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Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long TXP.TO
It’s Christmas in July today as Touchstone Exploration (TXP.TO, last at $0.96) reported its maiden Cascadura reserves estimate overnight… and it did not disappoint. In fact, the reserves numbers beat every estimate I have seen in any TXP reports to date, including my own, which are usually realistic-but-optimistic, so it’s a solid beat all around. The stock is up 17% in London on over 1.5 million shares traded as I type this; about an hour before the North American markets open.
I don’t have a lot of time this morning and I’ve made some straw-man estimates before on what I believe the range of outcomes for TXP could be in a variety of scenarios, depending on what happens with the upcoming Chinook and Cascadura Deep wells (link to it here). What I will point out is that my prior valuation assumptions were based on 200 BCF of net 2P reserves for Cascadura, which turned out to be 234 BCF (plus 6 mmbbls of associated liquids). I don’t think anyone really believed my estimates/assumptions when I posted them, but it’s nice to see some confirmation from a quality firm like GLJ, and I think that today’s reserve report should serve to set a foundation under the stock as the company heads into drilling again over the next “few weeks”.
