the current market cap? It's near two years lows. Why is the market disappointed with TXP? We aren't performing as many of our peers. Yeah. Well, we're obviously not happy with the the the share price. I mean, that's fairly evident. I I think, Cascadero coming on stream.

52:07 Some people are using that as liquidity event. Think, you know, that that maybe, that that might be the case. You you know, it's been a it's been a long road. Like, it's we've had a lots of delays along the way to get here, and I I I think our credibility is probably lacking a little bit. So we need to we need to focus on bringing that back, delivering some of the numbers. And, you know, I think I think getting some institutional shareholders in would be helpful as well. A lot of what we're seeing right now is is retail, and and we've had a lot of loyal loyal loyal retail shareholders for a long time. So, you know, I I could see some of them taking a little bit of money off the table here. So it's, I think that's a reality of of what we're seeing for sure. One more?

52:52 K. One more. I'll make this the last one. Let me, and I really appreciate all the questions. I wish I could get through them all here, but I'm about halfway down the bar. Can we expect any significant changes in the reserve report at the end of twenty twenty three? I don't you know, I think we've got 75,000,000 BOEs in there. We'll we'll have to figure out what we do at Royston, but put it in perspective, we've got 4,000,000 barrels booked at Royston. So it's it's not a big number either way in what it happens. The Cascadero wells, if we could drill them, you know, the the first Cascadero well is gonna shift some reserves from maybe p three, p two to to some of the proved. The next well would actually add additional reserves, and we're not likely gonna get both of those wells drilled by the end of the year. But but yeah. So that's I I don't think you see much of a change in the reserve report between now and the end of the year.

53:47 The real thing will be next year. Although we are producing two BCF a month right now. So, you know, it's one of the reasons we need to go. Perfect. Cool. Scott, thank you very much for that. I think you've addressed those questions you can from investors. And, of course, the company will review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which you know is particularly important to the company, Paul, could I just ask you for a few closing comments? Sure. I'd happy to do that, and I really appreciate everybody the time and the the questions, and I apologize if I couldn't get through all of the questions. But, you know, this really is transformational for us. This this this year is really different. This is a much different looking company than even a month ago. And I know it's been a bit of a struggle to get across the the the goal line here, but we're there. And what we now do and I what I hope this presentation today does is really shows everybody where we can go. And the takeaway is pretty simple. We got 42,000 BOEs a day of processing capacity.

54:52 We're producing 10,000 BOEs a day. That's the target is to fill up that capacity as quickly as we can. We think we got the asset base for it. We got the people for it. We've got the equipment for it. There's demand for product on the island. We just gotta execute this as fast as we can and do it in a a fiscally responsible manner is the other part of that. So that's where we're at, and I think that would be my summary. Perfect, Paul. Thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This might take a few moments to complete, but some should be greatly valued by the company. On behalf of the management team of TOUCHSTONE EXPLORATION, we'd like to thank you for attending today's presentation, and good afternoon to you all.