Canada's Touchstone Exploration has “taken in front” in its bold purchase of Trinity Exploration and Production's land-based oil-producing assets, judging by the words of its chief executive officer (CEO), Paul Baay, who says “We wanted to greatly enhance our development drilling inventory for when prices recover to a level that warrants additional drilling.”

The six lease operatorship (LO) blocks disposed of by the London-listed Trinity comprise the vast majority of its onshore assets and account for about 1,577 b/d of crude output.

Trinity was clearly motivated to sell-out because of its financial troubles which have been well known to the energy industry both at home and abroad. Its former chief executive officer (CEO), Joel 'Monty' Pemberton spoke of balance sheet pressures” and the need to reduce “overhead costs” as some of the reasons for selling out to Touchstone, which was prepared to pay US$20.8 million for acreage with a book value of US$17.17 million.

But Mr. Baay seems to think he has struck a good deal.

He told 'Energy Now' that “at current oil price levels, it is a more constructive use of capital to acquire assets than to drill for reserves.” The amount of reserves acquired through the purchase has not been revealed.

Touchstone, of course, has its own considerable inventory of onshore, and offshore, acreage but plans to embark on a work programme on the newly-acquired blocks as soon as possible.

“We will have a multi-well initiative during the coming year,” the Touchstone Exploration CEO confirms. “Depending on oil price, the drilling programme will be continuous. The lease operatorships (LOs) are in a renewal phase at the moment, so that will also dictate the commitment on each block.”

The oil price will probably remain the decisive factor. “As with the current structure,” Mr. Baay points out, “we really require US$68 for Brent before it makes sense to move back into the field.”

That's particularly important in regard to the more expensive deep horizon drilling, for which Mr. Baay believes there are some “excellent opportunities in all of the blocks.”

Touchstone has already demonstrated that in its WD 4 LO block.

The additional acreage should greatly assist Touchstone in meeting the crude oil production targets it has set for itself in Trinidad and Tobago, the only country in the world in which it will shortly have producing assets since, as Mr. Baay tells us, “we have continued to sell assets in Canada to focus purely on Trinidad and Tobago. We expect that, by the end of the year, we will be entirely focussed on Trinidad and Tobago.”

These crude oil production targets are 3,000 b/d following the absorption of the former Trinity blocks. By 2017, the CEO says “we would hope to be at 5,000 b/d.”

But Touchstone does not plan to stop there. “A target of 10,000 b/d is still on the horizon,” Mr. Baay says, “and I believe we can get there in the next four years, given the correct fiscal structure and a US$70 oil price.”

The acquisition of still more acreage would considerably enhance the Canadian company's vision of increasing crude output (which has a ready market in the Petrotrin refinery, which will buy any crude available, linked, in Touchstone's case, to Brent pricing).

“We will continue to grow our production and opportunity base in Trinidad and Tobago, as we see opportunities,” the CEO confirms. “We will also continue to have very open dialogue with Petrotrin on how we can expand the LO and joint venture structures to further increase production.”