Touchstone Exploration (TSX:TXP) — Q2 2025 results and Touchstone's 2025 work programme.

0:01 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 they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO Paul Bay. Good morning to you. Thank you very much, and thanks for everybody joining us today. It's really a a great time to give everybody an update as to where we're at. It's gonna be sort of a combined update of the quarter, second quarter results, as well as where we're at with the various projects and a little bit of a look forward as to what we see between now and the end of the year.

0:55 It's it's obviously been pretty noisy in the last little while, so I'll try to go through that and clear a bunch of those things up as we go forward and then lay out what the exciting plan is we have between now and the end of the year. So just start with a a quick little summary of touched on at a glance. You know, we've got about 260,000,000 shares outstanding, trade on both the Toronto and the London Exchange, so you you see the Toronto listing number on there. For the six months ended, to the end of June, it was a it's a little bit of a messy quarter. I I like to refer to it that way because we did the major acquisition of the Central Block facility, that came in on May 16. So it shows up for a partial period in here. All the costs associated with it are in there. And because the way the deal was done, it's actually a look back to January, and so there's some very high costs that are associated with that and doesn't really reflect truly the acquisition going forward. So that's why I refer to this quarter as being a little bit messy.

1:58 You can see that the natural gas sales funds flow from operations for the six months, just over $4,000,000, and the operating netback about $14. And we'll we'll talk a little bit about how that's gonna change and and move up. And at the end of the quarter, we had about 6,300,000 of cash. And then the net debt went up dramatically, during that quarter because we dropped on the, the full amount for the Central Black acquisition of about $30,000,000. So in essence, it doubled in that quarter. So when I say it's a messy quarter, really, you had all these costs. You got the debt. You've got everything kind of dumped in for the Central Block acquisition, and we haven't had seen all the revenue for it yet. So I think what you'll see is a couple of quarters, q two, q three, will probably still be a little bit messy as we get things sorted out there. Talk about some cost savings we're doing, some onetime expenses, and then what you'll start to see in q four is a really nice clean look at at what the, the go forward rolling rate will be for Central Block as we go forward. And talk about the reserves in here. These are the combined reserves of of the company now, including the Central Block acquisition.

3:04 So we talked a little bit about Trinidad and the opportunity in Trinidad, and and I'm not gonna go through each one of these. I think what we are finding, though, is this is actually becoming a a pretty fam friendly jurisdiction. Very encouraged by the new government that's come in. We've had a meeting with the minister and some of the things that we're seeing. I think that, you know, it'll be interesting to see when the budget comes out in October, how they wanna deal with our industry going forward. But certainly very encouraging things things from the government on shortening the timeline for approvals and various other sort of initiatives that they're taking on. So so we're excited from that point of view. I think the biggest change for us, though, is really the the market access that's happened for us in q two. We'll talk a little bit about that in some other maps here. But, you know, there's sort of three main business or three main buyers of natural gas in Trinidad. There's the chemical business, there's the LNG business, and then there's the electricity. All the power on the island is generated by electricity.

4:04 And we were we were sort of held hostage a little bit to the domestic market, which is the electrical market and the petrochemical market. And now what we're able to do is certainly between now and May 2027, we get a little bit of the benefit of the LNG market. And then in May 2027, we get this nice sort of clean part of our portfolio that'll shift into the LNG world, which I think is pretty exciting and and really be a nice balance to the portfolio in what we see. As far as the the rest of the things go that we've got going on in Trinidad, you know, I think all the equipment's there. There's certainly lots of demand for the product. And as I mentioned, the government seems to be very open for business. So we're excited to be there. And probably more important than anything, it's right off the coast of Venezuela, which makes it the optic end of the Venezuelan basin. And for those that might be new to the story, you know, it it probably is the richest hydrocarbon basin in the world. And so, you know, that's the right place to be from a geological point of view.

5:07 Talk a little bit about the second quarter, and I I I talked about this being a little bit messy. And, you know, I think what probably the the biggest thing was the drop in the central block that came in in in May of May 16. And so we really only end up with forty five days of production from central block in here, but there is a lot of cost. A lot of the closing costs, a lot of the onetime expenses are in here as well, and that's why you really see the the much lower funds flow in the quarter. Now as we ramp up the production and and we get those things cleaned up, you'll start to see, as I mentioned, a much cleaner quarter. Probably part of q three should be pretty clean, but q four certainly will. But give you one example would be at Central Block. There's a a facility there that was put in place by the previous operator where the staff were two weeks on, two weeks off, and they stayed there.

5:56 And it's about 35,000 US a month, and we just don't that doesn't make sense. But it's gonna cost us, you know, probably somewhere in the order of about a $500,000 to take it out. So it's those kind of onetime expenses that we're working through to make sure that we lower the operating costs as we as we go forward. As far as the volumes go, you know, the average for q two is about 4,300. We put out in that release last week that it was about 5,100 for the month of June, and July was about 5,300. So I think what everybody should be getting a little bit of comfort with, I certainly am, is that we're seeing some nice stable production from all of the properties when you combine them all together. So that's the the point from from looking at that. And, again, you can see the net debt number basically doubled with the $30,000,000 of debt that we took on to do the facility.

6:48 The guidance that we put out, we changed this. And and if you recall, we haven't put on any real revised guidance since December when we first announced that we were gonna buy the central block deal. So quite quite old guidance. And in that previous guidance, we had a bunch of Cascadura wells coming on early in the year and then coming on a little bit later. And that's really the only difference here is that those Cascadero wells that were gonna come on in February, early March are now gonna come on in October. So that's why the production's been pushed out, and that's why the funds flow have been pushed out. And, really, the reason for that is we wanted to focus on the central block acquisition. And as people that follow the story quite closely know, we had just a nightmare when we went in with a new mud system earlier this year to try to drill the first Cascadero wells, and it just didn't work. So we had to suspend operations since we've come back and now drilled one successful well. And as of today, we're over top of the other one and and drilling that out as early as Wednesday. So, you know, I think there's some delays in here, but but certainly it hasn't been production based. It's been more production based on the drilling not coming on in what we've seen and the new guidance that you see here.

8:00 So the production overview talked a little bit about this, and, you know, we we continue to show this, but I think it's really important to look at it in the wedges that we see now. You basically see that legacy oil production across the bottom. You see Coho, which is that single well, which has almost been on for three years now. You see these initial wells coming on at Cascadura, and then you see the the steep decline, and now we're starting to see that level wedge at the back end of it. And the same thing with the central block, which has now been dropped in in blue. And that's where I say we're running, you know, sort of that 53, 5,400 BOEs a day consistently every day now. A lot of that is depending on line pressure that comes in from the main line that we go into at Cascadura. We're seeing the wells really get bounced around on that. And as a result of that, what we've done is we've sped up the compression project that we originally had in the engineering program.

8:52 We've actually sped that up now where the purchase order went out last week, and, we've identified a unit in Houston, that'll work for us. And, we're looking to bring that on in q two of next year, and that'll just stable out stabilize out that production. And I'll talk a little bit more about that, but we'll really have two phase flows at Cascadura. We'll have the compressor phase flow, and then as we bring on the new wells where you see those big spikes in production, they'll go around the compressor and just go right into the facility. And then when their pressure drops down, we'll move them into the compression. So it's gonna be that next stage for Cascadero and what we see. Talk a little bit about the asset overview. We've now got all these facilities in place. We basically own all of the natural gas processing onshore in Trinidad. We've got our Coho operation, which actually processes the single well and then takes the gas down into cast into central block where then it goes gets sold from there. And then we've got Cascadura, which as I mentioned, we're gonna drop in the in the compressor. But, basically, we have all the facilities built now, and it's just a matter of what I've been referring to for a couple years now, drill to fill. And as we start to work out the the kinks in our drilling program and we start to have that happen, you'll just see these volumes ramp up as we go forward. You're still gonna see the steep declines in the Herrera wells.

10:11 That's not gonna go away. The whole idea here is to get all our money back during those steep declines. And then now that we'll have the compressor in both at Central Block and at Cascadura, you'll start to see this nice level predictable flow of income coming out the back end of that. So facilities are in place. Talk a little bit about the marketing, and this was the big change for us at Central Block. You can see that new red arrow that basically takes our gas at Central Block out to the LNG facility before everything had to go up to point leases on that side. And the the Central Block sales, although it goes to LNG from now until May 2027, so just a little bit over a year, I guess, about a year and a half, there's still a Henry Hub gas component within that contract.

11:00 So you won't really see that really higher price gas contract until May 2027. I know there was some confusion around the q two numbers because the gas price looked low at Central Block, but we actually get paid three different checks for our our our production of Central Block. One is we get the condensate that gets dropped out at the plant, so that's the first one we get. And then when the gas hits the LNG facility at Atlantic, they they strip it again, and we get two checks there. We get one for the gas, and then we we get one for the propane, butanes, and and all the other the liquids that are in there. So so you get kind of this combination, but on a per m and BTU, when you combine the two of those, you'll see. So it's gonna be a different way of reporting for us. Everybody's gonna have to kinda get get used to it in what we do.

11:51 The other thing is we only get paid at Point Fortin when the ships leave once they're loaded up. So the production will be a little chunkier as we move along. There'll be inventory as we move along. Production won't always match sales, so you might get some carryover. So there's some new things that are becoming out. And that's when I talk about q two being a little bit messy again. You know, q three, we get the rest of the costs sorted out. We'll start to get these inventories balanced. And then going into q four, you'll really you'll really see it'll become pretty compelling why why we wanted to see Central Block as part of our assets. And now I wanna start talking about this next stage because, you know, the development drilling we got at Central Block, the development drilling that we've got at Cascadura, those are now underway. They're moving forward. We've got the locations at at at Cascadura.

12:39 We've got approvals to start construction now at Central Block, which will happen here in the next week or two once the forestry is done with their jobs on stamping trees. So now we gotta kinda look beyond that a little bit as we fill up those plants. And and we really got three different prospects that we wanna talk about, and these are in the same formations in the Herrera. And the the the biggest one is Sapero, which sits just North of Cascadura, actually just North of Coho, really. It's a beautiful big structure. Sits right in that window. It's not very deep. It's about the same depth as what we drilled. So we're starting to scout out that location and looking at when we can do that as the as the funds flow start to come in next year. Although we're gonna use a big chunk of the funds flow for next year for paying down debt.

13:26 You know, we'd like to get that debt down significantly from where it is now, but the other piece will allow us to do development drilling and look at the exploration. So peril will probably be the top of the list. Charuma, I'll talk a little bit more because it's a different type of play. And then Rio Claro is more of an oil play, a little bit shallower on the Rio Claro block, and we'll look at adding that to the the portfolio as well. So for the first time, I think in about nine months, you you'll start to hear me now talking about where do we go to that next stage as the development drilling continues along here. Really exciting what's happened in the last couple of well, literally in the last month here on the Cretaceous in in in Trinidad. We've been talking about it for a while. We think there's a great Cretaceous opportunity.

14:11 You know, Guyana offshore, it's now become the, you know, fourth or fifth largest producer, and that's out of the Cretaceous. The big player there was Exxon. They've they did a bunch of work in Guyana. You know, they're gonna be over a million barrels a day there. Interestingly enough, the last two weeks, they just stepped into Trinidad and did a private deal with the government and took on seven, seven offshore licenses for the Cretaceous up to the Northeast part of the country. But I I think what this should signal to everybody is the fact that the Cretaceous fairway heads right this way And the fact that Exxon's willing to step up and make a commitment for both seismic, and I think one well in some very deep water, should give everybody a little bit of encouragement that, you know, there's there's obviously, you know, opportunity for Cretaceous. And when we look at Kraken, Saint Croix, and up north, which that's the Tiruma, Cocos or Tiruma, you know, these are all big plays that we look for. I've been asked a lot of questions. Are they gas or oil?

15:12 Don't know what the target would be. If it would be like what Exxon's seen, it would be more of an oil, a lighter oil in in what we've seen there. And we think it's the source rock for a lot of what we're drilling drilling up holes. So this is pretty exciting. The first one I think that would likely be drilled here would be the would be the Tiruma. That Saint Croix actually sits right below the Sapero Herrera anomaly, so we could do both of those. So once we get the drilling program figured out here, we get a little more confidence, we get a few more of these wells under our belt, then I think, you know, this this opportunity becomes something that gets pushed much closer than it was a couple of months ago when we were looking at things. Social governance, those things have really not changed.

15:57 It's remained, you know, very much a local local workforce in Trinidad. We have brought in some more consultants lately, especially on the drilling front, to help us sort of use best practices around the world. But as we do that, we're always integrating, our local content to to sort of transfer that knowledge as we go. So between now and the end of the year, basically, what we've got is we've got, five five wells coming on stream. We'll have Cascadura four and five, four that's drilling right now, five already drilled. We're gonna speed up that process a little bit. We're gonna end up perforating both of those wells using the drilling rig, save us a little bit of time, and we'll get those on right away. Then the rig will kinda sit off to the side there. Then while we get the central block ready and the central block well will be drilled between now and the end of the year. Right now, we're not forecasting it coming on till January.

16:47 It may be able to compress that, but I think January is when people should sort of look at that coming on. And then we've got two wells that'll be drilled on our oil properties, and that's as a result of a a swap or a disposition. We're selling about 60 barrels a day of production, and the contractor we're selling it to will drill a couple of wells for us. So really no cost to us on those two wells, but we're able to to get those funded, which are commitment wells. And then the other part is doing the design, the ordering for the compressor, which quite frankly will be the game changer for 2026. When we get that dropped in, we'll have very, very predictable production then coming from both Cascadura and from Central Block. And, and then we'll be able to get the a nice steady sort of bottom wedge, you wanna call it that, in the production graph. And then as we bring on new wells, we can bring them on as they decline, then we, we go from there. So, actually, a very busy year between now and the end of the year, and then we'll we'll see those results and then give you some guidance on 2026.

17:52 So I think that is where I'll leave it for now, and then maybe what we'll do is we'll hop over and take a few of the questions. That's cool. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. And while the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. And, Paul, as you can see, we have received a number of questions throughout today's presentation. And if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, I'll and pick up from you at the end. Thank you. Perfect. Appreciate that. Yeah. I'll start out with the first one was what are the costs that could be removed from central block?

18:38 For instance, reduced staff number shifts, water disposals, synergies. Those are all good things. I think I talked about the the living quarters, so we won't talk about that. Yeah. We didn't bring any g and a costs over at all with Central Block. It was just staff in the field. Fourteen fourteen employees came over, but water hauling is a really good example. They were sending that to a third party. We've got a water disposal well, so we can certainly do that one, you know, happens fairly quickly. You know, some little things like they had a helicopter on standby. We don't know do don't need a helicopter on standby. They had a lot of top office costs that were getting pushed down in what we see. So, you know, the the run rate right now is probably $3.50 to $500 a month, and there's a little bit of gap in there as we we continue to clean that up. But, you know, that's probably down from a million and a half a month already just in the way we've done it. So so there's definitely some synergies, but there's some cost to doing those things, like moving the facilities out, letting people go, doing all of that kind of thing. So that's why I say it's gonna be a little messy in q two and q three as those costs work their way through the system.

19:49 The next question is, has drilling at Cascadura 4 commenced? If not, when can we expect drilling? How long do you expect the drilling to take? When drilling is completed, how long will it take for tying Cascadura 4 And 5? That's a great question. So we actually moved the rig from it it walks on these big tracks. We moved it from Cascadura 5 over to Cascadura 4 on the weekend. Slumberjays been in doing the mud, getting everything ready. Ironically, and I know this is gonna sound strange, there was an airstrike here in airline strike in Canada. Air Canada went on strike, which is the way a lot of the crew gets down. So they've been delayed a day, but they're arriving today. So our plan would be to probably drill out the packers and the plugs here starting on Wednesday. And we're targeting about seventeen days from beginning to end on that. And then following that, the rig will then go and do the completion of those two wells depending on how fast we get approval. It may just walk over, do five, and then come back and do four.

20:47 James is working on logistics of that and then have those on stream. Our target is to have those on stream in the month of October. So that's that's what we're looking at for for the the Cascadero wells. So that that operation is going as fast as we can make it happen here. And, again, it'll be the same crew, same supervision, same mud system, everything else that we did on Cascadero five, which came in slightly under budget from where we were. So a big win on that one. And then the rig will move just off to the side, and then we'll move it to central block. And this next question is why was the realized gas price for central block low at $2.75 when it was expecting to be in the 4 to $5 range? A great question. I think I already answered it a little bit in that when we talk about that 4 to $5 price, it it it's really the price we get for the gas at the inlet to the Atlantic plant. But what we've now found is that we actually get it it gets stripped again inside Atlantic.

21:47 So if you look at the checks and what you're gonna start to see is us reporting in probably MMBTUs, which is kind of equivalent to the MCF, and you'll see that that roughly 3 to $4 range. I don't think it'll get to 5, but we'll certainly see 3 to $4 range in in for the those contracts until May 2027 or if we can get above 22,000,000 cubic feet a day. So I I should have mentioned that the contract only goes to 22,000,000 cubic feet a day, and then the higher price contract is any volumes up above that. So that's that's one of the reasons. You will see the $5 and higher gas after May 2027 when Henry Hub, the Henry Hub component comes out of the contract. So you'll start to see those those ramp up. But Scott and I had a long discussion about how to report this because it's you know, and, obviously, the way to report it is however we have to under IFRS.

22:40 But but what we need to do is then bring it back to the shareholders and sort of give you a combined rate of what the MMBTUs look like because it's it's it's basically what we're getting paid for the gas. And I should mention those numbers that you see are after all the processing costs. Right? So there's no processing costs even when you see that $2.75. So it's actually still a a much higher price than what we're seeing at Cascadero. The next one is the fall in Cascadero and Coho is is not relenting, and then there's a bunch of percentages on Cascadero and Coho. Gas wells decline. Like, that's the reality of the business we're in is they do they do decline. The slope of them will change. But if you if you the the the biggest thing to look at is look at the central block declines and then look at the cascadero declines. Same formation.

23:32 The difference is when BG built that plant twenty years ago, they put compression right in at the front end. So they've been they've been not subject to these line pressures that we had. Quite frankly, we thought we'd get a couple of years away without having to put in the compression. That's obviously been moved up now. But let's be clear. Natural gas wells decline. It's not a it's not an infinite gas pool. So as you take gas out, you see those decline. What you wanna see is see those drop off into lower sort of single digit declines. And we're seeing that. And even if you look at Coho, I mean, it's been on a a fairly long time, and you still see these nice declines in in that's what it's gonna be, and that's the reality. It's also why you need to be drilling wells every year into these pools, the development wells to keep them going.

24:18 So I appreciate the question. I think and you will see the declines change at Cascadura depending on the line pressure. So if we get a month of really high line pressure, let's say, 700 pounds, it'll appear like the wells are declining more, but they're really not based on bottom hole pressure. It's surface pressure that makes it look like that from a production point of view. So we actually ran downhole production gauges in Cascadura 2 so we can actually see what's going on at the reservoir, and we will run downhole recorders in Cascadura 4 And 5 as well. And then we'll be able to see what the pressures look like downhole. But, you know, it it give you an idea, like, when when the pressure drops, if it's really high for five or six days and then it drops, we see those volumes come right back up. If it was pure decline, you wouldn't see those production, you know, go back up. So it's, it may seem a little bit frustrating, from a shareholder point of view, but but, you know, it it's the way the reservoir performs.

25:18 Once we get these compressors in, instead of seeing six fifty to 700 pounds, way Kevin and the team has this setup right now, the wells will see 300 pounds, and they'll just see 300 pounds every day. And it's also better for the wells to run at a a steady rate. So I think q two of next year, you'll really you'll really see a much different production profile of the CAS, and that's basically gonna run for the next fifteen years, right, as we continue to add on to it. Next question is we keep seeing hourly costs, the bridge, the pump, all those things. Yeah. I mean, the the the bridge issue, I mean, if I I think we had some folks down there. I mean, you understand once you see the size of this, what the bridge issue is and everything like that. Those things are gonna happen. There's no you talk about the pump.

26:05 I think you're probably speaking about the pump in CAS three. You know, that's a the the the ran the pump. Pumps handed up. We had to change off some equipment on the top end of it instead of going back in and wasting more money by putting it back on pump and having the same thing happen again. Redesigned it, and that's gonna happen here in the next couple of months. So it's part of the part of the, you know, the exploration game is as we see these new reservoirs, we have to figure out how to produce them. But I don't really think that that one is a I know an overexpenditure as much as it is just trying to understand the reservoir. And those those will continue to happen, especially as we move to Sapero, Churuma, and into Rio Claro. Those those blocks will look quite different. Although Sapero looks a lot like Cascadura in in the technical term for sure.

26:54 The extra funding by year end, can you explain how we can fill that without further dilution? And what somebody's referring to here is the question is, in our last disclosure under our banking agreement, we have to raise about another $7,200,000 of equity between now and the end of the year. And this was put in place when we did the Central Block acquisition. You can see the debt jumped up dramatically because the cent our the bank funded the full acquisition. But what they wanted to make sure and what we wanted to make sure was that we had enough funds to do the whole capital program as it rolled out, and that that was the whole idea of getting the number, and and the bank and us agreed that that was the number that we wanted to do as we went forward. The the question is is how much of that will we have to by the end of the year? And you probably saw in that last statement we said or whatever we agreed to on the bank. So we'll we'll be talking to them throughout, and it it's really gonna depend on how the wells come on. If Central Block keeps outperforming the curve the way the team has it right now, all of those things, we'll have a review with the bank between now and the next quarterly. And I hope all of those things that we've got, all that noise that you that you hear in there, whether it's the equity, whether it's the everything else that's going on, that's all gonna be cleaned up by the end of the third quarter so that when we report the third quarter, middle of November, that'll all be cleared up. And there are some other ways to deal with that those things. I mean, there's waivers from the banks. There's change in numbers. There's higher production levels. There's all all sorts of

28:24 things. So we're looking at all those options. But, obviously, with the the issue we had with the the default of the the one equity holder, we had to fill that gap as quickly as we could to get back in the field, and that's what we did last week. How will you fund the $6,000,000 required for the compressor? That that's out of the capital. So that's that's in there. That's that's right in the numbers. That's in the forecast that you saw earlier. I think about 2,600,000 of it gets paid this year. That's the deposit and everything else for them to to do the unit. It's got some recylindering on it. It's a three stage unit. We only need a two stage. They're gonna have to change it out. So about 2,600,000 of that 6,000,000 is this year, and then the rest will be in q one of next year. But that's based into the capital program. And to give you an idea, the the you know, this compressor will basically add another well at it'd be like adding another well at Cascadura. So but very low risk. Right? Like, it's not like drilling a well where things can go wrong. Like, the the compressor will basically add it, but it it adds another well for the next fifteen years. So it's a it's, you know, what I would refer to as a no brainer to get us done and and pretty happy that the the team here was able to uncover a new unit in Houston.

29:41 The lead times on compressors right now with everything going on in the world is thirty four to thirty six weeks, and and, you know, obviously, we think we can do it here over the next six months. So we're really happy with what the teams put together there. You mentioned LNG price of $8.09, $10 before, but after the cost is much lower, what's realistic? The LNG prices of $8.09, and $10, that the LNG pricing is actually higher than that today if you were to look at the the markets. And then you look at the 2 or $3 to to to back off of that to get what we get paid to run through. But the issue right now is that we're not getting paid pure LNG until March 2027 sorry, May 2027. May 2027 or when we get above the 22,000,000 a day gas production, which if we're successful in drilling the the this well that we wanna drill, think we it'll come on at about 10,000,000 a day at central block. That will take us to roughly 27, 28,000,000 a day. And then you'll have 6,000,000 of that gas that'll be in the pure LNG market, and we'll get we'll get a snapshot to see what that looks like. Interestingly enough, the LNG plant went one of the trains went down here for four days last month. So for four days, we actually got the higher price contract.

30:59 It'll be interesting when we actually see what that price is here in q three, what we actually got paid for those four days, because that'll be pretty reflective of what we'll get paid under the new contract or when we get over the 22,000,000 a day. So we'll dispose that as soon as we see, but you you don't know what that number is until the ship gets loaded and moved and all that. So it's gonna take a little bit of time. But don't, yeah, don't don't abandon, and don't don't don't don't think the story's changed as a result of what you saw in q two. It it hasn't changed. Everybody's just gotta let us work through q three here. A lot of noise in q two, including that that gas price because of the the netting off of the propane and butane. So, yes, we got $2.75 for the gas, but then we also got a very large check for the pit protein and butanes, which when you combine them in the MMBTUs, that's really the volume you're selling on a central block. So we need to disclose that a little bit better, and we'll put some more words around that going forward.

32:01 How can you fulfill all your license obligations with our lack of cash flow on all these blocks? Well, the license obligations, the the the biggest ones are the six year ones that we just picked up at Trooma, Sapporo, and Rio, and we're only in near one of those. So I, you know, I see those coming down the road without any trouble. And as far as on the licensing of the oil blocks, as you can see, we basically sold 60 barrels a day of production. We're gonna get three wells drilled for us, and those wells should do 50 barrels a day to a 100 barrels a day each. So, you know, that that's I'd love to do those deals all day long if we could. So that's how we'll meet some of the obligations. And the deeper play, the Cretaceous play, although it's not really obligations, we do have some wells we wanna drill in there. You know, that's an obvious one where I think you might wanna bring in a partner, and we'll look at putting a package together and see if there's some interest maybe on those Cretaceous plays and accelerate that drilling program on the Cretaceous. Especially now that Exxon's moved into the country, I think it talks a little bit about a lot more eyes you're gonna be on on on that opportunity.

33:07 Next question. I think I've answered is what price are we getting from Central Block? Can you give us an exact figure? The the answer is no. I can't give you an exact figure because I don't know until we see the sheets from Shell. So Shell Marketing buys the gas from us. They organize where they're gonna sell it to. They put it into the market, and then when they sell it, we get paid. So that is gonna go up and down based on the on the pricing. It's gonna go up and down based on Henry Hub price. There's a small component in there that's also Brent oil price. So there's sort of four factors that move that price around. So, no, I can't give you an exact price. But as we move to that May 2027 date, you get a lot more weighting into the LNG, so it'll become more of a pure LNG price.

33:57 When will the Cascadeura contract be renegotiated? And how many wells do you expect to see on CAS in the next three years? I I I really like these questions that are starting to look out a little bit longer because I think that's important as we as we enter this you know, finish this building plants and now moving into the production stage. I think it's it's exactly the right way to start looking at this asset base. The contract itself gets renegotiated in October 2027 and go from there. However, you know, there is a huge demand on the island for gas right now. They're short gas. So so we are having discussions with them on that and and seeing you know, if they were to pay us more, we could drill more wells. They get more volume.

34:43 That's the discussion that that we're having right now. So there's kind of a side discussion, but the official date is October, note of, 2027. And when you look at CAS over the next three years, we actually see probably in the order of including this year. So if you if you take this as year one, there'll be two wells drilled. And then we could see four wells drilled next year and four wells drilled the following year. So you basically have 10 wells in there. Two of them would probably be in that central block in the sorry. Not central block. In the b block of the Cascadura Pool, which is kinda where these two are being drilled. And then what we've seen on the three d now that we've reprocessed it also what we've been able to learn from central block is there's likely gonna be two wells to the west of the plant, which should be sort of a a new area for us.

35:35 But on the three d, it looks like the obvious place to drill a couple of development wells. So as we drill more here, we'll we'll fill in the blocks. But, you know, there's lots of room to drill 10 to 12 wells in here, especially when you look at the the geophysics. So it'll just be a matter of how we wanna roll out the gas volumes. And, ideally, what we'd like to do the compressor is gonna be good for about 60,000,000 cubic feet a day at that 300 pounds. So, really, what you do is you'll have this base load of 60,000,000 cubic feet a day. And then as you bring on new wells, they'll go around the compressor and and then drop down, and then they'll come into the compressor. So that's you know, that when I talk about it being more predictable, that would be the way you would wanna you you'd wanna run this going forward. How is CAS three producing ATM?

36:27 I think that maybe means at this time, but it's just flowing right now because we're waiting for the pump on that one. So it's I think volume's twenty, twenty five barrels a day of oil. It's a it's a it's just flowing up three and a half inch tubing on its own every day, so it's not really doing anything. The pump and the the variable drive for the top of the pump, because the pump is running too fast when we ran it last time, so we have to actually slow it down a little bit. So we're gonna slow it down, but that process, I think, is going this week or next week. The service rig is going back on. So we should see some results of that again in q three, q four as we go forward. But, basically, it's been zero operating costs on it. And if you saw an operating cost spike in q two, that was because of all the costs around the Cascadura three running in the tubing, running the pump, doing all of that. We put that through as an operating cost.

37:22 It's gotten really interesting to see what that that that little well will do. I think it's pretty remarkable that it's still flowing up three and a half inch tubing and still giving us oil. Like, it's they it just you can't kill that well, so it'll be really interesting to see that on on pump. What percentage uplift, if any, would we see in the compressor online for CAS with consistent volumes? Two different questions there. One would be the first uptick, and and we actually see about a 5,000,000 a day uptick when we see it. But but what it's gonna do is it's gonna you're gonna see a 5,000,000 a day volume uptick, but then you're gonna see stability of everything else that's going on. Right? So you get this you'll get a flat production. So instead of seeing the production going up and down, you'll basically have a at the the top number because that's that's the let's say, line pressure is six fifty. You're now gonna go to 300 PSI.

38:17 So it'll be that number plus about 5,000,000 a day, and that's the original. That's what the model's kicking out right now in in what we see. So if you do the numbers on that, roughly what we're getting paid at Cascadero, it's it's about a one year payout just on the incremental volumes, but you also have to think about the volumes we lose every day that we get high pressures. So it's a it's a very, very economic project. And as I say, it'll run for the next fifteen years. Is the government willing to increase gas price for us earlier if we can commit to accelerated drilling? That that's exactly the conversation that we're having with them, and I think it's we're gonna find out how how interested they are. You know, the Trinidad government goes under a huge change every time a government changes.

39:02 Like, all the board members step off. So the National Gas Company, all the board members step off. So you get a new chairman. You get all these new board members. And I think in fairness, they're a little reluctant to do anything really dramatic right off the get go. They kinda wanna, you know, figure out what's going on. So we we know some people on the board, and we're we're obviously having those discussions. But, you know, their first meeting is gonna be an orientation meeting, which they had, and now they're gonna start to look at things. So I I think there's an opportunity there, but no guarantees on that for sure in what we see. The the VAP, there's a question here. It says, why is there if they're so keen, why don't they give us a quicker VAT refunds? I I I totally agree. We just we just made a submission to the new finance minister.

39:50 He had asked us to put a new submission, and and top of the list for us is is get the VAT refunds in. You know, we got we got roughly 3,000,000 US of of VAT bonds. Those we're gonna be able to sell. So we'll we'll get those, but those have been, you know, eighteen months waiting to get the cash for that. He he surprised me a little bit in that he says he hates that. It the problem is the collecting on the other side so they get enough collection on the other side to pay the people that they need to pay refunds to. And the one couple of suggestions that came out of that meeting would be a a zero VAT for our our industry. So we wouldn't you know, we'd never be in sort of having to be repaid back. I think he found that interesting. The other one would be a net VAT, so you'd only pay the net amount of what you owed or what you received every month. And then the third component, which I think makes the most sense, would be just offset your VAT against any other taxes that you owe, whether that's SPT or PPT.

40:50 It's all the big same pool, and that would, you know, that would help. You know, right now, we have roughly you know, we had about 7 or $8,000,000 of VAT refunds when you look at that q two if you include the VAT bonds. And, you know, that that in itself is virtually too well sent to us. So, you know, I that was the example I used for the minister, you know, is is how we could accelerate that. And very, very receptive asked us to put in a formal submission, which we did. And so we'll see where that goes. Budgets come out in October, September late September, early October in Trinidad. So and we've got another meeting scheduled. Scott and I are down, I think, the first week of September. How deep will CB wells be when they're drilled? They're about 7,000 feet.

41:39 We spent about a $500,000 redoing the three d seismic at Central Block. And I gotta tell you, there's some really exciting things, Gavin and the team along with James. You know, we think there's some really great development wells. We think there's a couple of sheets in here that aren't being properly drained. And if you looked at our Cascadura deep and ST one when we did that reperforation, you know, we saw some pretty big rates coming out of there initially. There's a lot to do at Central Block, so pretty excited about that. So 7,000 feet. So if you think about that, that's really no different than what we've than what we're drilling at Cascadero, so we should be able to do them for about the same. One of the challenges is is you're gonna have zones that are depleted at central block and then hopefully some some higher pressured zones, so there's gonna be a little bit of engineering to work through those zones. But but I think we've got the right team on that.

42:29 Is there any scope for decommissioning cost per barrel for CV to be reduced in light of likely decommissioning date in 2040 being extended? How can we negotiate this? I don't really think we can negotiate it. This is somebody obviously pretty knowledgeable what's going on. There's a fee that we pay on every barrel for decommissioning, and that gets put into a fund. I actually think it's a great way to do it. It it it's a small amount. I think it's about 25¢ that goes in there, and then you have this fund at the end to take it away. And from a from an accounting point of view, I think it it kind of it correctly reflects the liability that you inherently have when you acquire these assets. I mean, there is an liability down the road. But if you've got, you know, money sitting in a government account that you can access, I think it's the right way to do it so you don't end up with a bunch of abandoned orphan facilities at the end of the day. So so that's I think that's the last question.

43:28 That's correct, Paul. If I may just jump back in there, and thank you for adjusting those questions for investors today. You have covered a lot of ground there. And, of course, the company can review your questions submitted today, and we'll publish those responses on the investment company platform. But, Paul, before I redirect investors to provide you with their feedback, which one is particularly important to the company, could I please just ask you for a few closing comments? Sure. I'm delighted with that. And, again, thanks everybody for taking the time. I think the the key thing is is q two is messy, and, you know, I think q three is gonna be a little messy as well. And you'll start to really see the the benefits of what we've combined here and put everything together in in q four. I think the the growth profile as we go forward here, bringing on the CAS wells this quarter, bringing on the the first central block well first quarter next year and then the compression coming on and then additional wells after that.

44:21 I think you're gonna you know, the shareholders are gonna really start to to see this consistent growth that we're gonna that we're gonna see and then sprinkle in a little bit of exploration along the way as we go along. The story is gonna look quite different. And, you know, it it should have been a very quiet summer. It should have been drilling these wells, getting them on production, moving to central block, doing all those kind of things if we if we hadn't have had the the default of the one equity holder in in London. That was the plan for the summer, and I think the team's done a good job to to put together an alternative. It's, you know, it's by no means the perfect alternative, but we needed to get back in the field. We needed to start to get drilling in while we mitigate everything else, and and that's what the team's done. So look forward. I I I really look forward to this call at the end of q three and in November when we'll we'll have made so much progress on all of these assets. So look forward to seeing everybody then.

45:17 That's great, Paul. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of TOUCHSTONE EXPLORATION, we would like to thank you for attending today's presentation, and good afternoon to you all. Thank you.