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Highlights
- Touchstone secures acquisition of Shell Trinidad Central Block assets for $23 million.
- Acquisition offers access to Atlantic LNG and increased production capacity.
- Strategic infrastructure, infill opportunities, and gas sales contracts enhance Touchstone’s portfolio.
Touchstone Exploration Inc. (TSX, LSE: TXP) is pleased to announce that its wholly owned subsidiary, Touchstone Exploration (Trinidad) Ltd. ("TETL"), has entered into an agreement to acquire all the share capital of Shell Trinidad Central Block Limited ("STCBL"). The acquisition, valued at $23 million in cash prior to closing adjustments, will further expand Touchstone's presence in the Republic of Trinidad and Tobago and increase the company's production capacity.
The acquisition is subject to customary regulatory and partner approvals, including the approval of the Ministry of Energy and Energy Industries. Touchstone is currently in discussions with its Trinidad-based lender, Republic Bank Limited, to arrange financing for the transaction upon closing. The acquisition will have an effective date of January 1, 2025, and is expected to be completed during the second quarter of 2025, pending the completion of all necessary approvals.
Strategic Acquisition with Key Assets
STCBL holds a 65 percent operating working interest in the Central block exploration and production licence, which includes a gas processing plant. Heritage Petroleum Company Limited ("HPCL") holds the remaining 35 percent interest. The Central block currently produces approximately 18.0 MMcf/d of natural gas and 200 bbls/d of natural gas liquids, translating to approximately 3,200 barrels of oil equivalent per day (boe/d) in gross production.
The acquisition provides Touchstone with immediate access to both local and global LNG pricing through natural gas sales contracts associated with the Central block. This represents a significant opportunity to enhance the company's exposure to the world LNG market. Furthermore, Touchstone has identified several infill drilling locations and the potential for deeper exploration prospects at the Central block.
Infrastructure and Growth Potential
The Central block assets include strategic infrastructure, such as an 80 MMcf/d gas processing plant, known as the Evergreen Facility, along with field flowlines and a gas export pipeline. These assets provide critical midstream infrastructure for transporting natural gas to both the domestic market and the Atlantic LNG facility, supporting growth potential in the region.
In addition to existing production, Touchstone sees substantial opportunity for development, including the optimization of facilities, infill drilling, and further exploration. The acquisition will increase Touchstone’s net production by approximately 2,080 boe/d (94 percent natural gas) at current field rates, contributing significantly to the company’s cash flows and strengthening its operational base in Trinidad.
CEO's Comment on Strategic Fit and Future Plans
Paul Baay, President and Chief Executive Officer of Touchstone Exploration, commented: “We are pleased to enter into an agreement to purchase the Central block asset. The asset is a strategic fit with Touchstone’s current land base and provides us access to world LNG prices for natural gas. The infrastructure associated with the assets provides processing and takeaway capacity for natural gas in the Herrera fairway. During 2025, we will consider pursuing an infill development drilling program at Central block and look to boost production and LNG sales.”
The acquisition is set to enhance Touchstone’s position in the growing Trinidad energy market, providing significant synergies with existing operations and potential for future growth through exploration and development. As regulatory approvals and funding arrangements are finalized, the company looks forward to progressing the acquisition and unlocking the full potential of the Central block assets.
Conclusion
Touchstone Exploration’s acquisition of the Central block assets is a significant step in the company’s growth strategy, expanding its production capacity, access to LNG markets, and infrastructure in Trinidad and Tobago. The deal provides Touchstone with new opportunities for development, exploration, and increased production, ultimately enhancing its ability to deliver sustainable, long-term value for shareholders. With strong prospects in both natural gas production and LNG sales, Touchstone is well-positioned to capitalize on the growing demand for energy in the region.
