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Touchstone Up 14% On Cascadura EIA – Is This Too Much For The News?

Updated 8 Aug 2022

Key points:

  • Touchstone Exploration is up 14% this morning
  • The trigger is the application for the EIA at the Cascadura project
  • Note that it is just the application, not the actual granting of the permission

Touchstone Exploration (LON: TXP) is up 14% on the news about the EIA for the Cascadura project. While this is good news it’s possible to think that this is a little strong as a reaction to such a simple piece of news. For, effectively, the announcement is that they’ve filled in the forms correctly. Which is something we might hope an oil company could do really. OK, perhaps that’s being excessively dismissive but a 14% jump in the Touchstone share price does look a little much here. For it’s not the grant of a permission or licence, it’s the news that it has been correctly applied for.

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As the company announcement has it: “Touchstone submitted the remaining EIA documentation on August 3, 2022, and the EMA responded on August 5, 2022 stating that the submitted information was reviewed and was deemed to be adequate to determine the outcome of the Company’s CEC application. Pursuant to statutory CEC rules, the EMA confirmed that a final CEC determination will be made by September 15, 2022.” That is, the information release isn’t that the environmental permit hsa been issued, nor that it will be. Rather, Touchstone have filled out the forms correctly for the regulator to make a decision.

Of course, such an environmental permit is a requirement of being able to actually produce anything, so it is a vital part of the process. It’s good to know that the decision will arrive in a month’s time. But still, 14% on the share price does seeem quite a lot for this news.

Touchstone Exploration share price
Touchstone Exploration share price from IG

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It does have to be said that Touchstone hsan’t exactly been lucky with earlier announcements. Back a year and a bit and they announced that they’d found light oil in the Ortoire block and the shares sank like a stone. Which is an oddity but then the annual results also announced didn’t please. So it wasn’t the finding of oil that pushed that Touchstone share price down. So, maybe they’re just de a little luck with this possible over-reaction here?

It could also be thought of as more than a little odd that an oil company share price should tank – like it has – at a time of high oil prices. But then that’s because while they do have production that doesn’t cover their costs. They’re much more of an exploration company than they are a solid producer. Again, we might therefore think that a share price boost as they pass another milestone on the way to producing is reasonable enough. But that does still come up against the fact that this is an announcement of the licence applied for, not the licence received.

The next likely major mover of the Touchstone share price is going to be sometime between now and Sept 15th. For that will be when we’ll get the news that the necessary EIA has been granted. Or not, of course.