Canaccord Genuity cuts target price on Touchstone Exploration
By Iain Gilbert
Date: Monday 09 Dec 2024
(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on oil and gas business Touchstone Exploration from 60.0p to 90.0p on Monday but said there was "still plenty of upside" to the stock despite recent changes in production guidance.
Following Touchstone's guidance for the remainder of FY24, and FY25, Canaccord said it had revised its forecasts to better reflect lower production expectations fuelled by higher decline rates from the company's Ortoire licence.
"We still see considerable value in Touchstone, with our new target price representing a circa 110% upside to Friday's close," said Canaccord. "However, we acknowledge the lower-than-anticipated production from the Cascadura wells has left more work for Touchstone to do to prove the value of its onshore production assets in Trinidad."
Touchstone issued updated guidance for FY25, with a new production range of 6,700-7,300 barrels of oil per day. Alongside this, Canaccord Genuity has new capex expectations of roughly $23.0m in 2025, resulting in operating cash flow of approximately $22.0m and an FY25 year-end net debt of around $30.0m.
"We reduce our estimated FY25e production to circa 7,000 boepd from our previous circa 15,000 boepd that assumed a far slower decline from the Cascadura 1ST1 and Deep wells, and we have also taken a more conservative approach to modelling any future Ortoire wells," added the Canadian bank, which reiterated its 'speculative buy' rating on the stock.
Reporting by Iain Gilbert at Sharecast.com
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