Touchstone Exploration (TSX:TXP) — Update on the recent acquisition of Shell Trinidad Central Block Limited

0:01 Good afternoon, and welcome to the TOUCHSTONE EXPLORATION INVESTOR UPDATE. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted anytime by the q and a tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to make the following poll. I'd now like to hand you over to CEO, Paul Bay. Good afternoon, sir.

0:30 Thank you very much, and good afternoon to you as well. And appreciate everybody, taking the time to to join join me today on getting what I think will be partly an update of, of where we're at, including the acquisition that we recently, completed in Trinidad and sort of where we're headed for the next couple of months because we've kinda hit the ground running here. So we're we're pretty excited to pass along all of that information to you. So let me start out by walking through the presentation, and then what we'll do after that is I'll open it up for questions. And I see there's already some questions in here, which is great, so appreciate that. Just a a quick summary in case there's some folks that haven't haven't seen all this data before, but our market capitalization now is just over a $100,000,000 Canadian trade both on the London And Toronto Stock Exchange. AIM on the London Exchange, obviously.

1:18 And so just over a $100,000,000 market cap. For our three months ended March 31, that's the last quarter that we put out. And because we're on the TSX, we pro report quarterly as opposed to every six months like other some of the other AIM companies, but you can see production was about 4,300 BOEs a day. Reserves just over 50,000,000 barrels, BOEs, barrels of oil equivalent, on a two p basis independently evaluated at the end of the year. And I think the other thing that, is really important is to look at this two p reserve life index, so almost thirteen years. So we still have a a large proportion of reserves that we need to get out of the ground, and convert that to cash. And what you're gonna see and the takeaway today is we've kinda entered that drilling phase, for the company where we we've accumulated land, property, everything we need, and now what we need to do is convert those reserves, to to cash. And that's our that's our plan.

2:15 The Trinidad opportunity, we are completely focused in Trinidad. We are completely focused onshore in Trinidad. The things that we like about Trinidad is it's an environment that is very conducive to the oil and gas business. It's well established. It's, you know, well over a 100 years of production, from oil and gas. So they get it, as we would say, and they encourage us to be there and to operate there. Supportive government, we had a a a government change here, on the in April. The government, ironically, that is is now, come into play is the same, government that was in place when we got these original licenses, ten years ago where our main production comes from. So I think from our point of view, we we feel positive that that the new government's gonna you know, has settled the right things, that they wanna make sure that production continues to to grow on the island, and and they are willing to work with us. And, certainly, we have good contacts in there as we go forward.

3:13 So it is a very supportive government from that point of view. They are supporting growth. The country needs oil and gas production. It's short about a BCF and a half a day of gas for both your LNG and petrochemical businesses. They're trying to figure out ways to bring that in, whether it's Guyana, Venezuela, or additional, deepwater plays, onshore plays. They're looking at all of those things. So that's when I talk about a supportive environment. That's clearly it. Advanced infrastructure, there is plants and pipelines, both offshore and onshore. So that infrastructure component, that long lag time from production to turning it into cash is not very long anymore with with all the infrastructure that's in place. I think the most important thing is talk a little bit about the rocks.

4:00 This is the uptick end of the Venezuelan basin. I know some people that have been in in this story for some time know that this really you know, the opportunity here is is there is hydrocarbons all through all through Trinidad. And, you know, we've drilled 75 wells. And, really, the the the question is we've always encountered hydrocarbons. Sometimes it's not producible, and sometimes it's been at very high rates, but this is really a hydrocarbon saturated basin. It's well regulated. It's English speaking British law. So from that point of view, you you know, I think the rule of law when we look at the government and everything else that's there, I think it's a it's a fairly safe environment from an international regulatory basis. And market access, the reason I left that one till the very end here is that's really been the change for TOUCHSTONE over the last, really, couple of weeks since we closed this last acquisition of Central Block is there is different markets in Trinidad for natural gas.

4:54 One is the domestic market, which is really petrochemicals and electricity. They burn gas to create electricity, And the other one is the LNG market. And up until a couple of weeks ago, we had no ability to access that LNG market, and the LNG market is at a higher price. So what this does is allows us to to access that LNG market. I'll talk a little bit more about that, why that's so strategic for us. Talk about the first quarter highlights for us. And, you know, year over year, we did see a big production decline, but we also didn't drill any wells over that period of time. And you'll see a graph later where the wells that we're drilling have very high initial rates before they plateau out and level out. You get all your cash back, very high rates of return, but you do see these spikes in wells. And I'll I'll talk a little bit about that technically, but I think we've got a really good handle on that now in in what we're looking at doing. But the but the takeaway is these are these wells, you know, generate just a huge amount of cash into the market that we see.

5:54 And this is a a visual of what I was talking about that that big red block that you see there, that's two wells coming on production. And then a the yellow block is a basically, another single gas well that comes on. So what you see is these big huge ramp ups in production, get all your cash back, get all your capital paid for, and then they start to level out. And if you if you look at the underlying gray wedge and the black wedge and even that red wedge on the end, you can really start to see where these these wells start to plateau out. And the assets that we just bought, they've been producing for about twenty years. And and, similarly, you know, once they get into that flat range, they become very predictable. And that's that's what we wanna see is we're gonna see these big spikes in production as we drill the next wells, but what we really wanna do is focus on building that solid base wedge of production as we go forward.

6:44 So what have we got now? The the key thing for us is the land, and we did this through a combination of things last year. One was the Crown land sale, if you wanna call it that, or licensing round where we picked up RealClaro, Charuma, and Sapero. These are six year licenses. We've got commitments on them. We've got date on them. We've already got prospects on them, and we will just roll them out over time here as we drill them. The last bit that we did is the yellow piece that you see here, which is the central block, and you can see how it kinda fits in in there, as part of a puzzle piece. But the the more important part of that piece of the of the puzzle is that it allows us to get into the LNG market, which is I'll show you that in a little bit. But the takeaway from this particular map from our point of view is that we now control our own destiny in here.

7:34 We have put together the land. We have all the gas plants now. Now what we can do is go ahead and and or you'll hear me refer to later as drill to fill. Just talk a little bit about the central block acquisition. This was an acquisition that we picked up from a major. It has four wells on it. Really, the two wells, C R 1 and C R 2, are the main contributors. This was drilled around 1999 to 2002, was brought on production. Interestingly enough, when they brought these wells on production, they had compression at the facility right from the beginning. So these wells never saw the ups and downs of the line pressure like we're seeing at Cascadura. So I think that may have been a better approach. And in hindsight, that would have been a nice thing for us to do at Cascadura on day one. And I think you would have you would have seen a different production profile than what you see than what you have seen in that previous graph.

8:26 But but these four wells have now been on production, but virtually nothing has been done to these wells over the last fifteen or twenty years. And it's an 80,000,000 a day gas plant, and it's covered by a three d seismic program, also the same one that we use for Coho. So but these wells were drilled before the three d was shot. So we think there's some opportunities on the technical side to take that data, rework it, which quite frankly, we've already done some of that, and then we'll be able to drill some additional wells. And I'll I'll talk about that in a minute. But the key takeaway is it's a nice little tight package, and it's got some great reserves to it. We're 65%, and we're the operator in here. It goes through a plant that's called referred to as the Evergreen Gas Plant, and you can see there's four wells that go into that gas plant. The plant itself was commissioned in 2007.

9:17 The wells actually came on production before that, while the plant was being built. 80,000,000 cubic feet a day of capacity. I think it peaked out at just north of 80,000,000 a day, and and and it's got about 10,000 barrels a day of condensate capacity. We'll talk about that as well. We think there's an interesting oil opportunity at Central Block as well. And then the pipeline is both connected to the LNG market and to the domestic market. So the the beauty of this asset is you can sell gas anywhere on the island from here. Because it's been run by a major and it's sweet gas, You haven't seen a lot of corrosion, if you wanna call it that, in the plant. The plant is really in pristine shape and really is a great opportunity. We paid $23,000,000 for this asset.

10:03 And if you exclude the LNG contracts, if you exclude the production and you were just trying to rebuild this plant today, it'd be way more than the 23,000,000. So from our point of view, you know, we think that this was a really nice add to our our net asset value and the scenario shot. Talk a little bit about about that a little bit further. But maybe before I get off this, because this is a a really, a good view, you can see that two wells in there, C R 1 and C R 2. The first wells that we're gonna drill in here will be directly offsetting C R 1. And you can see there's quite a bit of open land there and a bunch of open acreage, so we'll be able to move very quickly on this. As a matter of fact, we got the keys to the plant on a Saturday. We had the surveyors and all the forestry people out there on the following Wednesday starting the process to get this this ready.

10:51 So it's it's moving along very quickly. And as you can see, there's quite a bit of room in there for us to do what we need to do. So the phases that we've got for central block, number one will be to optimize the four existing wells that are there. I do these little chats that are are one on ones with the CEO, a bunch of the plant people. We picked up 14 employees from Shell. There's no additional g and a ads for this asset. But I of the 14 people, I think I've chatted maybe with 10 of them so far. And what's really interesting, a lot of them have been there for twelve to fifteen years, and they've had a whole bunch of ideas that they wanted to do to increase production and lower costs. But, you know, this hasn't been top of the priority for the major that owned it before. So, we're really you know, it's really been fun to talk to them and understand some things.

11:41 Couple of the quick things at phase one at the beginning is, these wells are still producing a very, very large tubing, which means any of the liquids like the condensate is restricting the flow of these wells. So some simple things like just downsizing the size of the tubing from, you know, four and a half to two and three quarters, two and seven eighths. We should be able to get more velocity, get more lift. There's those kind of things. There's a couple of piece of equipment that aren't running at the plant right now that could recover more liquids. So as we drill these wells, the you know, they're they're basically saying these pieces of equipment can be turned on, and we can recover some more liquids and get some more economics out of it. So there's there's that side on the production side that we see some short term things. Just on the expensing side, water disposal, a third party was doing that for them. We obviously have a water disposal well, so we can do those kind of things at a much lower rate. So that's all kicked in on day one, and it's been it's been really fun to to work with the the staff at the central block that they're actually getting to do some of the things that they've wanted to do for a long time.

12:47 The next thing we're gonna do is that drilling program. Initially, a two well program. As I talked about, we're already in the the surveying and forestry stage. So that's, you know, that's kicked off right right out of the gate. We'll we'll get that done as quick as we can, and I'll talk about that sequencing that we've got coming up. And then further beyond that, what we'd like to do and I I should mention the first two wells in that phase two, we'd like we wanna get those drilled in 2025. So they'll be drilled before the end of the year. And then the third phase of this is taking a look at a more sort of holistic approach now that we have central block. You know, we look at Coho. We look at we look at all the other prospects that we have, Giba. Any of those prospects that we have that can come down into the plant. Even Sapero that sits north of Coho, that new land that we have, if we were to get gas there, we would just bring that down to the Coho tie in and take that to the central block and be able to sell that into the higher priced LNG market.

13:46 So we're putting together this master plan of of that encompasses all of our gas acreage on the East Side of the island.

13:56 This illustration for kind of why we see this as a real game changer from us. Basically, these are the three markets that you can sell to in Trinidad. The the one to the north there at Pointe Lisa's is basically the petrochemical market. Pointe Of Perth is where all the oil goes to. It's the old refinery where all the tankages that our oil production goes to. And then to the south is Pointe Fortin, which is the LNG facility. And up till October of last year, that was just Shell and BP. The national gas company bought a piece of that, so it kinda made it a common carrier and kinda opened the doors for third parties to go in there, but nobody could physically get in there. It was kind of to be honest with you, I think it was done more to attract Venezuelan gas. But the ability for us now with the central block facility, because it is tied into Point Fortin, what we can now do is we can now take that central block gas.

14:47 And because we pick up the gas contracts as well as all the assets at Central Block, we're now able to move gas to the LNG facility. So when we take a look at any of the developments at Central Block, you look at Coho, you look at that Sapporo block to the north, all of that could come down and go into the Central Block. And the one thing that, you know, we still haven't lost sight of is there is a deeper play in the Cretaceous below all of these lands. And, again, if that were to be gas or if there was associated gas with it, we could take that into the central block. So there's both a marketing point of view, there is a development drilling point of view, and then there's the exploration layered on top of that. But you can see how this kinda changes the dynamic of the marketing for us. So what do we now have for capacity?

15:35 We were at about 48,000 BOEs a day. Yeah. In the central block, we're at about 72,000. You compare that to the just north of 4,000 BOEs a day that we were producing. You there's this gap now. There's a gap between the reserves we've got between the capability we have to process gas and oil and then the and then what we were actually producing. So the nice thing now is all the cash that we have, we can put into the ground to basically drill and tie in the wells. So this is the drill to fill program, and, really, it's the drill to fill is to fill up the gas plants. The drill for growth will be some of our legacy oil properties that we've we've got that you know, the economics on the last couple of wells we drilled are very, very interesting, and then drill for the future is our exploration program.

16:22 And I know I've had questions about the equity issue that we did along when we did the the acquisition. And and quite frankly, that was done so that we could meet this slide. You know, we debt financed the acquisition, but what we needed to do was get some more equity in so we could get to a continuous drilling program so we could take advantage of all of these assets that we had now put in place. And by doing it at the same time as we did the acquisition of Central Block, it really wasn't dilutive on a per share basis when you look at the cash flow, when you look at production, and you look at all those other things. So we felt it was the right time, right time to send that message. You'd obviously always like to be able to do these at a higher price, but what we needed to do is be able to make sure that we were fully funded to kick us into this drill to fill program.

17:10 The last part is what I I I don't wanna miss because it it it is really a very big component of what we have. Sapero, which is that block that sits just north of our Orotois block, this is uncontracted gas. So this is gas we can bring down to central block. It's a beautiful structure on the three d. We've done some looking around at at whether or not it would be an ideal place to take one of the deeper shots. I think initially, we'll just look at the Herrera in here. It basically is a look alike structure to our Cascadura structure. It's on that same trend. It sort of sits between Cascadura. You come down through Sapero, and then you end up over in Barrick pour, which has done, you know, 100,000,000 barrels of oil. We think it's in the gas window, but but either way, it would work out fine. And then to the north there on that Tiruma block, this would be our a new play for us. This is the Nariva and the Cretaceous play. So this is what I would call true exploration.

18:08 There's been some other players in the country before that Parex was here, some of the other local companies that have really always wanted to drill this particular structure. It's it's very unique on the island. It it really does jump out, and it's one that's only at 7,000 feet. So we think it's one that we we wanna move up in the portfolio and take a look at it. So very interesting on on that point of view. And then sorry. I'll just go back. And then underlying all of this is the Cretaceous play, and that's the big play that's been down in Guyana. And you can see that in the Sapero block, we can get there at 13,500 feet. We believe it sits below central block. There is a beautiful anomaly there, and there is another anomaly that sits over sort of on the north end of our Orotois, Rio Claro block.

18:58 Rio Claro sits on here as a exploration acreage. However, I I feel a little bit differently about that now. We we actually drilled a well at Cascadura as far to the east as we as we could, and we had an oil discovery that's actually gonna go on pump here in the next month. But, really, what that did is it showed that there's hydrocarbons onto that RealClaro block. We know we can come up structure under RealClaro. So I think from the oil side of things, RealClaro is more of a development play. However, on the Cretaceous play, it definitely would fit into this exploration category. Social and the governance, you know, we are we are by far the biggest onshore independent now in what we're looking at for production. We control all three of the gas facilities that are onshore, you know, fully staffed up. The the nice thing for us is that we didn't add any bodies with this Shell acquisition besides the field staff.

19:55 And this can just kinda fold in, and and now we can put the plan together as what we've done. We've had some challenges on the drilling side. I know a lot of people have probably looked at that and and asked some questions on that. We've actually done a a a full revamp of the drilling plan and the drilling program and and personnel and contracting. And so I think when we go forward on on our drilling program, I think we're gonna be able to deliver some really interesting results as we go forward. This little breather in doing the central block deal has given us the opportunity to to evaluate that as we go forward. So that's the main part of the presentation. I know there's gonna be lots of questions, so I'll I'll maybe take a pause there, and, we can go forward from there. That's great, Paul. Thanks very much for your presentation. Ladies and gentlemen, please do continue to submit your questions, and you can do so just by using the q and a tab that's situated on the top right hand corner of your screen.

20:48 But just while Paul takes a few moments to review the questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboards. Paul, as you can see, we have received a number of questions throughout today's presentation. If I could ask you just to read those out and give responses to it's appropriate to do so, I'll pick up from you at the end. Yeah. And I may I may abbreviate some of them. Some of them are kinda long, so I'll I'll I'll I'll cut through the chase on some of them. And then if there aren't some that I can answer in there, I'll I'll let you know. But, yeah, the first one is, you know, I think it's a fair question is sort of how long is it gonna take to deliver on some of the stuff that we promised. And in fairness, I I think we've we've had some disappointments in the wells and the decline rates of the big wells at Cascadura.

21:33 But generally speaking, I I think when we kinda step back and put in in place the the Trinidad factor, which is things take a little bit longer. And for anybody that's been on the ground there, it's it's much more remote than people sort of fully appreciate for getting things done, and, you know, we've missed some timelines. But at the end of the day, we certainly have, you know, got things done like Cascadero, Lake Coho. You know, even Central Block was a a a big deal for us to get done. So, you know, the question is is when can we deliver on some of the things we promised? Well, I think the the key now is to get the wells drilled. That that that's the last piece of the puzzle for us is we need to get these wells drilled. We need to get them drilled on time. We need to get them drilled on budget. And one of the big helps of that will be drilling them back to back. You know, get the rig hot, get it moving, and we can drill these wells back to back.

22:23 And that's really what we what we need to do. So I think this next quarter is gonna be a quiet quarter from a from a production point of view. We will get the ad from the from the asset acquisition that we did. But when you're really gonna see the changes in q three and q four when we start to see these new wells coming on, and then we can add the continual drilling to them. So that's you know, I think it's a it's a fair question. I think we had a pretty big setback when when we looked at those initial declines at Cascadeura being deeper than we wanted to. Having said that, I think we've answered those questions. I think we've been transparent on that, and we're now using that new data that we have, the new type curves we have for those wells, applying them to the wells that we're gonna drill now, and and look forward to to to being able to deliver on the new estimates that that we'll put out here once we've got all the data. I'm just gonna go back to a map here so we've got a map up while I'm talking.

23:15 Yeah. That we'll leave that one up. The next question is, are the volumes from Coho still being restricted at central block facility, due to pressures? And we were gonna sort out some of those issues as part of the purchase. Yeah. It's the the COHO volume, when you looked at that wedge that I had there, you could see that it's virtually flattened right out. I wouldn't say it's really being restricted by by the shell pressures. I'm not sure that would be that would be factually correct. You know, the the shell plant runs at a pressure, and the Coho well is now going into that pressure. We could lower the pressure at central block, and there is a process to do that where we could take the two compressors that are running side by side and and putting them in tandem and lower the pressure. We don't wanna do that until we do these recompletions of the wells and probably drill the first two wells at central block only because when you do that, you you reduce the capacity at the plant, and we don't wanna do that until we know exactly what we're dealing with for for production at Central Block. So that might be a 2026 plan.

24:23 Now there are more wells to drill at Coho, and we've been talking about that for quite some time. But I think what we are starting to do is now look at this as an entire package of assets. Right? So the, you know, the development Coho well, if you could drill it on the Central Block side lands as opposed on the Oritwa lands, it becomes uncontracted gas versus contracted gas. So those are the kind of things that we're we're looking at to kind of figure out what we wanna do before we put that plan together. But it's a long winded answer on Coho. There's a bunch of moving parts, but but this is really one of the the things that Central Block brings to us is it it now we we need to look strategically at every well we drill because there's these different pricings in the in the wells as we go ahead and drill them. So an opportunity for Coho, a development well at Coho.

25:11 Know, do we really want that going into a market that's selling $2.25 gas when it's literally hundreds of meters away from being able to get two or three times that amount of money. Right? So that's one of the challenges there. When do you expect to be in a position to start continuous back to back drilling programs of the five plus wells? So all the new consultants are on the ground this week setting up the new program, making sure that we got all the right pieces in place, and, you know, that program should kick off in in early June. But there's actually people on the ground now getting that all ready to go. So the first two wells that we'll drill will be the two wells in the at Cascadura on the B Pad, and then we'll move to Central Block. And then depending on where sort of the situations go, it could be back to Cascadero for a couple more wells.

25:58 It there we do have four wells approved at Central Block, so we may actually find if we have success there, that may be more of a focus, but it'll become a little bit fluid at that point as to where we move. But I I think this is a really, really informative question, and the and the key part in that is when can you start doing a continuous drilling program? And that really gets back to my comment about the equity is this allows us to start to focus on doing a continuous drilling program. In the presentation last week, we stated that the private placement brought in a couple of strategic investors, and there hasn't been anything published on that. Yeah. I got I gotta be a little careful on this. The the onus is actually on them to report. It's not on the company to report, and, obviously, that's confidential information. I I can't disclose that. It's really the onus is on them to disclose, and I don't know how they hold that in their fund of funds.

26:51 That might be how they can can get around not disclosing what their interests are, but I I that's purely speculation on my point of view. Why were existing shareholders denied the opportunity to participate in the private placement? You know, I think in light of what we were doing and the way the way it was done, the question also in here is did the Republic Bank ask us to do the private placement as part of the secured loan? They you know, when they look at this asset and when we looked at this asset, the the real value here in the upside is drilling the additional wells, and we both wanted to make sure we were funded to do that program. So as part of this process, we agreed it made made sense to go and do an equity raise as part of that as part of that program.

27:38 But, you know, let's be clear. The bank didn't force us to do that. That was a decision that that we made and the board made to make sure that we were properly funded. And as I mentioned, you know, from our point of view, it it wasn't dilutive on a cash flow or production per share basis. So I think in a normal world, what you would have done in this acquisition is you would have done partly debt and partly equity, and that's really what we ended up doing here, although all of the debt went to the purchase price. The next one, the investors were likely believe that buying the central block would open in order to higher gas prices, so it would have been disappointing to hear to say that now we're locked into lower price contract for the first sixteen months, and then it flips around at a higher price contract. Yeah. I know I mentioned that. I I I probably should have clarified that.

28:25 The central block gas gets a higher price from day one. Like, let's just make that clear. There there's two contracts at the central block, and this can take me just a little while to explain this. But but up to about 22,000,000 cubic feet a day, that's a gross number. That's a gross number. Up to 22,000,000 cubic feet a day, there's a contract that runs until May 2027. And the factors in there are a combination of Henry Hub, the Brent oil price, and and the LNG price markers from from from rounds. So so because it's got that Henry Hub component in it, you get a little bit lower price. Now Henry Hub price has been pretty strong, so that's been a been a nice price. When you move to that 2027, that May 2027, what actually happens or you get above 22,000,000 a day, which we hope we can do that with the first well that we drill.

29:17 Those volumes then go to pure LNG, and then there's a small Brent component in there, so you'll lose the Henry Hub component. So you get a higher price for that base gas rate from day one, and I I apologize if I sort of misled people on that. But what happens is that Henry Hub price falls away or that Henry Hub component falls away when you enter the new contract. So you get another step up in the gas price, and it becomes more of a pure LNG price with a small Brent price. And the good news on that is Brent decides to go through the roof for some reason and, you know, with everything we're seeing in the world that could happen, you'd also see an uptick in your in your gas production or in your gas price. So apologize for that if I if I didn't kinda relay that. In the new presentation that we're putting out, there'll be a nice graph in there that'll kind of explain that, and everybody will do that. Part of what we're dealing with right now is we're just making sure we're getting all the right data from the last six months from the the central block.

30:15 And once we've got all those hard hard data in from Shell, we'll go from there. In fairness, they didn't wanna give us all the data till it closed, so we're drinking from a fire hose a little bit in the last week because we've just been getting data after data after data. So let the team work through it and just confirm all those thing. I think that answered that one, Ted.

30:36 Can I let you know the revenue from central block accrues from January? Yes. So the way this was was a lockbox. We get all the revenue and all the expenses from January, February, March, and you'll see that when we get the new guidance. Now that doesn't mean we're gonna count that as our production. That's just an adjustment in in the in the pricing that we did, and you you actually saw that when we when we closed that. But, again, we wanna confirm. And a little bit different than Cascadura where we get paid on the twenty fifth of the following month, The central block volumes, because they're going to LNG, you get paid when the boat floats. So you'll have some months where you'll get paid twice, and you might have a month where you don't get paid at all, although we haven't seen that yet in the data that we've seen. So you don't get that consistent that consistent production. Nice thing is you do get the LNG price, you get paid in US dollars.

31:25 So we'll we'll have that for you. What is the issue with CAS 4, and how will you learn from the cost overrun, and what was the well cost so far? So the CAS 4 well is the first development well that we were drilling at Cascadura. And the plan there was to switch from an oil based drilling system to a water based drilling system. Thought it would save us about a million dollars. Quite frankly, it didn't work. We've been pretty transparent on that. We were afraid of getting stuck in the hole again, so we suspended that well, and I've now switched over to an oil based system. It's taken a couple months to get the the chemicals and all the oil based system back in in there. So now what we gotta do is go back in, and we'll drill four and five on two wells on the on that pad and and go forward.

32:15 The cost in there, I'd have to go back to the MD and A and take a look, but I know in the first quarter, we put out what the costs were. I think we were north of $5,000,000 on CAS four, and and I'm not sure what the AFE looks like going forward on the well yet, but we'll we'll look at that. I mean, bottom line is it's too much. That's you know, and that's why we've done this whole revamp of bringing in some additional experts, additional people on the ground, working with Schlumberger, going back to what's worked for us on some of the other wells and done a a relook at it. You know, we we we really should be able to drill these wells in eighteen or nineteen days. We should be able to drill them for under $5,000,000, and that's where we need to get to. So that's the that's the plan of what we wanna do.

33:03 The next one from John, the production decline rates on gas wells has been disappointing. We've been advised the company's because dual porosity system in the reservoir. Please, could the company publish individual well production versus time, or if not, give details of the rate declines of the matrix phase production? Well, we're not we're not gonna publish that, and I'll tell you why is it's confidential information. And we think there's an advantage for us because of the way we can look at some of the other wells on the island and some of the things that we think we can do. So I I I can tell you right now, we're not gonna publish detailed well by well information. I think we've been pretty transparent on showing the curves. If you look in our last presentations, we saw the decline curves for CAS and and the other productions. But if you look at those graphs, you're gonna see that. And, you know, you talk about these decline curves being disappointing. Yes. They are disappointing, but that is the business we're in. Wells decline every month in what we see. But what we wanna do is we wanna get into that flat wedge where you've got chunks of this this really predictable wedges, then we're gonna get peaks in the production as we go along.

34:08 So we'll we'll continue to be transparent on giving the on the cascadure production volumes. The one thing we have found at central block is the wells are way more predictable and the declines are way more predictable if you put a compressor in the front of this, and they don't see the up and down on the line pressure from the l n from the natural gas company. So, you know, that's maybe a tactical error when we built Cascadura. If we had to drop the compressor in at the very beginning, you would have been able to control those declines because you wouldn't have been at the the whim of the the pipeline pressure. So that's definitely a learning from our point of view in what we, in what we see. I'm not trying to dodge that question, but I don't think I don't think we want to, put out, you know, technical information to the public that, quite frankly, can still be quite a big advantage to us in what we see.

35:00 Can we get LNG prices immediately? What percentage of CVs sold to the LNG price? I think I covered that off in the the contract discussion how that how that moves up. What is CB acquired LNG current contract price? So the the question here is what's the current price for the LNG, and and you'll see when we put the new guidance out what what it has been for the last couple months. It's gonna change every month be because of those three factors that I put in there. So as Brent price goes up and down, as the LNG price goes up and down, as Henry Hub goes up and down initially, and then when Henry Hub falls off. So you're actually gonna see that change based on the LNG market. But the biggest component is the LNG market. So if you wanna get an idea of what TOUCHSTONE is gonna get paid out of central block, just see what the LNG market does, and you'll be able to get a good good proportion on that.

35:54 There is a there is a component to move the gas from central block to the LNG. That's a fixed price, and then there's a fixed price for processing at the LNG. So you're gonna see that in the new guidance. We'll kinda disclose what that what what that model looks like. I think if you roughly think of it today, it's probably $2 off of the the LNG price gets you back to to Central Block. Is it possible that that we can get LNG prices for Cascadero earlier than the five year negotiation? And then the comment on the end of this is we aren't getting fair prices. No. We're not gonna get the LNG price before the the end of the five years. That's just it's contracted gas. There's no way to do that. And when we say we aren't getting a fair price, I think we are getting the onshore price in Trinidad.

36:43 Whether we like that price or not, I agree with you. I I certainly like a higher price, and we think there's some ways that we can maybe negotiate our way to get a higher price on the on that gas. But there is gas that goes to this domestic market. And even if you look at our number today of, call it, 228 in MMBtu, you know, Henry Hub price is sub $3 today. I think it was $2.78 yesterday. When you think our price is at the wellhead and Henry Hub, you've you've gotta subtract transportation to get there. You know, it's not like we're talking three or four full difference here between what you would get between that gas and what you would get for onshore North American gas. So I think we have to keep that in perspective, but it also really emphasizes the point of why we want to do the central block deal is it gets us into the the highest price natural gas market in the world, which is the LNG price.

37:38 And, that's why this is so strategic for us. I don't necessarily disagree with you that we're not getting a fair price. I think I think we're probably one of the lower priced contracts on the island, and and I agree with you. I don't think that's fair. So let us try to work some magic on that. Q one production numbers for the central block and pricing levels for gas liquids, we'll give you all of that we'll give you all of that when we put out the new guidance. But in the initial one, we looked at about 2,000 BOEs a day of production from central block. That's been consistent. That hasn't changed. So that I can I can give you that number, but you'll see you'll start to see it when you get the new guidance and what we're looking at doing? Paul, with TXP's strategy, drill to fill, there's going to be a lot of report, report ongoing forward. Can TXP commit to doing a monthly public investors meet webinar, presenting updates, and doing a q and a?

38:35 Yeah. You know, part of our problem, if you look back over the fourth last fourteen months, is we have the Trinity deal that went sideways on us. Quite frankly, we got a bid on it. But during that period, we couldn't say a lot of things. And then all of a sudden, you know, just when we were getting going again in October, I get the call from Shell saying, hey. We wanna do this deal, you know, but it's gotta be signed by the end of December, and we wanna close it the first half of next year. So, you know, we we've kind of been handcuffed a little bit, but I I I think you're I I won't commit to a monthly update because I I'm hoping we can do more than that. I'm hoping that between our social media, new strategy we've got, as well as continual disclosure that we have on from our financial requirements, but also just, you know, being a little more active on some of these things.

39:23 Mainly And because we're gonna have more to talk about now. I mean, that's one of the advantages that we see here once we get the continual drilling program. And so so I I I won't commit to doing a monthly update on on a particular format or a particular platform, but I think what you're gonna see is a lot more updates on a continual basis. And I and I've heard from a lot of shareholders that some of the things, you know, that we don't need to wait just for material information. Like, it's of interest to them knowing that the wells have spotted. It's interest to know, you know, what's going on at Central Block and and those kind of things. So we've taken that in. We had a great discussion at the board here at our quarterly to kinda ramp up that that program a little bit. So we we hear you on that one. Alan, when can we start continuous drilling, and what volume production rates do we need to be able to do to do so?

40:14 I talked about when we're gonna start the continuous drilling program. As far as the volume rates go, quite frankly, the what we've done is taken the new curves that we now see from CAS one, CAS deep, and and CAS two, the three gas wells. And, basically, what we've done is we picked the lowest one of those bunch, and that's what we're using as the new production curves. And if you use those production curves, Alan, basically, we can have a continuous drilling program. It generates enough cash that we just keep going. And if we can really get these central block wells drilled, when I talk about, you know, the real kickoff for central block is to get over that 22,000,000 as fast as we can, and then you get into the higher price contracting. And, again, I wanna be careful. Central block is higher price. It's the higher of the higher price contracts that we wanna get into as quickly as we can. But the economics change pretty dramatically.

41:07 I mean, even, you know, you look at Coho at a 5 to 10,000,000 a day well, if you can get the the higher priced contract on that, those wells just become very, very productive. Have we overspent on Cascadura plant in relation to the poor gas volume so far? I I would say yes. I would say the Cascadura plant, you know, was originally designed for I think at one point, we were the build out was gonna be for about 200,000,000 cubic feet a day. Fortunately, we didn't put everything in place for that. You know, we put in some of the inlet headers and things like that. But, the plant was originally capable about 90,000,000 cubic feet a day. With the new separator we put in, we can probably get to about a 140,000,000 cubic feet a day. So have we overspent on it? There are some things we definitely overspent and overdesigned.

41:55 So the the key now is to optimize that, but the the benefit is we don't have to spend any more money on it. You know, we can we can drill to fill that. So I would say for sure it was overdesigned for what we what we see. Now having said that, I think if we had to taken the central block approach and put a compressor in compressors in at the very beginning of this, I think we would have seen a very different decline curve. Not necessarily more reserves because you you you're not getting more reserves, but what it would allow us to do would have been to level out some of those declines a little bit more. So lesson learned on that one for sure. Although that would have been, you know, probably another 5 or $6,000,000. See what we got here. If the government is so supportive of growing production, what financial actions are they taking to help companies like TOUCHSTONE ramp up production?

42:43 Brand new government, have not met with them yet, have not had those discussions with them yet. We'll wait and see what they what they come up with. You know, there's some basic things they could do, things like the VAT refunds. You know, Cale and and Scott and the team, you know, we're still a year behind on VAT refunds, so you're looking at, you know, 3 to $6,000,000. You know, some simple things like that that they could do fairly quickly. I still think there's a big disconnect between the tax rate we pay and what the petrochemical and the LNG plants pay. They're about 20% less than us. You know, that would be a very simple one to take a look at. Although we've got enough tax pools to cover that, it's still, you know, an effective tax rate. But it's it's you know, I think there's a bunch of little things they could do from that point of view. I must admit in the field, you know, the forestry folks that we used to take a month or two to get, they we phoned them and said, hey. Can you guys come out on Wednesday? We're looking at Central Block. They were they were there on Wednesday. Think we had, like, 20 people on-site and to start looking at at doing the surveying. So, you know, I think they they understand it. They're receptive to it. I think that's trickled down through the organization, and and the results will really do the talking on that. But on the financial side, I think that's probably the the big one on that.

44:00 A couple more here. Asking again the strategic investors, who are they? I I I really have to let them do it, and and it's it's a self reporting mechanism for them. So if they're over 3%, they'll have to report on it. Why is the company slow to implement improvements on processes? Board side took nearly a year to reduce. What other costs can be reduced? Yeah. I I take a little bit of exception to this. I I I think, especially on the board side of things, you know, we went through a process on that. The directors elected directors last year. We got feedback that, quite frankly, you know, conjunction with the Wells maybe not performing as well, where could we save some costs? We reduced the board from nine till six and went through a process to make sure the six people that were on there were the right people to have on there. We've done a bunch of other things on expense side, and you can see that when you go through the MD and A just focusing on some things that we've done.

45:04 We've actually done a couple of small dispositions of properties that that were were underperformers. We've been able to use either drilling credits or cash in what we've looked at doing. It's also reduced our headcount. You know, there's a lot of stuff that we've been able to do on that front when you take a look at it, and we're continually looking at that. I don't think that's something that you ever wanna stop doing, but the best example of that, quite frankly, is we just brought in 2,000 BOEs a day of production and 80,000,000 a day gas plant, and we didn't add any g and a. So when you think about that, everything that we brought in will be in the operating cost basis, and you've now ex you know, spread the g and a over a much bigger bigger base. So I think that's also speaking to the efficiencies that we're starting to see. Talking about greater transparency here, We do have a communication policy that's posted on the the board and r and s announcements.

46:05 I I think this gets back to my question. I think it's Mark that's asking this question. I'm not gonna commit to kind of a monthly update because I don't think shareholders need to get into the operational side of things, but I do hear you that a lot of the stuff we do is interesting. And our approach to that would be to be able to provide that information sort of on a continual timely basis. But, again, our hands have been a little bit tied, and quite frankly, we haven't been doing a lot, and we're gonna get very active now. So so, you know, from a transparency point of view, hopefully, you'll see more of that in what we're doing. The next one here was again asking about we're locked into a lower price contract for sixteen months. I think I talked about that, and I apologize if I misspoke on that before about giving some some thinking that the central block contract was a lower price. It it it it's a higher price contract, but it gets higher again when we get above that 22,000,000 and we get into into the new contract in 2027.

47:09 Why is the forecast for production given back in December excluding Central Block so poor? You'd originally forecast two wells drilled by the end of q one. So, you know, the reality is is we had to reset expectations in December, and I hate to go back and have to do this again, but the wells didn't perform the way we want it to. And and shareholders have asked for transparency, so we gave them transparency. So when we put out those new forecasts, they were based on the new information. And and, yeah, I think we're all disappointed in that, but but that's the reality. These are still very, very economic wells. You get your payback, you know, in months here. We're not talking years. So, you know, we had to realign the expectations. And as far as the wells not getting drilled in q one, I I think I went into detail. We tried to save some money drilling the first well at at Coho or, sorry, at Cascadura.

47:58 Didn't work as opposed to us keep going forward and spending bad money after good. We stepped back, re reanalyzed it, and now we'll go back with a new plan going forward. So I would hope that's what the shareholders would want us to do. Gonna run out of time here in a minute, but let's just see here. The next one would be the question was here. The latest equity raise resulted in 25 percent increase in shares. Are you confident the institutions purchasing the shares are intending to remain investors long term and not just turning over their shares for a quick return? Yeah. I mean, it's always a risky run, but I I think the fact that this was well oversubscribed, we cut back everybody in their allocations.

48:49 And I I think they're looking at this as being a long term. You know, they their view was that the stock ran up on the expiration excitement, and then while you're building facilities and things, you know, that's not very exciting to the market. We obviously had the disappointments in the wells. They see it now entering a production phase, which is where they are more they are more comfortable as big institutions because they think the risk is much lower. So I I would hope that they would hang in there. Obviously, you have no way of knowing that, but these are investors that are are long term generally long term players. Talks a little bit. The next one was the r and s on CAS four and five. Reason for delays, I think I've covered that off a number of times.

49:36 So if you had TOUCHSTONE wells have been drilled problem free, you know, I I I think it's fair if you look at TOUCHSTONE just in sort of an echo chamber of its own, yeah, we've had a lot of trouble drilling the wells. But if you step back and you'd look at BP having the same issues, you look at Heritage having the same issues, you look at EOG having scrapped some offshore wells, this is just tough drilling. And quite frankly, that's why when we step back, we went to one of the world leaders on the consulting side and said, okay. What have we done? What have we done right? What have we done wrong? And we need to get the best people you got to help us out in drilling the next five wells. So that's the approach that we've taken. Talking about a Gantt chart, talking about some wells and how we're layering in those production numbers.

50:33 Yeah. I think that you'll see that now, and I I guess what we're trying to do is as part of transparency is we're not gonna try to hide the big declines that we're expecting. But what you really wanna do is see these wedges add up. And I I was doing an interview with discussion with the other day, he said, you know, what what would you what would you really like to to see? And I said, well, I what I'd really like to see is people start to focus on those the wedges once they've you know, the the the the flat parts of the platform and if we can build those up over time. Because, you know, if people continue to focus on peak production rates and then get disappointed in the declines, they're gonna continue to be disappointed. But what you can do is you can see we get all of our cash back over that short period of time, and then you get a fifteen year run life on these wells. So they're they're gonna set up from a very long lifelong cash flow opportunity as we see.

51:26 Talking about the decline of the share price, you know, some of the root causes of that, I I I don't think there's any more of a root cause than those declined wells at Cascadero. I mean, they're a disappointment to everybody. They're a disappointment to us. They didn't perform the way we wanted to. And I think when you look at that, it it affects cash flow. It affects everything. Right? So that's why we had to reset the expectations in December, and I think I think we did that. It talks here about relocating the chief operating officer to to Trinidad. So, you know, we've tried that model before, and and what ends up happening is everything kind of funnels through to one individual, and then it funnels back out to all the technical people. And we actually found it really inefficient.

52:13 We found it better to have a position where it's a very flat structure, and that's what we have right now where all the G and G, whether they're in Trinidad or they're in Canada, it's all one group. There's kinda no Us and them type approach to it. So we we found that model has worked much better, especially on something like this drilling where we we, quite frankly, we need worldwide expertise on what we're looking at doing. And if we had just the Trinidad, again, you kinda get into this echo chamber, which is this is the way we've always done it. This is how we do it. And, you know, my argument to that is, well, it doesn't work, but that's the way you always do it. And that's just not a good answer. So I I think this model actually works pretty well. It's also very expensive to have expats in in Trinidad from a cost point of view.

53:04 And we think also from a sort of a social license point of view, the talent in Trinidad engineering geologically and everything else is is exceptional. And, you know, from our point of view, we think the way we have it is is pretty good. When do you expect to start think it's the last maybe one of the last two questions. Production from the CAS four and five wells. So the the two wells will get drilled back to back here depending on how long they'll they'll take all the equipments on the ground to tie it in. So it'd just be a short period of time after that. I I I think right now we're looking for q three. We'd like to see those, wells on production. Could the Coho gas be reject redirected to the LNG market? No. Because, it's under the Orochwa contract.

53:49 So the COHO volumes right now are not we're having that negotiation, but I don't I don't foresee them giving that up because you you kinda think about they're buying cheap gas, putting it through central block, and quite frankly, they could be selling it to the LNG market. They're not gonna give up that kind of margin, so we're gonna have to figure that out. How does the cost of your $30,000,000 debt facility compare to your existing debt facility that pays rates of 68%? It's right in the ballpark. It's about 50 basis points higher, and it's it's on a floating rate. But, basically, it's the it's a very similar rate in what we see. When can you expect the first Cretaceous well to be drilled? I think probably 2026. The only reason I hesitate a little bit on that is depending on how the team kinda feels about Sapero.

54:38 It might be early twenty twenty six because we could we could take a well down at Sapero. Troom is probably the easiest one to drill. But with all the development that we've got in place at Cascadero, Coho, and Central Block, especially if we can get some price changes on the Orotois contract, man, that rig's gonna be drilling up all of those. That's that's what we wanna do is just convert that to get that production up, prove to prove to everybody that we can do what we said we were gonna do. Gotta scroll down here. I'm not gonna get through all these questions. We only got a couple of minutes left. Talked about the repricing. Can the wells be stimulated frac? That's a interesting question. It's actually something we're looking at. You know, the CAS deep well was producing from a fairly tight zone before we reperforated and moved it uphole.

55:29 We actually have all that information, and it's out being analyzed. It looks like they did a frac at one of the central block wells at one point. So we've we've also hopefully get that data. We haven't seen it yet. Hopefully, we get that data here in the next little while, we can take a little bit. So that'll give us another data point as to whether we look at that. Let's just see. When is the new guidance due for delivery? I think that's a fair question. And I'm gonna be a little bit vague on this. We need to make sure that when we give everybody that data, it's exactly right. And the biggest component of that is gonna be the central block contracts and production data. So we're gonna be at a little bit of a whim to get that all that information here over the next couple of weeks and then sort through all of that, make sure we've got the right forecast in for those volumes.

56:21 Because that's that's gonna be what you'll see is it's not it's not the biggest volume number at 2,000 BOEs a day. But when you get these higher prices, it just has a material effect on how it changes the funds flow. So give us a bit of time on that in what we're looking at. I keep getting asked a bunch of questions in here about gas prices sold over the 22,000,000. Again, let us let us get through the data so we can give you the right number. But, again, it's gonna change month to month based on the LNG. Some of these, I I don't really see too many in here that I haven't. Well well, Paul Paul, let me jump in there. I'd just like to thank you, for answering all of those questions. You covered a lot of ground there. Of course, the company can review all the questions submitted today, we will publish the responses on the investor meet company platform.

57:13 Perhaps just before redirecting investors, provide you their feedback, which is important to yourself. Paul, could I just ask you maybe for a few closing comments? Yeah. I I apologize. I wasn't able to kinda get through all those questions. It's a little tricky to be trying to read them and answer them, so I apologize if I bounced around. But listen. I think the big takeaway here is that we are gonna provide you with a lot more transparency and a lot more updates. I think this is a pretty good example of that. We have to be careful not to give proprietary information. But but the the the big takeaway here is this central block facility gives us the ability to move capital around, to be a lot more strategic in what we're looking at doing, and that's that's obviously what we're gonna do. The number one focus for us right now is to drill some wells. We need to get the drilling costs down. We need to be able to get those predictable.

58:03 We need to be able to get the wells drilled, and we need to be able to get them on production quickly. And, you know, it's just not that complicated. Like, it's we we when I say it's not that complicated, the drilling is very complicated, but the story is pretty simple. We've been building all these blocks for the last five years, and I know everybody's heard me say that. All we need to do now is drill wells. We don't need any more permits. We don't need any more, you know, facilities, pipelines, any of that kind of thing, gas contracts. We just need to drill to fill. And that's a pretty good place to be in a in a in a basin that's full of hydrocarbon to be the biggest onshore producer now in in Trinidad. So, yeah, I think the story's changed. It's way less risky than it was four or five years ago, and we had to reset expectations, which I hope we did. And now we just need to meet the new expectations, and that's our number one goal going forward.

58:58 That's great, Paul. I'd just like to thank you for updating this today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback, and all the management team can better understand your views and expectations? On behalf of management team of TOUCHSTONE EXPLORATION, we'd like to thank you for attending today's presentation, and good afternoon to you all.