REG - Touchstone Explrtn. - FIRST QUARTER 2022 FINANCIAL AND OPERATING RESULTS

Touchstone ExplorationAnnouncement

12/05/2022 07:00

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RNS Number : 2402L  Touchstone Exploration Inc.  12 May 2022

FIRST QUARTER 2022 FINANCIAL AND OPERATING RESULTS

 

CALGARY, ALBERTA (May 12, 2022) - Touchstone Exploration Inc. ("Touchstone",
"we", "our", "us" or the "Company") (TSX, LSE: TXP) reports its operating and
financial results for the three months ended March 31, 2022. Selected
information is outlined below and should be read in conjunction with our March
31, 2022 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.sedar.com (http://www.sedar.com/) ) and on our
website (www.touchstoneexploration.com (http://www.touchstoneexploration.com/)
). Unless otherwise stated, all financial amounts herein are rounded to
thousands of United States dollars.

 

First Quarter 2022 Financial and Operational Highlights

·      Achieved quarterly average production volumes of 1,396 barrels
per day ("bbls/d"), representing a 4 percent increase relative to the
preceding quarter and an 8 percent increase from the 1,297 bbls/d produced in
the first quarter of 2021.

·      Realized petroleum sales of $10,496,000 from an average crude oil
price of $83.55 per barrel compared to petroleum sales of $8,212,000 from
average realized pricing of $66.81 per barrel in the fourth quarter of 2021.

·      Generated an operating netback of $37.83 per barrel, a 26 percent
increase from the fourth quarter of 2021 and a 72 percent increase from the
$21.98 per barrel reported in the first quarter of 2021.

·      Our funds flow from operations improved to $1,426,000 in the
quarter compared to $1,291,000 recognized in the fourth quarter of 2021 and
$538,000 reported in the first quarter of 2021.

·      Recognized a net loss of $236,000 and comprehensive income of
$164,000, compared to a net loss of $460,000 and comprehensive loss of
$415,000 reported in the same period of 2021.

·      Capital investments of $2,554,000 focused on continuing
production testing operations on the Royston-1 well, expenditures related to
the Coho-1 facility and pipeline and lease preparation costs for two Coora
development well locations.

·      Exited the quarter with cash of $10,148,000, a working capital
surplus of $4,259,000 and $30,000,000 drawn on our term credit facility,
resulting in a net debt position of $21,241,000.

·      In March 2022, our field development plan for the Cascadura area
was approved, which extends the exploration and production period for the
defined 2,378-acre area through October 31, 2039.

Post Period-End Highlights

·      Daily crude oil sales averaged 1,532 bbls/d in April 2022 with a
realized price of $91.79 per barrel.

·      Coho pipeline has been welded, with trenching operations
progressing toward anticipated initial production within four to six weeks.

·      The National Gas Company of Trinidad and Tobago ("NGC") has
agreed to purchase the Coho pipeline upon completion and commissioning.

·      Received a review and assessment report in response to our
Cascadura area Environmental Impact Assessment ("EIA") application with no
material deficiencies raised.

·      NGC has received regulatory approval to construct a 20-inch
natural gas pipeline from our Cascadura surface facility to their onshore
transmission pipeline network.

Paul Baay, President and Chief Executive Officer, commented:

 

"Our first quarter results reflected a combination of increased commodity
pricing and higher production volumes from our legacy crude oil properties.
Our near-term priority is to bring our Coho and Cascadura exploration
discoveries onto production, with a focus on converting our extensive Trinidad
reserve base to sustainable long-term cash flows to fund our portfolio of
future development and exploration opportunities. We are forecasting first gas
from Coho imminently, which will represent the initial step change in our
production profile. With the approval of our Cascadura field development plan
and our EIA in the final stages of documentation and clarification, we are
making progress toward bringing our Cascadura discovery onto production. We
thank our shareholders for their continued support and look forward to
providing further updates as we proceed to execute our 2022 strategy."

 

First Quarter 2022 Financial and Operating Results Summary

 

                                                          Three months ended March 31,      % change
                                                          2022             2021

 Operational

 Average daily crude oil production((1)) (bbls/d)         1,396            1,297            8

 Dated Brent benchmark price ($/bbl)                      100.87           61.04            65

 Operating netback ($/bbl)
 Realized sales price((2))                                83.55            52.43            59
 Royalties((2))                                           (28.55)          (15.79)          81
 Operating expenses((2))                                  (17.17)          (14.66)          17
 Operating netback((2))                                   37.83            21.98            72

 Financial ($000's except per share amounts)

 Petroleum sales                                          10,496           6,120            72

 Cash from (used in) operating activities                 333              (1,234)          n/a

 Funds flow from operations                               1,426            538              165
 Per share - basic and diluted((2))                       0.01             0.00             n/a

 Net loss                                                 (236)            (460)            (49)
 Per share - basic and diluted                            (0.00)           (0.00)           -

 Exploration capital expenditures                         1,874            2,954            (37)
 Development capital expenditures                         680              127              435
 Capital expenditures                                     2,554            3,081            (17)

 Working capital surplus((2))                             (4,259)          (10,552)         (60)
 Principal long-term balance of term loan                 25,500           7,500            240
 Net debt (surplus)((2)) - end of period                  21,241           (3,052)          n/a

 Share Information (000's)

 Weighted average shares outstanding - basic and diluted  210,823          209,400          1
 Outstanding shares - end of period                       211,164          209,400          1

 

Notes:

(1)   References to crude oil in the above table and elsewhere in this
announcement is a mix of light and medium crude oil and heavy crude oil for
which there is not a precise breakdown since our oil sales volumes typically
represent blends of more than one type of crude oil.

(2)   Non-GAAP financial measure. See "Advisories: Non-GAAP Financial
Measures" for further information.

 

Operational Update

 

Coho

 

Our pipeline and facilities project at Coho is progressing, and the pipeline
has been strung out and welded along the right-of-way. Trenching has
commenced, and approximately 4,000 feet has been buried to date.

 

Cascadura

 

In March 2022, the Trinidad and Tobago Ministry of Energy and Energy
Industries approved our field development plan for the Cascadura area, which
extends the exploration and production period for the defined 2,378-acre area
through October 31, 2039.

 

We are progressing with facilities procurement and construction of the
Cascadura natural gas facility and liquids pipeline. We received a review and
assessment report in response to our Cascadura area EIA from the Trinidad and
Tobago Environmental Management Authority on May 5, 2022. We anticipate
submitting the additional information request on May 13, 2022. Upon final
approval of the EIA, we expect to immediately proceed with construction of the
surface facility, access roads and future development drilling locations.

 

Royston

 

We are concluding the extended production test of our Royston-1 exploration
well, with the well shut-in for a pressure build-up. Our proposed future
Royston-1 drilling operations include re-entering the existing wellbore to
abandon the lowest section of the well and sidetrack the well to evaluate the
intermediate sheet and potentially the subthrust sheets in the Herrera
Formation.

 

Annual Meeting of Shareholders

 

We will be holding our 2022 Annual Meeting of Shareholders (the "Meeting") on
Thursday, June 9, 2022 at 10:00 a.m. (Mountain time). To continue to mitigate
risks to the health and safety of our communities, shareholders, employees and
other stakeholders amid ongoing concerns regarding the coronavirus pandemic,
we are holding a virtual-only Meeting which will be conducted via live audio
webcast. Every shareholder and duly appointed proxyholder, regardless of
geographic location and ownership, will have an equal opportunity to
participate in the Meeting online and vote on the matters to be considered at
the Meeting. You cannot attend the Meeting in person. Details on how to attend
the virtual-only Meeting are as follows:

·      Go to https://web.lumiagm.com/249639854
(https://web.lumiagm.com/249639854) in your web browser.

·      If you have voting rights, select "Login" and enter your username
and the password "touchstone2022" (case sensitive).

·      If you do not have voting rights, select "Guest" and complete the
online form.

Further details on how to attend the Meeting are included on our website. The
meeting materials, including our Notice of 2022 Annual Meeting of Shareholders
and Management Information Circular dated April 29, 2022, are available on our
website (www.touchstoneexploration.com/investors/shareholder-meetings
(http://www.touchstoneexploration.com/investors/shareholder-meetings) ) and
under our profile on SEDAR (http://www.sedar.com/ (http://www.sedar.com/)
www.sedar.com (http://www.sedar.com/) ). The meeting materials were mailed to
shareholders on May 10, 2022.

 

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 (http://www.touchstoneexploration.com/) or
contact:

 

Touchstone Exploration Inc.

Mr. Paul Baay, President and Chief Executive
Officer                             Tel: +1 (403)
750-4487

Mr. Scott Budau, Chief Financial Officer

Mr. James Shipka, Chief Operating Officer

 

Shore Capital (Nominated Advisor and Joint Broker)

Daniel Bush / Toby Gibbs / Michael McGloin
                                    Tel: +44
(0) 207 408 4090

 

Canaccord Genuity (Joint Broker)

Adam James / Henry Fitzgerald O'Connor / Thomas Diehl
    Tel: +44 (0) 207 523 8000

 

Camarco (Financial PR)

Billy Clegg / Emily Hall / Lily Pettifar
                                    Tel:
+44 (0) 203 781 8330

 

Advisories

 

Non-GAAP Financial Measures

 

Certain financial measures in this announcement do not have a standardized
meaning as prescribed by International Financial Reporting Standards ("IFRS"
or "GAAP") and therefore are considered non-GAAP financial measures. These
financial measures may not be comparable to similar financial measures
disclosed by other issuers. Readers are cautioned that any 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, liquidity and
ability to generate funds to finance its operations. Below is a description of
the non-GAAP financial measures, non-GAAP ratios, capital management measures
and supplementary financial measures disclosed herein.

 

Funds flow from operations and funds flow from operations per share

 

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.

 

Funds flow from operations per share is a non-GAAP ratio calculated by
dividing funds flow from operations by the weighted average number of common
shares outstanding during the applicable period on a basic and dilutive basis.

 

Operating netback

 

The Company 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 sales. Operating
netback per barrel is a non-GAAP ratio calculated by dividing the operating
netback by total crude oil sales volumes for the period.

 

Working capital and net debt

 

Touchstone closely monitors its capital structure with a goal of maintaining a
strong financial position to fund current operations and future growth. These
are capital management measures used by Management to steward the Company's
overall debt position and as measures of overall financial strength.

 

Management monitors working capital and net debt as part of the Company's
capital structure to assess its true debt and liquidity position and to manage
capital and liquidity risk. Working capital is calculated as current assets
minus current liabilities as they appear on the consolidated statements of
financial position. Net debt (surplus) is calculated by summing the Company's
working capital and the principal (undiscounted) long-term amount of senior
secured debt.

 

Supplementary Financial Measures

 

The following supplementary financial measures are disclosed herein.

 

Realized sales price per barrel - is comprised of petroleum sales as
determined in accordance with IFRS, divided by the Company's total crude oil
sales volumes for the period.

 

Royalties per barrel - is comprised of royalties as determined in accordance
with IFRS, divided by the Company's total crude oil sales volumes for the
period.

 

Operating expenses per barrel - is comprised of operating expenses as
determined in accordance with IFRS, divided by the Company's total crude oil
sales volumes for the period.

 

Refer to the "Non-GAAP Financial Measures" advisory section in the Company's
March 31, 2022 Management's discussion and analysis for reconciliations of
non-GAAP financial measures included herein to applicable GAAP measures.

 

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.

 

Forward-looking statements in this announcement may include, but are not
limited to, statements relating to Touchstone's near-term priorities, the
Company's development and exploration plans and strategies, including
anticipated future production, the receipt of anticipated regulatory
approvals, anticipated future drilling operations and timing thereof, and
Touchstone's current and future financial position including the sufficiency
of resources to fund future capital expenditures and maintain financial
liquidity. 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
2021 Annual Information Form dated March 25, 2022 which is available under the
Company's profile on SEDAR (www.sedar.com (http://www.sedar.com/) ) and on the
Company's website (www.touchstoneexploration.com
(http://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 to update publicly or revise any forward-looking statements made
herein or otherwise, whether as a result of new information, future events or
otherwise.

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