WTI (June) $61.62 -$1.53, Brent (July) $64.53 -$1.56, Diff -$2.91 -3c.
USNG (June) $3.36 -13c, UKNG (June) 84.57p +0.32p, TTF (June) €35.095 -€0.13.
Oil price
Oil is very quiet as we end the week almost entirely dominated by Trump in the Middle East as well as the Iran negotiations.
Touchstone Exploration
Touchstone has announced that it successfully closed the previously announced acquisition of 100 percent of the share capital of Shell Trinidad Central Block Limited (“STCBL”) on May 15, 2025.
The acquisition was completed for cash consideration of approximately $28.4 million, subject to final closing adjustments. STCBL holds a 65 percent participating interest in the onshore Central block exploration and production licence in Trinidad, which includes four producing natural gas wells and a gas processing facility. The remaining 35 percent participating interest is held by state-owned Heritage Petroleum Company Limited. The Central block licence encompasses approximately 6,699 gross acres (4,354 net working interest acres).
Touchstone will provide an updated corporate presentation and revised 2025 guidance as the integration of the acquired assets progresses.
Paul Baay, President and Chief Executive Officer, commented:
“The closing of this acquisition marks a significant milestone for Touchstone as we continue to expand our portfolio of high-quality assets in Trinidad. This transaction strengthens our production base, allows us access to the liquefied natural gas market, broadens our onshore presence, and enhances our operational capacity in a region where we see long-term strategic value. We look forward to integrating these assets and unlocking their full potential for the benefit of our shareholders and stakeholders.“
I have written plenty about this deal over recent weeks so closing of the transaction is just another tick in the box, to go with my other 8 ticks that Touchstone have achieved. In brief it gives them a 65% interest, 4,354 net WI acres, 4 producing wells and a gas processing facility.
In my view the key plus, apart rom the obvious synergies is the access to LNG and the price premium that it gives them over its existing contracts. Expect updated guidance from the company now that the deal is done and debt and equity fundings are complete.
With a bigger opportunity in these acres and ability to drill across the island giving production upside and pricing accretion I give Touchstone every chance to gain from this and are now the dominant independent in Trinidad.
Zephyr Energy
I think it’s time to take a look at Zephyr, it has had a busy couple of weeks and I think that to a degree the market has probably not appreciated the quality that has been put in front of it. So firstly, the State 36-2 LNW-CC-R well which as we now know came in as a truly remarkable proof of a first rate working petroleum system in the Paradox basin.
The well result
The well produced just under 3/- boepd on a 18/64″ choke with little or no drop in bottom hole pressure indicating from the data gathered from a fibre optic cable run along the length of lateral suggests that inflow of hydrocarbons across the length of the lateral is occurring. But better than that, the company say that this indicates the potential for a much larger reservoir volume to be drained compared with the initial completed interval of 130 feet in the previous production test.
The company stated that ‘elevated condensate-yields were observed’ and that while liquid yields will vary across the field area and in time as the reservoir pressure drops during field production, the overall elevated liquid yields are expected to be a significant driver of enhanced project economics.
Indeed, when talking to Colin Harrington this had really impressed him, in other words any way you look at these well results this is a commercial well with fantastic economics and without doubt opens up the Paradox Basin if ever there was any doubt, oh and don’t forget it wasn’t fracced…
From discussions with a number of experts this well is thought to be amongst the top 10% of all wells to be drilled in the onshore USA in recent years, it didn’t disappoint on any level and brought into play the entire Paradox Basin play.
On the day the result came out the shares actually fell, something that was somewhat surprising but it is worth looking at the recent performance of the shares, up until the day they had risen in anticipation, by 7.95% on a week, 46.41% on a month and 33.86% over six months. Clearly a bull position had been built up and whatever the result had been the shares would have suffered some degree of profit taking.
Finally on the well, I have attached an EIA chart showing all horizontal wells in the US since 2000 which is pretty comparable. The differences are interesting in that the larger wells are all 2-4 mile laterals and have all been fracced, the Zephyr well is a 1 mile lateral with no frac which is amazing, take a look at the company they are in. The lower red line is from the most choked back portion of the test, and at the upper line they were still choked at 18/64 – and with no pressure drawn down.
The strategic investment
Since then the company has entered into a strategic agreement to access up to $100m to fund growth in the Group’s non-operated asset portfolio in the Williston Basin. In partnership with a highly experienced upstream focused private equity investor’, they will grow production and net asset value on an accretive basis. Similar to its previous non-operated portfolio Zephyr intend to grow that side of the company in order to provide exceptional returns to develop the upside at the Paradox Basin.
By a combination of the success at the Paradox and the increased strategic investment in the non-operated assets in the Williston Basin Zephyr are uniquely in a position to use the latter to fund the drilling campaign at the former. Although I expect a considerable degree of interest from the US oil industry to partner in the Paradox, the Williston gives unique flexibility to benefit shareholders.
I have said before many times over a number of years that Zephyr has amongst the best management in the business, to have found and believed in the Paradox and to build up the production side to provide funds for the development.
The time has come to assess the success in both parts of Zephyr, my view is that this is a most substantial company in the making and my target price of 20p may be conservative by a country mile, when the market realises quite how good this is they will wonder indeed what happened when the Paradox came in….
Sunda Energy
Further to the Company’s announcement on 13 May 2025, Sunda Energy has announced that it has received notice from each of the three investors who participated in the CLN fundraising, in each case to convert all of the outstanding balance of their Loan Notes into ordinary shares of 0.025 pence each in the Company.
The conversion price of the Outstanding Balance is 0.03995 pence (the “Conversion Price”), which, in accordance with the terms of the Loan Notes, is a 15% discount to the lowest daily volume weighted average trading price on any of the 20 business days prior to the issue of each individual conversion notice (being 0.047 pence).
Accordingly, the Company will issue in aggregate 3,125,594,493 new Ordinary Shares (the “New Ordinary Shares”) to the Investors (the “Conversion”).
In addition, the Company has granted Warrants to the Investors pursuant to the Conversion. In aggregate, 1,803,227,592 Warrants have been granted to the Investors. One Warrant will entitle the Investors to subscribe for one Ordinary Share, at a 30% premium to the Conversion Price, being 0.051935 pence.
Details of the terms and conditions of the CLNs are outlined in the Company’s announcement released on 24 April 2025 and in the Company’s circular posted to shareholders on 25 April 2025.
Admission to AIM
Application will be made shortly to London Stock Exchange plc for the 3,125,594,493 New Ordinary Shares to be admitted to trading on AIM (“Admission”). It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on AIM at 8.00 a.m. on or around 22 May 2025.
Following Admission, the Company’s issued share capital will comprise 28,636,378,281 Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.
Capitalised terms in this announcement have the meaning ascribed to them in the announcement released by the Company on 24 April 2025.
Nothing to add to this as its merely a technical but as I said I met with the senior management of Sunda earlier in the week and whilst this way of raising money isn’t my favourite they are in a really interesting time right now.
And finally…
York continues today and with the Yorkshire Cup, earlier this week the trials were dominated by Aidan O’Brian, no surprise there. Tomorrow its the Lockinge at Newbury.
The US PGA is underway and the leaderboard populated by mainly mystery players, the weather has brought in ‘dirty balls’ rulings to say the least.
In F1 it’s the Emilia Romagna GP at Imola, quali at 3pm tomorrow, the race at 2pm on Sunday.
Football brings us the FA Cup final between the Eagles and the Noisy Neighbours whilst play-off activity continues. Walsall v Chesterfield, 2-0 up from leg one.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion.
