Shell plc’s SHEL Trinidad affiliate, Shell Trinidad Central Block Ltd. ("STCBL"), is set to be acquired by Canadian oil and gas producer Touchstone Exploration for $23 million in cash from BG Overseas Holdings. The move aligns with Touchstone’s ongoing natural gas projects and provides it access to world LNG (liquefied natural gas) prices for natural gas. Moreover, it expands the company’s presence in the Herrera fairway.
The acquisition of STCBL will give Touchstone a 65% working interest in the Central Block exploration and production license in Trinidad and Tobago. The remaining 35% interest in the central block will be held by Heritage Petroleum Company Ltd.
The agreement includes the acquisition of four wells of STCBL located in the Carapal Ridge, Baraka and Baraka East natural gas pools, producing a combination of natural gas and natural gas liquids.
The infrastructure to be acquired along with the assets will boost the processing capacity of natural gas in the Herrera fairway and also enable Touchstone to expand its natural gas exports while bolstering its local market supply.
The agreement also lays down the acquisition of three key gas marketing contracts held by STCBL. One of the contracts is for domestic sales and the other two are associated with the Atlantic LNG facility. This dual-market strategy ensures that Touchstone can capitalize on local and global gas prices.
Current production levels of the Central Block include 18 MMcf/d (million cubic feet per day) of natural gas and 200 bbls/d (barrels per day) of natural gas liquids, translating to approximately 3,200 barrels of oil equivalent per day. The block’s assets include an 80 MMcf/d gas processing facility and a network of pipelines. Touchstone plans to optimize the capacities of these facilities, pursue infill drilling and explore further prospects to maximize output. The acquisition will increase the company’s net production by 2,080 boepd (barrels of oil equivalent per day) and improve its cash flow prospects.
The acquisition, effective from Jan. 1, 2025, is expected to close by the second quarter of 2025 after the companies secure necessary approvals from the Energy Ministry and other regulatory bodies. Touchstone is also in touch with its banks to raise the required financing for the deal.
London-based Shell is one of the primary oil super-majors — a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like TechnipFMC plc FTI,KLX Energy Services Holdings, Inc. KLXE and Flotek Industries, Inc. FTK. While TechnipFMC currently sports a Zacks Rank #1 (Strong Buy), KLX Energy and Flotek Industries each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
London-based TechnipFMC plc is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The Zacks Consensus Estimate for FTI’s 2024 earnings indicates 260% year-over-year growth.
KLX Energy Services Holdings Inc. provides oilfield services focused on the wells’ completion, intervention and production activities. KLXE’s expected EPS (earnings per share) growth rate for next year is 28.52%, which aligns favorably with the industry growth rate of 15.10%.
Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2024 earnings indicates 125% year-over-year growth.
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