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Touchstone Exploration Inc. (TSX: TXP) is an international upstream oil and gas company currently active in the Republic of Trinidad and Tobago. The group is primarily engaged in the exploration and the acquisition, development, and production of hydrocarbons in onshore reservoirs in Trinidad. The company holds interests in producing and exploration properties in southern Trinidad, which is approximately 90,000 gross acres of exploration and development rights.
Key Updates:
Risks associated with the Investment:
The company’s operations might be impacted due to lower commodity prices, currency volatility, high input costs on account of rising inflation, etc.
Q1FY22 Financial Highlights
Q1FY22 Income Statement Highlights (Source: Company Reports)
Valuation Methodology (Illustrative): EV to Sales based
Analysis by Kalkine Group
Stock Recommendation:
Q1FY22, the company reported its cash conversion period of 117.1 days, which is lower than 127.1 days in Q4FY21. This indicates that the company is taking lower time convert its investments to cash flows. We have valued the stock using EV to Sales based relative valuation approach and arrived at a target price offering double-digit upside potential (in % terms). We have considered peers like Birchcliff Energy Ltd, ARC Resources Ltd etc. for this purpose. Considering the aforesaid facts, we recommend a ‘Speculative Buy’ rating on the stock of TXP at the last closing price of CAD 1.33 on June 17, 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.
One-Year Technical Price Chart (as on June 17, 2022). Analysis by Kalkine Group
Technical Analysis Summary
Disclaimer
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