Shares of Touchstone Exploration Inc (LON: TXP) fell 33.2% after the company announced that it had discovered light crude oil at the Ortoire block, onshore Trinidad and Tobago.
The company discovered 35-degree API gravity crude oil – a light crude – at Chinook-1’s third interval and said that it would evaluate the well further to determine its commercial viability.
Touchstone will place Chinook-1 on a pump for an extended period to evaluate the reservoir before deciding on the way forward.
Today’s announcement could not be the only reason behind the company’s shares massive selloff. It appears that investors were also reacting to the oil firm’s disappointing 2020 earnings results released on Friday.
Touchstone reported an annual loss of $11.03 million despite reporting an increase in its average daily oil sales to 1,392 barrels per day in 2020, representing a 24% increase compared to 2019.
Investors barely reacted to the news edged slightly lower. However, today’s overreaction indicates that investors were not pleased with Friday’s earnings reports and latched on today’s announcement to offload their shares.
The discovery of light crude oil should be a positive development for the company. It fetches higher prices in the markets than heavy crude since it generates higher quality diesel and gasoline when converted by a refinery.
Touchstone ended last year with $24.28 million in cash and is well-funded to keep investing in its operations and projects such as Chinook-1, which could boost its revenues after the projects attain commercial viability.
Paul Baay, Touchstone’s President and CEO, said: “This light oil discovery on the Ortoire property provides another level of opportunity for the company and is in line with our original Chinook exploration model, which indicated the target was oil charged.”
In the meantime, the company remains focused on the gas test at Cascadura Deep and bringing its first two wells, Coho-1 and Cascadura-1ST1, onto production.
Touchstone Exploration share price.
Touchstone Exploration shares fell 33.18% to trade at 88.86p, dropping from Tuesday’s closing price of 133p.
