Touchstone Exploration Inc. (LON:TXP) has announced an operational update, highlighted by the drilling results of the Cascadura-2 delineation well.
Highlights
· The Cascadura-2 delineation well was drilled to a total depth of 7,132 feet.
· Drilling of the well was suspended prior to the planned total depth of 8,300 feet to preserve the substantial pay section observed in the well after high pressure gas zones were encountered.
· Cascadura-2 openhole logs and drilling data indicated a total sand thickness of approximately 525 feet in the targeted Herrera formation.
· The Cascadura-2 well is currently being cased and production testing is scheduled to commence in the third quarter of 2024 directly into the Cascadura natural gas facility.
· Spudding of the Cascadura-3 development well is scheduled to commence within the next two weeks.
· Flow line procurement has commenced to tie-in future production from the Cascadura C surface location to the Cascadura natural gas processing facility.
· Completed the first stage of additional perforations at Cascadura Deep-1 where we are currently monitoring initial increased pressure and production rates.
· Drilling at our CO-1 block is scheduled to commence prior to the end of February, with two wells to be drilled from a single surface location.
· Achieved average net sales volumes of 8,504 barrels of oil equivalent per day (“boe/d”) in the fourth quarter of 2023 and annual 2023 net sales volumes of 3,981 boe/d.
Paul Baay, President and Chief Executive Officer, commented:
“The encouraging Cascadura-2 delineation well drilling results represent a great start to 2024. Cascadura-2 has proved up the concept of highly productive sands extending significantly to the east of our initial Cascadura discovery. We estimate that the well was drilled for under $6 million on a gross basis, which further enhances the economics of this prolific hydrocarbon fairway. With this new data point we can design a multi year drilling program to fully develop the structure. This well has not defined the eastern most edge of the structure, which warrants further delineation through future drilling.“
Cascadura-2 Drilling Results
The Cascadura-2 delineation well was spud on January 6, 2024 from our Cascadura C surface location and reached a total depth of 7,132 feet on February 4, 2024. While we planned to drill the well to a total depth of 8,300 feet, the gas sands encountered proved difficult to manage, and we ceased drilling to preserve the substantial pay section observed in the well.
Drilling samples and openhole wiring logs indicated over 525 feet of sands in the targeted Herrera formation with hydrocarbon shows observed in samples and at surface throughout the primary intervals. The top of the key Herrera formation was detected at a measured depth of 6,186 feet, with sand and shows observed throughout the section to the total depth of the well. Based on these encouraging results, we are currently installing casing for future production.
We expect to test the well directly into the Cascadura natural gas facility in the third quarter of 2024.
Cascadura-3 Development Well
The Star Valley #205 drilling rig will be walked to the Cascadura-3 development well location on our Cascadura C site when casing installation at Cascadura-2 is complete. We expect to spud the well within the next two weeks, which will target the same Herrera formation as the existing Cascadura producing wells.
Cascadura Infrastructure
The Company has commenced clearing the road from the Cascadura C surface location to the Cascadura natural gas facility. A flowline network will be installed to tie-in development wells drilled at the Cascadura C surface location, which is located approximately 1.6 kilometres northeast of the Cascadura facility. We are also planning to install an additional gas separator at the Cascadura facility to increase gross natural gas production capacity from approximately 90 million cubic feet per day (“MMcf/d”) to 140 MMcf/d. The flowline and infrastructure upgrades are anticipated to be completed in the third quarter of 2024.
Cascadura Optimization
Touchstone Exploration continues to optimize Cascadura Deep-1 and Cascadura-1ST1 well production. The first stage of additional perforations was completed in the Cascadura Deep-1 well on January 27, 2024. We continue to monitor production as the well stabilizes, and we are currently evaluating deeper sands for additional perforations to further optimize production from the well throughout 2024. Currently, Cascadura-1ST1 production is restricted based on surface choke size. Prior to the end of the month, we intend to replace the current surface choke with a larger unit, which will enable increased natural gas production.
CO-1
As previously announced, Touchstone intends to drill two wells from one surface location on the CO-1 block. Drilling operations remain on schedule, with the spudding of the first well expected before the end of February 2024.
2023 Sales Volumes
In the fourth quarter of 2023, we achieved average net sales volumes of 8,504 boe/d as follows:
· Cascadura field contributed average net sales volumes of 6,854 boe/d (8,566 boe/d gross) consisting of:
– net natural gas sales volumes of 37.4 MMcf/d or 6,232 boe/d (46.7 MMcf/d or 7,789 boe/d gross); and
– net natural gas liquids volumes of 622 barrels per day (777 barrels per day gross);
· net average natural gas sales volumes from Coho were 3.1 MMcf/d or 517 boe/d (3.9 MMcf/d or 646 boe/d gross); and
· average net and gross daily crude oil sales volumes were 1,133 barrels per day.
On a 2023 annual basis, Touchstone Exploration averaged net sales volumes of 3,981 boe/d, consisting of 35 percent crude oil and liquids and 65 percent natural gas volumes.
