TRINIDAD 2

Shell extended Rowan’s Gorilla VI jack-up contract 

1/2/2019

HOUSTON — Rowan Companies plc announced that the Rowan Gorilla VI (a Super Gorilla class  jack-up) has been extended by Shell Trinidad. The rig will continue its current drilling program until approximately March of 2019. Thereafter, the Rowan Gorilla VI will be used for platform support and accommodations work until approximately September of 2019, with an option to extend this work further until November 2019.

Rowan is a global provider of contract drilling services with a fleet of 25 mobile offshore drilling units, composed of 21 self-elevating jack-up rigs and four ultra-deepwater drillships. The company’s fleet operates worldwide, including the U.S. Gulf of Mexico, the United Kingdom and Norwegian sectors of the North Sea, the Middle East, the Mediterranean Sea, and Trinidad.

Touchstone announces Ortoire independent prospect evaluation

17 Jan 2019
Touchstone Exploration announced a summary of the results of an independent review prepared by GLJ Petroleum Consultants of Calgary, Alberta dated January 16, 2019 of the Company’s Ortoire exploration blocklocated onshore in the Republic of Trinidad and Tobago.

The Company engaged GLJ to review each of the internally identified onshore Trinidad exploration prospects on the Ortoire exploration block and to provide an independent Prospect Evaluation in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (‘COGEH’) and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (‘NI 51-101’). Touchstone has an 80% working interest in the Ortoire block.

The Prospect Evaluation includes an estimate of the Company’s Risked and Unrisked Recoverable Volumes and the net present value of future net revenue of its Contingent Resources and Prospective Resources. The Prospect Evaluation relied on several factors including existing well bores, offset producing properties and historical production tests on two of the three prospects. The Company also utilized a combination of 2D and 3D seismic data to further delineate the individual prospects. The locations target turbidite fan sequences of the Herrera formation at depths between 7,000 and 11,500 feet.

The Prospect Evaluation was performed to provide the Company with an independent assessment of the Ortoire exploration block opportunities and to assist in quantifying individual prospects. At this time, GLJ and the Company have not included the Contingent Resources and Prospective Resources identified in the Prospect Evaluation in Touchstone’s Reserves Report as the exploration license governing the Ortoire block requires the Company to first declare commerciality of any discovery prior to economic production

‘This independent prospect evaluation provides confirmation that the prospects that have been identified by the Touchstone team are of a significant size and provide an excellent opportunity for a step change in reserves, production and net asset value of the Company. Proving this geological model could be monumental for Touchstone and Trinidad as it will set up a multi year exploration and development program.’

Source: Touchstone Exploration TOUCHSTONE ANNOUNCES ORTOIRE INDEPENDENT PROSPECT EVALUATION Calgary, Alberta – January 17, 2019 –

Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TSX / LSE: TXP) announces a summary of the results of an independent review prepared by GLJ Petroleum Consultants Ltd. (“GLJ”) of Calgary, Alberta dated January 16, 2019 of the Company’s Ortoire exploration block (the “Prospect Evaluation”) located onshore in the Republic of Trinidad and Tobago (“Trinidad”).

The Company engaged GLJ to review each of the internally identified onshore Trinidad exploration prospects on the Ortoire exploration block and to provide an independent Prospect Evaluation in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGEH”) and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).

Touchstone has an 80% working interest in the Ortoire block. The Prospect Evaluation includes an estimate of the Company’s Risked and Unrisked Recoverable Volumes and the net present value of future net revenue of its Contingent Resources and Prospective Resources.

The Prospect Evaluation relied on several factors including existing well bores, offset producing properties and historical production tests on two of the three prospects. The Company also utilized a combination of 2D and 3D seismic data to further delineate the individual prospects.

The locations target turbidite fan sequences of the Herrera formation at depths between 7,000 and 11,500 feet. The Prospect Evaluation was performed to provide the Company with an independent assessment of the Ortoire exploration block opportunities and to assist in quantifying individual prospects.

At this time, GLJ and the Company have not included the Contingent Resources and Prospective Resources identified in the Prospect Evaluation in Touchstone’s Reserves Report as the exploration license governing the Ortoire block requires the Company to first declare commerciality of any discovery prior to economic production.

Paul R. Baay, President and Chief Executive Officer, commented:

“This independent prospect evaluation provides confirmation that the prospects that have been identified by the Touchstone team are of a significant size and provide an excellent opportunity for a step change in reserves, production and net asset value of the Company. Proving this geological model could be monumental for Touchstone and Trinidad as it will set up a multi year exploration and development program.”

Prospect Evaluation Summary The prospect Evaluation classifies exploration targets in either the Contingent Resources (Development Pending) or Prospective Resources (Prospect) COGEH category.

Both Contingent Resources and Prospective Resources have risks associated with the Chance of Commerciality, which is defined as the product of Chance of Development and the Chance of Discovery. Contingent Resources are defined as discovered resources, due to historical production or testing, thereby carrying no Discovery Risk. Contingent Resources have risks associated with Chance of Development only.

Prospective Resources are defined as undiscovered resources, with risks associated with both Chance of Development and Chance of Discovery. GLJ’s estimate of the Recoverable Volumes and Net Present Values (both Risked and Unrisked) of the Contingent Resources and Prospective Resources identified at Ortoire are set out below. In all instances, net present value of future net revenue (“Net Present Value”) is calculated as at December 31, 2018 using GLJ’s pricing forecasts dated January 1, 2019 and is net of estimated future royalties, development and operating costs required to fully develop each prospect and recover all Recoverable Volumes, and abandonment and reclamation costs.

Operating costs have been estimated based on the Company’s current structure and take in to account premiums related to bringing new volumes on stream over time.

2 An estimate of risked net present values of future net revenue of Contingent Resources and Prospective Resources is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the Company proceeding with the required investment. It includes Contingent Resources and Prospective Resources that are considered too uncertain with respect to the Chance of Development and Chance of Discovery to be classified as reserves. There is uncertainty that the risked net present value of future net revenue will be realized.

Recoverable Volumes Summary of Total Company Interest Contingent Resources (Development Pending)(5)(6)(8)(9)(10)

The following table summarizes GLJ’s estimate of the Unrisked Recoverable Volumes associated with the Company’s Contingent Resources (Development Pending) including Light and Medium Oil, Residue Gas, Natural Gas Liquids, and Oil Equivalent (each as defined under NI 51-101) for the Company’s Ortoire exploration prospects.

Product Type Unrisked Low Estimate(2) Best Estimate(3) High Estimate(4) Gross Net(1) Gross Net(1) Gross Net(1) Light & Medium Oil (Mbbl) 495 396 1,180 944 2,738 2,190 Residue Gas (MMcf) 8,190 6,552 13,230 10,584 20,160 16,128 Natural Gas Liquids (Mbbl) 109 87 368 294 874 699 Oil Equivalent (Mboe) 1,969 1,575 3,753 3,002 6,970 5,576

Summary of Total Company Interest Prospective Resources (Prospect) (5)(7)(8)(9)(10) The following is a summary of GLJ’s estimate of the Unrisked Recoverable Volumes associated with the Company’s Prospective Resources (Prospect) including Light and Medium Oil, Residue Gas, Natural Gas Liquids, and Oil Equivalent for the Company’s Ortoire exploration prospects. Product Type Unrisked Low Estimate(2) Best Estimate(3) High Estimate(4) Gross Net(1) Gross Net(1) Gross Net(1) Light & Medium Oil (Mbbl) 1,980 1,584 7,800 6,240 23,460 18,768

Residue Gas (MMcf) 18,486 14,789 80,334 64,267 212,949 170,359 Natural Gas Liquids (Mbbl) 431 345 2,313 1,850 7,554 6,043 Oil Equivalent (Mboe) 5,493 4,394 23,501 18,801 66,505 53,204

The range of Recoverable Values are a function of the uncertainty of various components used in the Prospect Evaluation including subsurface variables (i.e. thickness, porosity, fill, net to gross sand ratio, water saturation and hydrocarbon qualities) as well as recovery factors.

• As exploration activities move forward these variables will be better quantified. The estimation of the magnitude of Touchstone’s oil and gas prospects on the Ortoire exploration block and the potential commerciality of these prospects is in the early stages of exploration and appraisal.
• There are a number of positive and negative factors which GLJ took in to account in determining risk and overall uncertainty. The key positive factors include:
• Touchstone has operated in Trinidad since 2010 and has sufficient drilling history and experience to be able to accurately estimate the anticipated drilling and production costs with a reasonable degree of certainty. 3
• There have been a number of wells drilled on the Ortoire block by prior operators. Many of these wells are documented and several have associated production or hydrocarbon indications. All of the prospects evaluated in the Prospect Evaluation have legacy wells drilled in close proximity to the identified exploration locations.
• Prospects classified as Contingent Resources (Development Pending) have legacy wells from the targeted reservoirs, which have tested significant quantities of hydrocarbons or were previously on production.
• The Company’s current exploration plan includes drilling wells deeper than many of the legacy wells reviewed in the evaluation, exposing the Company to potential hydrocarbon bearing zones not observed or tested in the past.
• Touchstone’s initial development plans are based solely on primary production strategies. Potential secondary and/or tertiary production schemes were not considered in the Prospect Evaluation and could result in increased future recovery factors.
• Oil and gas markets and prices in Trinidad are strong relative to many other jurisdictions and lend themselves to robust project economics. The Company has access to both existing infrastructure with reasonable investment and few obvious impediments to market. Negative factors with respect to the estimate of resources include:
  • Although petroleum activity is commonplace onshore in Trinidad, should
  • The majority of the available offset well data available relevant to the Ortoire block prospects was obtained in the 1950s and 1960s and the technology and interpretive techniques of the time, and the data available to the Company cannot be verified absolutely.
  • There is no publicly available long-term well production performance from oil and/or gas prospects in the immediate area to establish a production type curve specific to the prospect, thereby requiring use of analogue information to establish development plans and to confirm the Chance of Commerciality.
  • Recovery efficiencies are uncertain given the absence of publicly available site specific long-term well production performance data on the property.

AS activity levels increase, timelines may likewise increase to achieve government approvals and access development infrastructure. On a risked basis the Chance of Commerciality is the product of the Chance of Discovery, which takes in to account the physical, subsurface risks and the Chance of Development which looks at future risks associated with bringing the prospects to market. Chance of Developments risks include legal, regulatory, market access, economics, commitment, and timing while the Chance of Discovery risks include source, migration, trap, seal, and reservoir.

Summary of Total Company Interest Contingent Resources (Development Pending)(5)(6)(8)(9)(10) The following table summarizes GLJ’s estimate of the Risked Recoverable Volumes associated with the Company’s Contingent Resources (Development Pending) including Light and Medium Oil, Residue Gas, Natural Gas Liquids, and Oil Equivalent for the Company’s Ortoire exploration prospects. For the Company’s Contingent Resources,

GLJ estimated the Chance of Commerciality of these targets to be 95.0%. Product Type Risked Low Estimate(2) Best Estimate(3) High Estimate(4) Gross Net(1) Gross Net(1) Gross Net(1) Light & Medium Oil (Mbbl) 470 376 1,121 897 2,600 2,080 Residue Gas (MMcf) 7,780 6,224 12,569 10,055 19,153 15,322 Natural Gas Liquids (Mbbl) 104 83 371 297 830 664 Oil Equivalent (Mboe) 1,871 1,497 3,565 2,852 6,623 5,298

4 Summary of Total Company Interest Prospective Resources (Prospect)(5)(7)(8)(9)(10) The following is a summary of GLJ’s estimate of the Risked Recoverable Volumes associated with the Company’s Prospective Resources (Prospect) including Light and Medium Oil, Residue Gas, Natural Gas Liquids, and Oil Equivalent for the Company’s Ortoire exploration prospects. For the Company’s Prospective Resources, GLJ estimated the average Chance of Commerciality of these targets to be 33.9% as the calculated product of the Chance of Development (average 95.0%) and Chance of Discovery (average 35.7%). Product Type Risked Low Estimate(2) Best Estimate(3) High Estimate(4) Gross Net(1) Gross Net(1) Gross Net(1) Light & Medium Oil (Mbbl) 678 542 2,668 2,134 8,024 6,419 Residue Gas (MMcf) 6,250 5,000 27,184 21,747 71,895 57,516 Natural Gas Liquids (Mbbl) 146 117 783 626 2,543 2,034 Oil Equivalent (Mboe) 1,865 1,492 7,981 6,385 22,549 18,039 Net Present Value Summary of

Total Company Interest Net Present Value Contingent Resources (Development Pending)(1) The following table summarizes GLJ’s estimate of the Unrisked Net Present Value associated with the Company’s Contingent Resources (Development Pending). Net Present Values Before Income Taxes Discounted at (% per year) ($000’s) Unrisked Low Estimate(2) Best Estimate(3) High Estimate(4) 0% 19,615 61,287 158,627 5% 14,352 45,901 114,309 10% 10,585 35,434 86,860 15% 7,817 28,001 68,452 20% 5,736 22,540 55,405 Summary of Total Company Interest Net Present Value Prospective Resources (Prospect)(1)

Below is a summary of GLJ’s estimate of the Unrisked Net Present Value associated with the Company’s Prospective Resources (Prospect). Net Present Values Before Income Taxes Discounted at (% per year) ($000’s) Unrisked Low Estimate(2) Best Estimate(3) High Estimate(4) 0% 74,045 487,947 1,712,406 5% 48,020 319,851 1,009,326 10% 31,410 219,666 649,688 15% 20,421 156,236 443,369 20% 12,940 114,176 315,803 5 Summary of Total Company Interest Net Present Value Contingent Resources (Development Pending)(1)

The following table summarizes GLJ’s estimate of the Risked Net Present Value associated with the Company’s Contingent Resources (Development Pending). Net Present Values Before Income Taxes Discounted at (% per year) ($000’s) Risked Low Estimate(2) Best Estimate(3) High Estimate(4) 0% 18,634 58,223 150,696 5% 13,634 43,606 108,593 10% 10,056 33,662 82,517 15% 7,426 26,601 65,029 20% 5,449 21,413 52,635

Summary of Total Company Interest Net Present Value Prospective Resources (Prospect)(1) The following is a summary of GLJ’s estimate of the Risked Net Present Value associated with the Company’s Prospective Resources (Prospect). Net Present Values Before Income Taxes Discounted at (% per year) ($000’s) Risked Low Estimate(2) Best Estimate(3) High Estimate(4) 0% 25,338 166,192 582,224 5% 16,442 108,826 342,549 10% 10,765 74,656 220,087 15% 7,009 53,036 149,907 20% 4,452 38,709 106,561 Summary of Total Company Interest Production Upside(1)(10) The table below summarizes the potential upside to the Company’s working interest production, as estimated by GLJ on an Unrisked basis for both Contingent Resources and Prospective Resources in Barrels of Oil Equivalent:

Peak Daily Oil Production (boepd) Low Estimate(2) Best Estimate(3) High Estimate(4) Unrisked Contingent Resources 832 1,439 2,375 Unrisked Prospective Resources 2,042 8,640 16,673 For the Company’s Contingent Resources and Prospective Resources, in all estimated cases GLJ forecasted the date of first commercial production to occur in late 2019. In both the Contingent Resources and Prospective Resources analysis, Recoverable Volumes have been estimated based on developed technology, and on offset wells currently depleting analogous reservoirs within the basin.

The overall development strategy for the project is based upon a conceptual model generated by the independent evaluator in coordination with Touchstone.

6 Summary of Total Company Interest Future Development Costs(1) The following tables provide information regarding the development costs deducted in the estimation of the Company’s future net revenue using forecast prices and costs as included in the Prospect Evaluation. Year ($000’s) Contingent Resources (Development Pending) Low Estimate(2) Best Estimate(3) High Estimate(4) 2019 10,295 10,295 10,295 2020 – – – 2021 7,375 14,223 14,223 2022 – – 6,813 Thereafter – – –

Total undiscounted 17,670 24,519 31,331 Total discounted at 10% per year 15,628 21,024 25,904 Year ($000’s) Prospective Resources (Prospect) Low Estimate(2) Best Estimate(3) High Estimate(4) 2019 5,669 5,669 5,669 2020 14,770 14,770 14,770 2021 13,696 13,696 13,696 2022 21,332 21,332 21,332 Thereafter 4,386 67,514 173,688 Total undiscounted 59,853 122,983 229,158 Total discounted at 10% per year 47,137 84,786 132,774 Summary of Pricing, Inflation and Foreign Exchange Assumptions

With respect to both Contingent Resources and Prospective Resources, the following table sets forth the benchmark reference prices, inflation and foreign exchange rates reflected in the Prospect Evaluation. Forecast Year Henry Hub (US$/MMBtul)(11) Brent Blend FOB North Sea (US$/bbl)(11) Inflation Rate (%/year)(12) US$/C$ Exchange Rate(13) 2019 3.00 63.25 2.0 0.75 2020 3.17 68.50 2.0 0.77 2021 3.36 71.25 2.0 0.79 2022 3.51 73.00 2.0 0.81 2023 3.64 75.50 2.0 0.82 2024 3.71 78.00 2.0 0.83 2025 3.78 80.50 2.0 0.83 2026 3.86 83.41 2.0 0.83 2027 3.94 85.02 2.0 0.83 2028 4.00 86.66 2.0 0.83 Thereafter % change per year 2.0% 2.0% Nil Nil

Resource Definitions “Chance of Commerciality” is the arithmetic product of the Chance of Discovery and the Chance of Development. “Chance of Discovery” is the estimated probability that exploration activities will confirm the existence of a significant accumulation of potentially recoverable petroleum. “Chance of Development” is the estimated probability that, once discovered, a known accumulation will be commercially developed.

7 “Contingent Resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. “Prospective Resources” are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

Prospective Resources have both an associated chance of discovery and a chance of development.

Footnotes (1) Touchstone’s working interest in the Ortoire block (exploration licences and production leases) is 80%.

(2) The low estimate is the P90 quantity. P90 means there is a 90% chance that the estimated quantity will be equaled or exceeded.

(3) The best estimate is the P50 quantity. P50 means there is a 50% chance that the estimated quantity will be equaled or exceeded.

(4) The high estimate is the P10 quantity. P10 means there is a 10% chance that the estimated quantity will be equaled or exceeded.

(5) The totals are the arithmetic summation of probabilistic estimates. Arithmetic summation may produce invalid results except for the mean.

(6) Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is also appropriate to classify as Contingent Resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status. There is uncertainty that it will be commercially viable to produce any portion of the Contingent Resources.

(7) Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated Chance of Discovery and a Chance of Development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity. Prospective Resources have both an associated Chance of Discovery and a Chance of Development. There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the Prospective Resources evaluated. Estimates of the Prospective Resources should be regarded only as estimates that may change as additional information becomes available. Not only are such Prospective Resources estimates based on that information which is currently available, but such estimates are also subject to uncertainties inherent in the application of judgmental factors in interpreting such information. Prospective Resources should not be confused with those quantities that are associated with Contingent Resources or reserves due to the additional risks involved. Because of the uncertainty of commerciality and the lack of sufficient exploration drilling, the Prospective Resources estimated herein cannot be classified as Contingent Resources or reserves. The quantities that might actually be recovered, should they be discovered and developed, may differ significantly from the estimates herein.

(8) The Contingent Resource and Prospective Resource estimates contained in the Prospect Evaluation are expressed as gross working interest resources. Working interest Contingent Resources and Prospective Resources incorporate the fraction of potential hydrocarbon pore volume which would be owned or partially owned by Touchstone, before deduction of any associated royalty burdens, following a declaration of commerciality. Recovery efficiency is applied to the Recoverable Volumes noted.

(9) The estimation of resources quantities for a prospect is subject to both technical and commercial uncertainties and, in general, may be quoted as a range. The range of uncertainty reflects a reasonable range of estimated potentially recoverable quantities. Estimates of petroleum resources herein are expressed using the terms low estimate, best estimate, and high estimate to reflect the range of uncertainty.

(10) Barrel of oil equivalent includes technical conversions to standardize recoverable volumes of oil, natural (residue) gas, and natural gas liquids.

A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.

(11) The summary table identifies benchmark reference pricing schedules that might apply to a reporting issuer. Product sales prices will reflect these reference prices with further adjustments for quality differentials and transportation to point of sale.

(12) Inflation rates for forecasting pricing and costs.

(13) Exchange rates used to generate the benchmark reference prices in this table. About Touchstone Touchstone Exploration Inc. is a Calgary based company engaged in the business of acquiring interests in petroleum and natural gas rights, and the exploration, development, production and sale of petroleum and natural gas. Touchstone is currently active in onshore properties located in the Republic of Trinidad and Tobago. The Company’s common shares are traded on the Toronto Stock Exchange and the AIM market of the London Stock Exchange under the symbol “TXP”. Advisories Forward-Looking Statements Certain information provided in this news release may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking information in this news release may include, but is not limited to, statements relating to the Company’s exploration and development plans and strategies, and estimated Recoverable Volumes and Net Present Value of the Contingent Resources and Prospective Resources including the estimated total costs required to achieve commercial production, the general timeline of the project, the estimated date of first commercial production, and the recovery technology to be used in achieving commercial production. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Because forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.

Actual results could differ materially from those currently anticipated due to a number of factors and risks. Certain of these risks are set out in more detail in the Company’s December 31, 2017 Annual Information Form dated March 26, 2018 which has been filed on SEDAR and can be accessed at www.sedar.com. The forwardlooking statements contained in this news release are made as of the date hereof; and except as may be required by applicable securities laws, the Company assumes no obligation to update publicly or revise  any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise. Statements relating to reserves are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources described exist in the quantities predicted or estimated, and can be profitably produced in the future.

The recovery estimates provided herein are estimates only, and there is no guarantee that the estimated resources will be recovered. Consequently, actual results may differ materially from those anticipated in the forwardlooking statements. Net Present Value vs. Fair Market Value It should not be assumed that the present worth of estimated future net revenues presented in the tables above represent the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained, and variances could be material.

Crude Oil Abbreviations boepd barrels of oil equivalent per day Mbbl one thousand barrels Mboe one thousand barrels of oil equivalent MMcf one million cubic feet

Contact Mr. Paul Baay, President and Chief Executive Officer; or Mr. James Shipka, Chief Operating Officer Telephone: 403.750.4487 www.touchstoneexploration.com

 

Year in Review 2018

11 Jan 2019
After two years of contraction, the Trinidad & Tobago economy is expected to have returned to growth in 2018, fuelled by increased energy sector returns and a recovery in strategic non-hydrocarbons sectors, including manufacturing and insurance.

The T&T economy entered positive territory for the first time in two years in 2018, according to estimates from the Central Statistics Office (CSO) and the IMF, after two years of declining energy sector returns led to negative growth of 6.1% and 2.6% in 2016 and 2017, respectively.

The CSO’s “Review of the Economy 2018”, published in October, forecast the economy to expand by 1.9% in real terms, while the IMF in September estimated growth of 1%.

This came on the back of year-on-year growth of 3.2% in January to March followed by 2.8% in April to June – the first instance of consecutive quarterly growth since 2014, according to the central bank.

Increase in gas production drives economic recovery

The return to growth in 2018 was underpinned by a recovery in gas output to the highest levels seen since 2015, driven by the Trinidad Onshore Compression project and the Juniper field, which reached full production during the year, according to the CSO.

Despite a continued decline in oil exploration and extraction, the CSO said the energy sector, supported by higher commodity prices, was on track to expand by 2.2% in 2018, while the IMF expected even more robust growth of 6%. However, a fall in global oil prices – from yearly highs of around $86 per barrel in early October to just over $50 per barrel by the end of the year – could impact fourth quarter returns.

The higher levels of gas production increased supply to key downstream industries such as liquefied natural gas (LNG) and petrochemicals. LNG output averaged 1.9bn standard cu feet per day between October 2017 and July 2018, compared to 1.7bn in the same period a year earlier, while petrochemicals, supported by higher menthol and urea output, rose by 12.5% over 2018, according to CSO projections.

Up and downstream gas activity is expected to continue supporting energy sector expansion over the medium to long term. In the second half of 2018 both the Iguana field off the west coast of Trinidad and the Dolphin Extension Phase 3 project off the east announced their first deliveries of natural gas.

These recent developments, coupled with the government’s commitment to a programme of exploration and development for the next five years, should ensure that production levels continue to expand in 2019 and beyond.

Manufacturing supports upturn in non-hydrocarbons sector

The increased supply of gas to the downstream segment also supported an improved performance in the non-hydrocarbons sector in 2018. While growth is projected to be marginal, at 0.01%, according to the CSO, it is anticipated to be higher than the -2.9% recorded for 2017.

Manufacturing was the main driver of this trend change. The sector is expected to reverse two years of negative growth to expand by 7.3% in 2018, supported not only by LNG and petrochemicals, but also a substantial upswing in the food, beverages and tobacco products industry, with growth of 5.6% projected for 2018, up from -12% in 2017.

Growth was also bolstered by the financial and insurance sector, which is set to grow by 1.1% in 2018, continuing its trend of positive growth over the past five years. As the effects of new legislation enacted in 2018 intended to insulate the sector against external shocks by reinforcing oversight begin to show results, the state anticipates further growth fuelled by increased credit allocation to businesses and private customers.

Tax reforms bolster state revenues

In tandem with the recovery of the energy sector, T&T’s economy also benefitted from government moves to improve its fiscal position by making changes to the tax system.

Total revenue and grants for the financial year 2018 are expected to reach $42.6bn, a 17.7% increase over the previous year. According to the CSO, this was due in large part to the introduction of a 35% tax bracket for commercial banks, increased receipts from oil companies, and goods and services taxes.

This result, coupled with a projected 1.7% decline in state spending to $48.9bn – supported by an 8.2% decrease in wages and salaries, and a 5.9% cut in transfers and subsidies – contributed to the first reduction in the overall deficit in seven years to $6.3bn, or 3.9% of GDP, according to the CSO.

Despite the fiscal improvements, delayed implementation of key adjustment measures, such as the establishment of the Revenue Authority, the body to be charged with tax collection, and reintroduction of the property tax, coupled with continuing high levels of public debt, mean T&T’s economy remains vulnerable to any external shocks, according to the IMF.

In September the fund said the government should take advantage of the high-oil-price environment to continue improving its fiscal position, in particular by implementing delayed tax reforms, including changes in energy taxation, increasing tax compliance and reducing public spending.

OBITUARY

Dr Norbert Masson, 1934- 2019

Masson studied in the UK at Loughborough University. Graduating in mechanical engineering with first-class honours from the Royal School of Mines, Imperial College London University and a PhD from Leeds University, he joined Shell Holland and Shell Trinidad as a trainee. In 1963 he became the first principal of the John S Donaldson Technical Institute. He was chairman of the Board of Industrial Training and the First Secretary of the National Examinations Council for Vocational and Technical Education. As director of the Metrication Board, he ushered the country into the metric system of units and measurements in 1975.

Geological Society of Trinidad and Tobago (GSTT)

Quarterly Publication  “The Hammer”

In this edition,  (downloads as a .pdf file )

• Dr. Sally Radford present her feature article titled “An Epicontinental Epic 1944-2019”.
• Ms. Shaliza Ali presents her article on “Thin Bed Pay: Dilemma or Destiny?”
• Mr. Clement Ramroop discuss “A Geological review of surface hydrocarbon occurrences in the San Fernando Area, Trinidad”
• We highlight a number of GSTT Events to close off the year 2018.
  Finishing with Mr. Curtis Archie speaking about “Anglais point mud volcano”.

 

 

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