Touchstone Exploration's Cascadura-5 Success: A High-Risk, High-Reward Gas Play

Touchstone Exploration's recent update on the Cascadura-5 well (Cas-5) in Trinidad's Ortoire block delivers a compelling mix of operational triumph and strategic urgency. The well's on-budget completion, extended depth due to robust hydrocarbon signals, and enhanced reservoir insights position the company at a critical juncture: turning exploration success into production growth—if it can secure funding for its next move.

Operational Efficiency & Reserve Upside
The Cas-5 well, drilled to 7,020 feet—366 feet deeper than planned—exposed 620 feet of Herrera Gr7bc sands, exceeding pre-drill expectations. Touchstone's use of advanced drilling techniques (synthetic oil-based mud, managed pressure drilling) minimized downtime, keeping costs at $5 million. This efficiency underscores the team's improved execution compared to past projects. The extended hydrocarbon-rich zone suggests the Cascadura structure's resource potential is larger than initially modeled. Crucially, the sands were found 300 feet updip from the 2024 Cas-2 well, expanding the field's mapped boundaries and supporting multi-well development.

Synergies in Sight: Cas-4/Cas-5 Tie-In
The Cas-5 success now hinges on completing the nearby Cas-4 well, which is cased to 3,200 feet but awaits $5 million in funding. Once operational, both wells can be tied into the Cascadura facility with existing equipment—eliminating costly delays. This synergy could unlock a combined 7,000 BOE/day by 2025, per Touchstone's targets, capitalizing on Trinidad's rising gas demand. The government's 2025 deepwater bid round—offering frontier blocks with up to 5 Tcf of gas—also hints at broader sector tailwinds, as global LNG prices climb amid supply constraints.

Funding Gaps & Capital Allocation Risks
The looming question is whether Touchstone can secure the unfunded placing commitments needed to complete Cas-4. The drilling rig used for Cas-5 remains idle until capital is raised, creating a critical path risk. While Trinidad's gas market offers premium pricing (U.S. gas prices near $4/MMBtu) and geopolitical diversification (post-U.S.-Canada tariff tensions), execution failure here could delay cash flows and erode investor confidence. The company's 2024 annual report highlights risks like regulatory delays and commodity price volatility, which remain unresolved.

Investment Thesis: A Speculative Buy with Asymmetric Upside
Touchstone is a high-conviction, high-risk play. The operational execution on Cas-5 and Trinidad's gas market tailwinds—bolstered by global LNG demand—create a clear value-creation path. However, success hinges on two variables: (1) securing Cas-4 funding and (2) efficiently tying in production to existing infrastructure. Investors should monitor the July 2025 deepwater bid round results (a potential catalyst for sector-wide optimism) and any updates on capital raises.

For risk-tolerant investors, the asymmetry is compelling: success here could re-rate Touchstone's valuation, while failure leaves it stranded with a partially drilled well. Consider a small speculative position, with a focus on near-term funding updates and gas price trends.

In conclusion, Touchstone's Cascadura project exemplifies the classic “all or nothing” exploration story—where a single well can redefine a company's trajectory. The stakes are high, but the rewards for investors who bet right could be transformative.