TIDMTXP
RNS Number : 3056T
Touchstone Exploration Inc.
14 November 2023
TOUCHSTONE ANNOUNCES THIRD QUARTER 2023 FINANCIAL AND OPERATING
RESULTS
AND PROVIDES AN OPERATIONAL UPDATE
CALGARY, ALBERTA (November 14, 2023) - Touchstone Exploration
Inc. ( " Touchstone ", "we", "our" or the " Company " ) (TSX, LSE:
TXP) provides an operational update and reports its operating and
financial results for the three and nine months ended September 30,
2023.
Selected financial information is outlined below and should be
read in conjunction with our September 30, 2023 unaudited interim
condensed consolidated financial statements and related
Management's discussion and analysis, both of which will be
available under our profile on SEDAR+ ( www.sedarplus.ca ) and on
our website ( www.touchstoneexploration.com ). Unless otherwise
stated, all financial amounts presented herein are rounded to
thousands of United States dollars , and all production volumes
disclosed herein are sales volumes based on Company working
interest before royalty burdens.
Paul Baay, President and Chief Executive Officer, commented:
"The positive impact that initial output from our Cascadura
field has had on both our production profile, and more importantly,
our operating cash flows is clear. The results from the first few
weeks of production at Cascadura demonstrate that we can look
forward to materially enhanced operational and financial
results.
While we are encouraged with our initial output levels, we are
focused on optimizing production across our portfolio including
Cascadura, Coho and our legacy oil properties. These operations are
anticipated to be completed by the end of the year and will provide
Touchstone with a strong platform upon which to continue our growth
in 2024.
Along with our significant production gains, we continue to work
to expand our land footprint and look forward to commencing our
development drilling program on both the Ortoire block and our
legacy acreage. "
Third Quarter 2023 and Recent Operational Highlights
-- Achieved first production from the Cascadura-1ST1 well on
September 6, 2023 and initial production from the Cascadura Deep-1
well on September 14, 2023.
-- Produced record quarterly average volumes of 3,391 boe/d in
the third quarter of 2023, representing a 167 percent increase
relative to the 1,272 boe/d produced in the third quarter of
2022.
-- Achieved average net sales volumes of 8,917 boe/d in October
2023, with the Cascadura field contributing 7,234 boe/d in the
month.
-- Cascadura wells are currently restricted by surface chokes
while final facility commissioning progresses, with a production
volume increase expected when the recycle compressor is
operational.
-- Coho-1 well workover is currently scheduled for late November
2023 to isolate water production from the lowest set of
perforations.
-- Preparations are underway at our Cascadura and CO-1 fields for future development drilling.
Third Quarter 2023 Financial Results Highlights
-- Realized petroleum and natural gas sales of $11,682,000
compared to $9,933,000 in the 2022 comparative quarter, as
$3,855,000 of incremental natural gas and NGL sales were partially
offset by a $2,106,000 decrease in crude oil sales, reflecting a 15
percent decline in realized crude oil pricing and a 7 percent
reduction in crude oil production.
-- Cascadura field production volumes in the quarter contributed
$1,871,000 of natural gas sales at an average realized price of
$2.40/Mcf and $1,264,000 of NGL sales at an average realized price
of $78.12/bbl.
-- Natural gas production from the Coho-1 well averaged net
volumes of 3.7 MMcf/d (618 boe/d) in the quarter and contributed
$720,000 of net natural gas sales at an average realized price of
$2.11/Mcf.
-- Generated an operating netback of $6,011,000, representing a
37 percent increase from the 2022 third quarter primarily
reflecting incremental Cascadura natural gas and NGL production
volumes.
-- Reported funds flow from operations of $2,432,000 in the
third quarter of 2023 compared to $6,000 in the preceding quarter
and $256,000 in the prior year equivalent quarter.
-- Recognized net earnings of $988,000 and comprehensive income
of $809,000 in the quarter compared to a net loss of $778,000 and a
comprehensive loss of $1,228,000 reported in the third quarter of
2022.
-- $3,609,000 in quarterly capital investments primarily focused
on expenditures related to the construction and commissioning of
the Cascadura natural gas and liquids facility and three Royston-1X
well production tests.
-- Exited the quarter with a cash balance of $3,794,000, a bank
debt principal balance of $29,500,000 and a net debt position of
$29,919,000.
-- October 31, 2023 estimated cash balance of approximately $5.4 million.
Operational Update
Touchstone commenced production from the Cascadura facility in
September 2023, with the Cascadura-1ST1 well and the Cascadura
Deep-1 well coming onstream on September 6, 2023 and September 14,
2023, respectively. Both wells are currently restricted by surface
chokes while we proceed with final commissioning of the facility.
The facility is designed as a closed system where vent gas from
both the condensate flash separator and the vapours off the
condensate storage tanks are captured, compressed, and reinjected
into the system for sales, resulting in minimal emissions. The
recycle compressor is currently non-operational resulting in vented
production volumes being flared at the facility. Once the
compressor is operational, we will be able to optimize the facility
and we expect to see an increase in production volumes.
Our Coho facility has been operational for over a year and has
produced approximately 2.26 billion cubic feet of gross natural gas
volumes through October 2023. The Coho-1 well had a workover
completed in October 2023 which was designed to isolate and shut
off water production from the lowest perforations in the well. The
workover was unsuccessful as the packer collapsed after the well
commenced dry natural gas production. We have sourced a second
packer which is currently scheduled to be installed prior to the
end of November 2023, with the well continuing to produce until we
commence the workover.
In October 2023, we achieved average net sales volumes of 8,917
boe/d as follows:
-- Cascadura field contributed net sales volumes of 7,234 boe/d
(9,042 boe/d gross) consisting of:
- net natural gas sales volumes of 38.7 MMcf/d or 6,456 boe/d
(48.4 MMcf/d or 8,069 boe/d gross) with a realized price of
$2.43/Mcf; and
- net natural gas liquids volumes of 778 bbls/d (973 bbls/d
gross) with an average realized price of $77.18 per barrel.
-- Net average natural gas sales volumes from Coho were 3.1
MMcf/d or 519 boe/d (3.9 MMcf/d or 649 boe/d gross) at a realized
price of $2.15/Mcf.
-- Average gross and net daily crude oil sales volumes were
1,164 bbls/d with an average realized price of $77.18 per
barrel.
Touchstone has designed a work program for the Royston-1X well
that will isolate and evaluate the two uppermost zones in the
wellbore and expects to commence testing prior to the end of the
year.
The Company is preparing to commence development drilling on our
Cascadura and CO-1 fields. At Cascadura, the third-party drilling
company is on site to obtain the required drilling rig
certifications. At CO-1, we plan to drill two development wells off
an existing surface lease and have contracted a Trinidad based
drilling company to perform these operations. The rig is currently
undergoing certifications to drill a well for another party and
once complete it will be mobilized to our lease site, where we
expect to drill the two CO-1 prospects in the first quarter of
2024.
Financial and Operating Results Summary
Three months % change Nine months ended % change
ended September September 30,
30,
---------------------------- --------- ---------
2023 2022 2023 2022
---------------------------- --------- -------- --------- --------- --------- ---------
Operational
Average daily production
Crude oil(1) (bbls/d) 1,183 1,272 (7) 1,197 1,362 (12)
NGLs(1) (bbls/d) 176 - n/a 59 - n/a
---------------------------- --------- -------- --------- --------- --------- ---------
Crude oil and liquids
(bbls/d) 1,359 1,272 7 1,256 1,362 (8)
Natural gas(1) (Mcf/d) 12,191 - n/a 7,203 - n/a
---------------------------- --------- -------- --------- --------- --------- ---------
Average daily production
(boe/d) (2) 3,391 1,272 167 2,457 1,362 80
---------------------------- --------- -------- --------- --------- --------- ---------
Average realized prices(3)
Crude oil(1) ($/bbl) 71.89 84.85 (15) 66.38 88.80 (25)
NGLs(1) ($/bbl) 78.12 - n/a 78.12 - n/a
---------------------------- --------- -------- --------- --------- --------- ---------
Crude oil and liquids
($/bbl) 72.69 84.85 (14) 66.94 88.80 (25)
Natural gas(1) ($/Mcf) 2.31 - n/a 2.23 - n/a
---------------------------- --------- -------- --------- --------- --------- ---------
Realized commodity
price ($/boe) (2) 37.44 84.85 (56) 40.76 88.80 (54)
---------------------------- --------- -------- --------- --------- --------- ---------
Production mix (%
of production)
Crude oil and liquids 40 100 51 100
Natural gas 60 - 49 -
Operating netback
($/boe) (2)
Realized commodity
price(3) 37.44 84.85 (56) 40.76 88.80 (54)
Royalties(3) (10.23) (29.14) (65) (11.70) (30.97) (62)
Operating expenses(3) (7.94) (18.16) (56) (10.44) (17.60) (41)
---------------------------- --------- -------- --------- --------- --------- ---------
Operating netback(3) 19.27 37.55 (49) 18.62 40.23 (54)
---------------------------- --------- -------- --------- --------- --------- ---------
Financial
($000's except per
share amounts)
Petroleum and natural
gas sales 11,682 9,933 18 27,339 33,025 (17)
Cash from operating
activities 343 3,058 (89) 4,231 6,941 (39)
Funds flow from operations 2,432 256 850 3,241 2,849 14
Net earnings (loss) 988 (778) n/a 638 (1,276) n/a
Per share - basic
and diluted 0.00 (0.00) n/a 0.00 (0.01) n/a
Exploration capital
expenditures 3,498 2,692 30 17,043 7,498 127
Development capital
expenditures 111 207 (46) 720 1,323 (46)
---------------------------- --------- -------- --------- --------- --------- ---------
Capital expenditures(3) 3,609 2,899 24 17,763 8,821 101
---------------------------- --------- -------- --------- --------- --------- ---------
Working capital deficit(3) 13,419 4,537 196
Principal long-term
bank debt 16,500 22,500 (27)
Net debt(3) - end
of period 29,919 27,037 11
---------------------------- --------- -------- --------- --------- --------- ---------
Share Information
(000's)
Weighted avg. shares
outstanding:
Basic 233,541 212,647 10 233,243 211,898 10
Diluted 237,138 212,647 12 236,947 211,898 12
Outstanding shares
- end of period 234,213 213,113 10
Notes:
(1) In the table above and elsewhere in this announcement,
references to "crude oil" refer to "light and medium crude oil" and
"heavy crude oil" product types combined; references to "NGLs"
refer to condensate; and references to "natural gas" refer to
"conventional natural gas", all as defined in National Instrument
51-101 Standards of Disclosure for Oil and Gas Activities ("NI
51-101"). Refer to the "Advisories - Product Type Disclosures" for
further information.
(2) In the table above and elsewhere in this announcement,
references to "boe" mean barrels of oil equivalent that are
calculated using the energy equivalent conversion method. Refer to
the "Advisories - Oil and Natural Gas Measures" for further
information.
(3) Non-GAAP financial measure. See the "Advisories - Non-GAAP
Financial Measures" for further information.
Touchstone Exploration Inc.
Touchstone Exploration Inc. is a Calgary, Alberta 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 " .
For further information about Touchstone, please visit our
website at www.touchstoneexploration.com or contact:
Touchstone Exploration Inc.
Paul Baay, President and Chief Executive Tel: +1 (403) 750-4487
Officer
Scott Budau, Chief Financial Officer
James Shipka, Chief Operating Officer
Shore Capital (Nominated Advisor and
Joint Broker) Tel: +44 (0) 207 408 4090
Daniel Bush / Toby Gibbs / Iain Sexton
Canaccord Genuity (Joint Broker)
Adam James / Gordon Hamilton Tel: +44 (0) 207 523 8000
FTI Consulting (Financial PR) Tel: +44 (0) 203 727 1000
Nick Hennis / Ben Brewerton Email: touchstone@fticonsulting.com
Advisories
Forward-Looking Statements
Certain information provided in this announcement may constitute
forward-looking statements and information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. Such forward-looking statements include, without
limitation, forecasts, estimates, expectations and objectives for
future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or
"should" occur or be achieved. The forward-looking statements
contained in this announcement speak only as of the date thereof
and are expressly qualified by this cautionary statement.
Specifically, this announcement includes, but is not limited to,
forward-looking statements relating to the Company's expectation of
future production, operational results and expanding its land
position, the Company's development plans and strategies,
including: Cascadura facility commissioning operations and the
anticipated increase in production upon expected completion; Coho
workover operations and the expected timing thereof; the timing of
anticipated Royston-1X production testing operations; and
forecasted future development well drilling, including the
locations and expected timing thereof.
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. Since 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 2022 Annual Information
Form dated March 23, 2023 which is available under the Company's
profile on SEDAR+ ( www.sedarplus.ca ) and on the Company's website
( www.touchstoneexploration.com ). The forward-looking statements
contained in this announcement are made as of the date hereof, and
except as may be required by applicable securities laws, the
Company assumes no obligation or intent to update publicly or
revise any forward-looking statements made herein or otherwise,
whether as a result of new information, future events or
otherwise.
Non-GAAP Financial Measures
This announcement may reference various non-GAAP financial
measures, non-GAAP ratios, capital management measures and
supplementary financial measures as such terms are defined in
National Instrument 52-112 Non-GAAP and Other Financial Measures
Disclosure. Such measures are not recognized measures under GAAP
and do not have a standardized meaning prescribed by International
Financial Reporting Standards ("IFRS" or "GAAP") and therefore may
not be comparable to similar financial measures disclosed by other
issuers. Readers are cautioned that the non-GAAP financial measures
referred to herein should not be construed as alternatives to, or
more meaningful than, measures prescribed by IFRS, and they are not
meant to enhance the Company's reported financial performance or
position. These are complementary measures that are commonly used
in the oil and natural gas industry and by the Company to provide
shareholders and potential investors with additional information
regarding the Company's performance. Below is a description of the
non-GAAP financial measures, non-GAAP ratios, capital management
measures and supplementary financial measures disclosed in this
announcement.
Funds flow from operations
Funds flow from operations is included in the Company's
consolidated statements of cash flows. Touchstone considers funds
flow from operations to be a key measure of operating performance
as it demonstrates the Company's ability to generate the funds
necessary to finance capital expenditures and repay debt.
Management believes that by excluding the temporary impact of
changes in non-cash operating working capital, funds flow from
operations provides a useful measure of the Company's ability to
generate cash that is not subject to short-term movements in
non-cash operating working capital.
Operating netback
Touchstone uses operating netback as a key performance indicator
of field results. The Company considers operating netback to be a
key measure as it demonstrates Touchstone's profitability relative
to current commodity prices and assists Management and investors
with evaluating operating results on a historical basis. Operating
netback is a non-GAAP financial measure calculated by deducting
royalties and operating expenses from petroleum and natural gas
sales. The most directly comparable financial measure to operating
netback disclosed in the Company's consolidated financial
statements is petroleum and natural gas revenue net of royalties.
Operating netback per boe is a non-GAAP ratio calculated by
dividing the operating netback by total production volumes for the
period. Presenting operating netback on a per boe basis allows
Management to better analyze performance against prior periods on a
comparable basis.
Capital expenditures
Capital expenditures is a non-GAAP financial measure that is
calculated as the sum of exploration and evaluation asset
expenditures and property, plant and equipment expenditures
included in the Company's consolidated statements of cash flows and
is most directly comparable to cash used in investing activities.
Touchstone considers capital expenditures to be a useful measure of
its investment in its existing asset base.
Working capital and net debt
Management monitors working capital and net debt as part of the
Company's capital structure to evaluate its true debt and liquidity
position and to manage capital and liquidity risk. Working capital
is calculated by subtracting current liabilities from current
assets as they appear on the applicable consolidated balance sheet.
Net debt is calculated by summing the Company's working capital and
the principal (undiscounted) long-term amount of senior secured
debt and is most directly comparable to total liabilities.
Supplementary Financial Measures
Realized commodity price per boe - is comprised of petroleum and
natural gas sales as determined in accordance with IFRS, divided by
the Company's total production volumes for the period.
Royalties per boe - is comprised of royalties as determined in
accordance with IFRS, divided by the Company's total production
volumes for the period.
Operating expenses per boe - is comprised of operating expenses
as determined in accordance with IFRS, divided by the Company's
total production volumes for the period.
For information regarding such measures, including
reconciliations to the nearest GAAP measures, please refer to the
"Advisories - Non-GAAP Financial Measures" section in the Company's
Management's discussion and analysis for the three and nine months
ended September 30, 2023 accompanying our September 30, 2023
unaudited interim condensed consolidated financial statements which
will be available on our website ( www.touchstoneexploration.com )
and under our SEDAR+ profile ( www.sedarplus.ca ) .
Oil and Natural Gas Measures
Where applicable, natural gas has been converted to barrels of
oil equivalent based on six thousand cubic feet to one barrel of
oil. The barrel of oil equivalent rate is based on an energy
equivalent conversion method primarily applicable at the burner
tip, and 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 the 6:1 conversion ratio, utilizing
the 6:1 conversion ratio may be misleading as an indication of
value.
Product Type Disclosures
For information regarding specific product disclosures in
accordance with NI 51-101, please refer to the "Advisories -
Product Type Disclosures" section in the Company's Management's
discussion and analysis for the three and nine months ended
September 30, 2023 accompanying our September 30, 2023 unaudited
interim condensed consolidated financial statements which will be
available on our website ( www.touchstoneexploration.com ) and
under our SEDAR+ profile ( www.sedarplus.ca ) .
Abbreviations
The following abbreviations are referenced in this
announcement:
bbls/d barrels per day Mcf thousand cubic feet
boe barrels of oil equivalent Mcf/d thousand cubic feet per
day
boe/d barrels of oil equivalent per day MMcf/d million cubic
feet per day
NGLs natural gas liquids
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