REG - Touchstone Explrtn. - First Quarter 2026 Results and Operational Update

Touchstone ExplorationAnnouncement

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RNS Number : 3222E  Touchstone Exploration Inc.  14 May 2026

FIRST QUARTER 2026 RESULTS AND OPERATIONAL UPDATE

 

CALGARY, ALBERTA (May 14, 2026) - Touchstone Exploration Inc. ("Touchstone",
"we", "our" or the "Company") (TSX, LSE: TXP) reports its operating and
condensed financial results for the three months ended March 31, 2026 and
provides an operational update.

 

Selected financial information is outlined below and should be read in
conjunction with Touchstone's March 31, 2026 unaudited interim condensed
consolidated financial statements and related Management's discussion and
analysis, both of which are available on the Company's profile on SEDAR+
(www.sedarplus.ca (http://www.sedarplus.ca/) ) and website
(www.touchstoneexploration.com (http://www.touchstoneexploration.com/) ).
Unless otherwise stated, all financial amounts presented herein are in United
States dollars, and all production volumes disclosed herein are sales volumes
based on Company working interest before royalty burdens.

 

First Quarter 2026 Financial and Operating Highlights

·      Production growth: Average daily production increased 8%
year-over-year to 4,657 boe/d, as production from the Central field (2,131
boe/d) successfully mitigated natural declines in legacy assets. Relative to
the preceding quarter, average quarterly production decreased from 4,877
boe/d, primarily due to natural declines in mature crude oil and Ortoire
natural gas volumes.

·      Revenue and realized pricing: Petroleum and natural gas sales
totaled $12.5 million, a 14% increase from the $11.0 million recorded in the
previous quarter. This was driven by an 18% increase in realized natural gas
prices and a 25% recovery in realized crude oil pricing, with March 2026 crude
oil volumes averaging $86.58 per barrel.

-     Crude oil sales: $5.68 million from average production of 929 bbls/d
at a realized price of $67.94 per barrel.

-     NGL sales: $1.50 million from average production of 422 bbls/d at a
realized price of $39.38 per barrel.

-     Natural gas sales: $5.36 million from average production of 19.84
MMcf/d (3,306 boe/d) at a realized price of $3.00 per Mcf.

·      Operating netback: Realized an operating netback of $13.73 per
boe, a 46% improvement over the $9.41 per boe recorded in the preceding
quarter. This expansion reflected higher commodity pricing and stable royalty
structures, which more than offset the increased operating cost base.

·      Funds flow from operations: Increased to $1.85 million from $0.62
million in the previous quarter, primarily driven by a $1.54 million increase
in operating netbacks.

·      Net income: Recorded a net loss of $2.38 million ($0.01 per basic
share), a normalization from $13.62 million in net income reported in the
fourth quarter of 2025, which was skewed by $14.53 million in one-time
non-cash gains.

·      Capital investments: Expenditures were focused on high-impact
projects, including the FR-1835 crude oil development well, tie-in of the CR-3
natural gas development well, and the Cascadura compression project, totalling
$3.22 million for the quarter.

·      Financial position: Ended the period with a net debt position of
$76.07 million.

Post Period-end Highlights

·      Strategic infrastructure: Successfully delivered the Cascadura
compressor to the facility in April, with commissioning expected in June 2026
to unlock further production capacity.

·      WD-8 block drilling: Completed drilling the FR-1836 well ahead of
schedule, with the well encountering an estimated 227 feet of net hydrocarbon
pay.

·      Production Update: In April 2026, the Company produced estimated
average net production volumes of 4,677 boe/d, including average net natural
gas sales volumes of 19.3 MMcf/d (3,221 boe/d) and average net crude oil and
natural gas liquid sales volumes of 1,456 bbls/d.

Q1 2026 Financial and Operating Results Overview

 

                                             Three months ended
                                             March 31,  December 31, 2025  March 31,

                                             2026                          2025

 Operational

 Average daily production
 Crude oil((1)) (bbls/d)                     929        996                1,162
 NGLs((1)) (bbls/d)                          422        413                39
 Crude oil and liquids((1)) (bbls/d)         1,351      1,409              1,201
 Natural gas((1)) (Mcf/d)                    19,838     20,805             18,698
 Average daily production (boe/d)((2))       4,657      4,877              4,317

 Production mix (% of production)
 Crude oil and liquids((1))                  29         29                 28
 Natural gas((1))                            71         71                 72

 Average realized prices((3))
 Crude oil((1)) ($/bbl)                      67.94      54.57              63.86
 NGLs((1)) ($/bbl)                           39.38      30.30              64.05
 Crude oil and liquids((1)) ($/bbl)          59.02      47.46              63.87
 Natural gas((1)) ($/Mcf)                    3.00       2.54               2.50
 Realized commodity price ($/boe)((2))       29.92      24.53              28.60

 Operating netback ($/boe)((2))
 Realized commodity price((3))               29.92      24.53              28.60
 Royalty expense((3))                        (7.31)     (7.15)             (7.25)
 Operating expense((3))                      (8.88)     (7.97)             (5.52)
 Operating netback((3))                      13.73      9.41               15.83

 Financial
 ($000's except per share amounts)

 Petroleum and natural gas sales             12,543     11,001             11,113

 Cash from operating activities              4,787      9,903              5,611

 Funds flow from operations                  1,848      623                2,580

 Net (loss) income                           (2,376)    13,621             41
 Per share - basic and diluted               (0.01)     0.04               0.00

 Capital expenditures((3))                   3,224      7,443              6,673

 Principal balance of bank debt              55,625     57,750             33,500
 Principal balance of convertible debenture  12,500     12,500             -
 Net debt((3))                               76,072     72,890             33,330

 Share Information (000's)

 Weighted average shares outstanding
 Basic and diluted                           324,734    304,674            236,461
 Outstanding shares - end of period          324,734    324,734            236,461

 

Notes:

(1)   Refer to "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 "Advisories - Oil and Natural Gas
Measures" for further information.

(3)   Specified or supplementary financial measure. Refer to "Advisories -
Non-GAAP and Other Financial Measures" for further information.

 

Operational Update

 

Carapal Ridge 3 (CR-3)

 

Since commencing production, the CR-3 well has delivered stable gross
production rates of approximately 2.2 MMcf/d of natural gas and 14 bbls/d of
condensate. Based on current well performance and flowing parameters, the well
appears to be experiencing an inflow restriction. To optimize performance, the
Company is awaiting the availability of equipment to complete a coiled tubing
cleanout and acid stimulation aimed at enhancing reservoir inflow and well
productivity.

 

Cascadura Infrastructure

 

The Cascadura compressor arrived in Trinidad on April 23, 2026. Installation
is progressing, with commissioning targeted to commence in June 2026. The
compressor is intended to alleviate production constraints associated with
elevated sales pipeline pressures and is expected to enhance production rates
and improve operational stability at the facility.

 

Oil Block Drilling

 

Following the successful drilling of FR-1835 on the WD-8 block in March 2026,
drilling operations on FR-1836 commenced on March 26, 2026, with total depth
reached on April 7, 2026. Wireline log analysis indicates approximately 227
feet of net hydrocarbon pay. Both wells were drilled ahead of schedule with
turnkey drilling costs funded by the drilling operator. Completion operations
are currently underway, and both wells are expected to be brought onstream
imminently.

 

Liquidity and Recapitalization

 

As at March 31, 2026, the Company had a working capital deficit of $22.2
million (excluding the convertible debenture maturing in 2028). Due to the
current debt structure and projected 2026 covenant levels, the Company's March
31, 2026 unaudited interim condensed financial statements include a note
regarding the existence of material uncertainties over its ability to continue
as a going concern.

 

In the absence of mitigating actions, the Company's current cash resources and
forecast cash flows from operations may not be sufficient to fund expected
operating and development expenditures and scheduled bank debt repayments over
the next twelve months.

 

Touchstone is actively executing a strategic recapitalization plan to address
near-term liquidity and ensure the Company is funded for its high-growth
development program, which includes:

·      Debt restructuring: Constructive and ongoing discussions with our
lender regarding loan amendments and waivers for the currently projected
annual 2026 covenant breaches. The Company has a history of proactive
engagement and receiving covenant waivers from its lender.

·      Value-added tax recovery: Continuing engagement with the Trinidad
and Tobago Government to collect outstanding value-added tax receivables
(approximately $10.1 million outstanding as at March 31, 2026).

·      Operational cash-flow: Anticipated production growth as new wells
and the compression project come online in 2026 and benefitting from
strengthening commodity pricing.

·      Equity initiatives: Evaluating strategic opportunities to
strengthen the balance sheet and support future work commitments.

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.

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

Scott Budau, Chief Financial Officer

Brian Hollingshead, EVP Engineering and Business Development

 

Canaccord Genuity (Nominated Advisor and Joint Broker)

Adam James / Charlie
Hammond
Tel: +44 (0) 207 523 8000

 

Cavendish Capital Markets Limited (Joint Broker)

Neil McDonald / Derrick Lee / Graham
Hall                                  Tel:
+44 (0) 131 220 6939

 

FTI Consulting (Financial PR)

Nick Hennis / Ben
Brewerton
Tel: +44 (0) 203 727 1000

Email: touchstone@fticonsulting.com (mailto:touchstone@fticonsulting.com)

 

Advisories

 

Certain information contained in this announcement would have been deemed
inside information as stipulated under the UK version of the EU Market Abuse
Regulation (2014/596) which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended and supplemented from time to time, until
the release of this announcement.

 

Forward-looking Statements

 

The information provided in this announcement contains certain 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 "expect", "believe",
"estimate", "potential", "anticipate", "forecast", "pursue", "aim", "intends",
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 hereof 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 business plans,
strategies, priorities and development plans; anticipated developmental
drilling and facility upgrade activities, including locations, the timing
thereof and related production and cash flows therefrom; field estimated
production rates; the expected timing and potential success of the coiled
tubing cleanout and acid stimulation program at the CR-3 well and its impact
on reservoir inflow and productivity; the anticipated timing for the
completion, commissioning, and startup of the Cascadura compressor, including
the project's impact on wellhead backpressure and overall production rates and
operational stability; the estimated hydrocarbon net pay of the FR-1836 well
based on internal interpretations of wireline logs, which may not be
indicative of ultimate production or reserves; the anticipated timing for
bringing wells FR-1835 and FR-1836 onstream; the Company's expectation of
executing a recapitalization plan; the Company's ability to amend its current
loan agreement and/or obtain future waivers for projected financial covenant
breaches; and Touchstone's current and future financial position, including
the Company's liquidity and the sufficiency of resources to fund current
obligations and future capital expenditures. The Company's actual decisions,
activities, results, performance, or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements and
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur or, if any of them do,
what benefits that Touchstone will derive from them.

 

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 2025
Annual Information Form dated March 30, 2026 which is available on the
Company's profile on SEDAR+ (www.sedarplus.ca (http://www.sedarplus.ca/) ) and
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 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 and Other Financial Measures

 

This announcement references 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
Canadian Generally Accepted Accounting Principles ("GAAP") and do not have a
standardized meaning prescribed by IFRS Accounting Standards as Issued by the
International Accounting Standards Board ("IFRS") 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 herein.

 

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 royalty 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

 

Working capital and net debt are capital management measures used by
Management to monitor the Company's capital structure to evaluate its true
debt and liquidity position and to manage capital and liquidity risk.

Working capital is calculated as current assets minus current liabilities as
presented in the applicable consolidated balance sheet, excluding the carrying
value of the convertible debenture. Management excludes the carrying value of
the convertible debenture from working capital given the instrument has a
maturity date in 2028.

 

Net debt is determined by adding the Company's working capital surplus or
deficit to the principal (undiscounted) balance of non-current bank debt and
the principal (undiscounted) balance of the convertible debenture. Net debt is
most directly comparable to total liabilities as disclosed in the Company's
consolidated balance sheets.

 

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.

 

Realized crude oil sales per barrel, realized NGL sales per barrel and
realized natural gas sales per boe - are comprised of sales from the
respective product type as determined in accordance with IFRS, divided by the
Company's total production volumes of the respective product type for the
period. Crude oil sales, NGL sales and natural gas sales are components of
petroleum and natural gas sales as disclosed on the consolidated statements of
comprehensive income.

 

Realized crude oil and liquids sales per barrel - is comprised of the sum of
crude oil and NGL product sales as determined in accordance with IFRS, divided
by the sum of the Company's total crude oil and NGL production volumes for the
period. Crude oil and NGL sales are components of petroleum and natural gas
sales.

 

Royalty expense per boe - is comprised of royalty expense as determined in
accordance with IFRS, divided by the Company's total production volumes for
the period.

 

For further information, please refer to the "Advisories - Non-GAAP Financial
Measures" section of the Company's most recent Management's discussion and
analysis for the three months ended March 31, 2026 accompanying the March 31,
2026 unaudited interim condensed consolidated financial statements, both of
which are available on the Company's profile on SEDAR+ (www.sedarplus.ca
(http://www.sedarplus.ca/) ) and website (www.touchstoneexploration.com
(http://www.touchstoneexploration.com/) ). Touchstone's Management's
discussion and analysis is incorporated by reference herein and includes
further discussion of the purpose and composition of the specified non-GAAP
financial measures consistently used by the Company and detailed
reconciliations to the most directly comparable GAAP measures.

 

Oil and Natural Gas Measures

 

To provide a single unit of production for analytical purposes, natural gas
production has been converted mathematically to barrels of oil equivalent. The
Company uses the industry-accepted standard conversion of six thousand cubic
feet of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 boe ratio is
based on an energy equivalent conversion method primarily applicable at the
burner tip. It does not represent a value equivalency at the wellhead and is
not based on either energy content or current prices. While the boe ratio is
useful for comparative measures and observing trends, it does not accurately
reflect individual product values and may be misleading, particularly if used
in isolation, as the value ratio between crude oil and natural gas based on
current commodity prices may differ significantly from the 6:1 energy
equivalency ratio.

 

Product Type Disclosures

 

This announcement includes references to crude oil, NGLs, crude oil and
liquids, natural gas average daily production volumes. Under NI 51-101,
disclosure of production volumes should include segmentation by product type
as defined in the instrument. In this announcement, references to "crude oil"
refer to light and medium crude oil and heavy crude oil; references to "NGLs"
refer to condensate and propane; and references to "natural gas" refer to
conventional natural gas, all as defined in the instrument. References to
"crude oil and liquids" include crude oil and NGLs.

 

The Company's estimated average net production volumes for April 2026 consist
of the following product types as defined in NI 51-101 using a conversion of 6
Mcf to 1 boe where applicable.

 

 Period      Light and Medium Crude Oil (bbls/d)  Condensate (bbls/d)  Other NGLs (bbls/d)  Conventional Natural Gas (Mcf/d)  Total Oil Equivalent (boe/d)

 April 2026  981                                  158                  317                  19,325                            4,677

 

For further information regarding specific product disclosures in accordance
with NI 51-101, including first quarter 2026 and 2025 average daily production
information by product type, please refer to the "Advisories - Product Type
Disclosures" section of the Company's most recent Management's discussion and
analysis for the three months ended March 31, 2026 accompanying the March 31,
2026 unaudited interim condensed consolidated financial statements, both of
which are available on the Company's profile on SEDAR+ (www.sedarplus.ca
(http://www.sedarplus.ca/) ) and website (www.touchstoneexploration.com
(http://www.touchstoneexploration.com/) ).

 

Competent Persons Statement

 

In accordance with the AIM Rules for Companies, the technical information
contained in this announcement has been reviewed and approved by Brian
Hollingshead, Executive Vice President, Engineering and Business Development
of Touchstone Exploration Inc. Mr. Hollingshead is a qualified person as
defined in the London Stock Exchange's Guidance Note for Mining and Oil and
Gas Companies and is a member of the Association of Professional Engineers and
Geoscientists of Alberta. Mr. Hollingshead holds a Bachelor of Science in
Electrical Engineering from the University of Alberta and has over 20 years of
oil and gas exploration and development experience. For the purposes of UK MAR
and Article 2 of the binding technical standards published by the Financial
Conduct Authority in relation to MAR as regards Commission Implementing
Regulation (EU) 2016/1055, the person responsible for the release of this
announcement is Paul Baay, President and Chief Executive Officer.

 

Abbreviations

 

The following abbreviations may be referenced in this announcement:

 

bbl(s)                barrel(s)

bbls/d               barrels per day

boe                  barrels of oil equivalent

boe/d               barrels of oil equivalent per day

Mcf                  thousand cubic feet

Mcf/d               thousand cubic feet per day

MMcf                million cubic feet

MMcf/d             million cubic feet per day

LNG                  liquefied natural gas

NGL(s)              natural gas liquid(s)

 

 

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