(Piero Stewart, Energy Analytics Institute, 13.Dec.2024) — Touchstone Exploration Inc.‘s wholly owned subsidiary, Touchstone Exploration (Trinidad) Ltd. (TETL), entered into an agreement with BG Overseas Holdings Limited to acquire all the share capital of Shell Trinidad Central Block Limited (STCBL).
Per the terms of the acquisition agreement, TETL will pay BG Overseas $23mn in cash prior to closing adjustments, Calgary-based Touchstone announced 13 Dec. 2024 in an official statement.
Additionally, Touchstone said it is in active discussions with its Trinidad-based lender, Republic Bank Limited, to fund the acquisition upon closing. The effective date of the acquisition will be 1 Jan. 2025. Also, the acquisition has a four-month long stop date, and is expected to close during the second quarter of 2025, Touchstone said.
“The asset is a strategic fit with Touchstone’s current land base and provides us access to world LNG prices for natural gas. The infrastructure associated with the assets provides processing and takeaway capacity for natural gas in the Herrera fairway. Touchstone CEO Paul Baay said in the statement.
“During 2025 we will consider pursuing an infill development drilling program at Central block and look to boost production and LNG sales,” Baay said.
STCBL holds a 65% operating working interest in the Central block exploration and production license and gas processing plant in the twin-island country of Trinidad and Tobago with Heritage Petroleum Company Limited (HPCL) holding a 35% working interest. Current gross production from the Central block is 18 MMcf/d of natural gas and 200 b/d of natural gas liquids (NGLs) or approximately 3,200 boe/d.
Termination of the acquisition is subject to customary regulatory and partner approvals, including approval from Trinidad and Tobago’s Ministry of Energy and Energy Industries (MEEI).
Acquisition benefits
Benefits of the acquisition including the following:
— It affords Touchstone access to the four-train Atlantic LNG exporting facility. STCBL is a party to gas sales contracts for the Central block asset, providing access to both local and LNG world gas market pricing,
— It affords Touchstone development opportunities. Touchstone has identified numerous infill well locations as well as a deeper Cretaceous prospect at Central block,
— It affords Touchstone with strategic infrastructure. STCBL’s midstream assets include an 80 MMcf/d gas processing plant (the “Evergreen Facility”), field NGLs flowlines, and a gas export pipeline to both the domestic market and the Atlantic LNG facility, and
— It affords Touchstone increased production: The acquisition boost the Canadian company’s base net production by approximately 2,080 boe/d (94% gas) at current field estimated rates and provides incremental corporate cash flows.
The assets
The Central block assets include 4 wells in the Carapal Ridge, Baraka, and Baraka East liquids rich gas pools. In addition to existing low decline field production, the Central block asset base has facility optimization potential, infill drilling opportunities and exploration prospects, Touchstone said in the statement.
STCBL holds 3 gas marketing contracts: 1 accessing the Trinidad domestic market, and 2 contracts accessing the Point Fortin-based Atlantic LNG facility. The Central block is situated in the Herrera fairway and is contiguous with Touchstone’s Ortoire block, providing strategic potential for gas egress and marketing options from future discoveries. Touchstone’s Coho gas production is currently processed at Central block, and the acquisition provides synergy potential for the field.
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The acquisition is subject to the fulfillment of certain conditions precedent and customary regulatory approvals, including the company’s ability to receive funding.
“Hence, no assurances can be given that the acquisition will ultimately be completed. Due to confidentiality terms in the agreement, Touchstone is not able to provide further information to the market on this acquisition until the transaction is effectively closed, or terminated, as the case may be,” Touchstone said in the statement.
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By Pietro Stewart reporting from Caracas. © Energy Analytics Institute (EAI). All Rights Reserved.
