Touchstone Explrtn. - TOUCHSTONE REPORTS SECOND QUARTER 2024 RESULTS
13/08/2024 07:00
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RNS Number : 1637A Touchstone Exploration Inc. 13 August 2024
TOUCHSTONE REPORTS SECOND QUARTER 2024 RESULTS
CALGARY, ALBERTA (August 13, 2024) - Touchstone Exploration Inc.
("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) reports financial
and operating results for the three and six months ended June 30, 2024 and
updated 2024 guidance.
Selected financial information is outlined below and should be read in
conjunction with our June 30, 2024 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
(http://www.sedarplus.ca/) ) and on our website (www.touchstoneexploration.com
(http://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 R. Baay, President and Chief Executive Officer, commented:
"Our results for the first half of 2024 highlight Touchstone's remarkable
transformation over the past year, with notable improvements in both financial
and production performance compared to the previous year. The second quarter
has been particularly productive, marked by our efforts to optimize
production, enhance processing capacity, and tie in our new wells to the
Cascadura natural gas facility. We were excited to increase average sales
volumes to 5,816 boe/d in July 2024, following the successful recompletion of
the Cascadura Deep-1 well, representing an 18 percent increase from June 2024.
Since we began production at Cascadura in September 2023, we have gained
valuable insights into the reservoir that will benefit our future drilling
initiatives. However, we have observed that field declines have been steeper
than anticipated, leading us to adjust our midpoint forecasted 2024 average
production to 8,000 boe/d. Consequently, we now project an approximate annual
funds flow from operations of $28 million for 2024.
Following our drilling program in the first half of the year, we remain on
track to achieve initial production from the two Cascadura wells by the end of
September. In line with our commitment to capital discipline and operational
efficiency, we have decided to leverage the current drilling rig location and
the installation of the Cascadura field flowline to drill two additional
development wells from our Cascadura B site in the fourth quarter of 2024.
This strategic shift will replace the previously planned two Coho wells. We
look forward to sharing further updates with our shareholders in due course."
Year to Date Second Quarter 2024 Financial and Operating Highlights
· Attained average production volumes of 6,223 boe/d (78 percent
natural gas), representing a 214 percent increase relative to the 1,982 boe/d
(39 percent natural gas) produced in the six months ended June 30, 2023,
mainly attributed from Cascadura natural gas and associated liquids volumes
that were brought online in September 2023.
· Achieved funds flow from operations of $10,110,000 versus
$809,000 reported in the prior year comparative period, driven by an increase
in operating netback of $12,112,000 primarily from increased production
volumes and realized commodity pricing.
· Recognized net earnings of $6,967,000 ($0.03 per basic and
diluted share) during the six months ended June 30, 2024 compared to a net
loss of $350,000 ($0.00 per basic share) reported in the equivalent 2023
period.
Second Quarter 2024 Financial and Operating Highlights
· Achieved average quarterly production of 5,432 boe/d (77 percent
natural gas), a 23 percent decrease relative to 7,015 boe/d produced in the
first quarter of 2024 (80 percent natural gas), mainly reflecting natural
declines from our Cascadura field.
· Realized petroleum and natural gas sales of $14,090,000 compared
to $16,584,000 in the first quarter of 2024, primarily attributed to a
decrease in natural gas and NGL sales volumes.
- Cascadura field production volumes in the quarter contributed
$5,168,000 of natural gas sales at an average realized price of $2.52 per Mcf
and $680,000 of petroleum sales at an average realized price of $73.86 per
barrel.
- Natural gas production from the Coho-1 well contributed $483,000 of
natural gas sales in the quarter at an average realized price of $2.16 per
Mcf.
- Crude oil production contributed $7,759,000 of petroleum sales at an
average realized price of $73.62 per barrel.
· Generated an operating netback of $8,127,000, a 22 percent
decrease from the first quarter of 2024, primarily due to decreased natural
gas and NGL sales volumes.
· Achieved quarterly funds flow from operations of $3,968,000 in
the second quarter of 2024 compared to $6,142,000 in the preceding quarter.
· Delivered net earnings of $3,339,000 ($0.01 per basic and diluted
share) versus $3,628,000 ($0.02 per basic and diluted share) recognized in the
first quarter of 2024.
· $5,543,000 in quarterly capital investments primarily focused on
expenditures directed towards one CO-1 well and progressing construction on
the flowline from the Cascadura C site to the Cascadura natural gas processing
facility.
· In April 2024 we entered into a third amended and restated loan
agreement with our existing lender providing for an additional $13 million of
bank debt capacity.
· Effective June 1, 2024 we closed an asset swap where we exchanged
private San Francique leases for the Balata East block, which resulted in a
$1,535,000 gain on asset disposition.
· Exited the second quarter of 2024 with a cash balance of
$6,990,000 and a net debt position of $28,674,000, resulting in a net debt to
annual funds flow from operations ratio of 1.25 times.
Post Period-end Highlights
· Effective July 1, 2024 we entered into exploration and production
licences for the Charuma and Cipero onshore blocks awarded pursuant to the
2022 onshore competitive bid round, where we have an 80 percent operating
interest in each licence.
· Following a recompletion of Cascadura Deep-1, in July 2024 we
attained average net sales volumes of 5,816 boe/d representing an increase of
18 percent from June 2024 average net sales, comprised of:
- average natural gas sales volumes of 27.5 MMcf/d (4,578 boe/d); and
- average crude oil and natural gas liquid sales volumes of 1,238
bbls/d.
· Cascadura facility infrastructure and tie-in operations are
progressing as scheduled, and we continue to target initial production from
our Cascadura-2ST1 and Cascadura-3ST1 wells prior to the end of September
2024.
Financial and Operating Results Summary
Three months ended June 30, % change Six months ended % change
June 30,
2024 2023 2024 2023
Operational
Average daily production
Crude oil((1)) (bbls/d) 1,158 1,124 3 1,162 1,204 (3)
NGLs((1)) (bbls/d) 101 - n/a 181 - n/a
Crude oil and liquids((1)) (bbls/d) 1,259 1,124 12 1,343 1,204 12
Natural gas((1)) (Mcf/d) 25,036 4,215 100 29,279 4,667 100
Average daily production (boe/d)((2)) 5,432 1,827 100 6,223 1,982 100
Average realized prices((3))
Crude oil((1)) ($/bbl) 73.62 62.26 18 71.78 63.64 13
NGLs((1)) ($/bbl) 73.86 - n/a 70.78 - n/a
Crude oil and liquids((1)) ($/bbl) 73.64 62.26 18 71.64 63.64 13
Natural gas((1)) ($/Mcf) 2.48 2.11 18 2.47 2.12 17
Realized commodity price ($/boe)((2)) 28.50 43.19 (34) 27.08 43.64 (38)
Production mix (% of production)
Crude oil and liquids((1)) 23 62 22 61
Natural gas((1)) 77 38 78 39
Operating netback ($/boe)((2))
Realized commodity price((3)) 28.50 43.19 (34) 27.08 43.64 (38)
Royalties((3)) (7.25) (12.94) (44) (6.41) (12.98) (51)
Operating expenses((3)) (4.81) (13.25) (64) (4.26) (12.61) (66)
Operating netback((3)) 16.44 17.00 (3) 16.41 18.05 (9)
Financial
($000's except per share amounts)
Petroleum and natural gas sales 14,090 7,181 96 30,674 15,657 96
Cash from operating activities 3,383 2,975 14 8,752 3,888 100
Funds flow from operations 3,968 6 100 10,110 809 100
Net earnings (loss) 3,339 (71) n/a 6,967 (350) n/a
Per share - basic and diluted 0.01 (0.00) n/a 0.03 (0.00) n/a
Exploration capital expenditures 60 4,795 (99) 168 13,545 (99)
Development capital expenditures 5,483 340 100 17,337 609 100
Capital expenditures((3)) 5,543 5,135 8 17,505 14,154 24
Working capital deficit((3)) 2,674 10,913 (75)
Principal long-term bank debt 26,000 18,000 44
Net debt((3)) - end of period 28,674 28,913 (1)
Share Information (000's)
Weighted avg. shares outstanding:
Basic 234,959 233,144 1 234,586 233,091 1
Diluted 236,364 233,144 1 236,451 233,091 1
Outstanding shares - end of period 236,307 233,428 1
Notes:
(1) Refer to the "Advisories - Product Type Disclosures" section herein
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) Non-GAAP financial measure. See the "Advisories - Non-GAAP Financial
Measures" section herein for further information.
Outlook and Guidance
We continue to focus on financial discipline and value creation from our
portfolio of development and exploration assets. Our principal near term
strategy is to increase cash flow generation via the development of our
Cascadura field in 2024. On December 19, 2023, the Company issued a news
release to announce the approval of our preliminary financial and operating
guidance for 2024. This guidance is summarized below along with updated 2024
guidance which reflects a 15 percent reduction in the midpoint of our
production forecast driven by year-to-date production levels.
The first half of our 2024 capital program has progressed as planned, with
four wells in the program successfully drilled and cased, including two
Cascadura development wells and two legacy property crude oil wells. Road and
pipeline construction to tie-in the two Cascadura development wells to our
natural gas facility is progressing and we continue to expect initial
production from the two wells prior to the end of September 2024.
Our original capital guidance in the fourth quarter of 2024 contemplated
drilling one Coho development well and one Coho exploration well. In order to
focus on the development of our Cascadura field, we have elected to postpone
our Coho capital program and drill two additional Cascadura development wells
from the Cascadura B site. We expect to commence Cascadura drilling operations
during the fourth quarter of 2024 after site preparations are complete and the
drilling rig has been mobilized from our Cascadura C site. As such, our 2024
capital budget has been revised from $33 million to $35 million to accommodate
increased estimated Cascadura facility tie-in expenditures and the
construction of the Cascadura B drilling pad. Similar to our original Coho
well production guidance, associated production from the two additional
Cascadura development wells is expected to commence in the first quarter of
2025 pending successful drilling, completion and tie-in operations.
Our year-to-date 2024 Cascadura field production has experienced higher
declines than anticipated in our preliminary 2024 guidance. Accordingly, we
have revised our midpoint forecasted 2024 average production from 9,400 boe/d
to 8,000 boe/d, in addition to revising our 2024 exit production rate from
14,500 boe/d to 13,500 boe/d. The material forecasted 2024 production increase
continues to be weighted to the fourth quarter of 2024 based on anticipated
initial production from our two recently drilled Cascadura development wells,
which have been forecasted based on the actual Cascadura-1ST1 type curve.
Based on forecasted average mid-point production of 8,000 boe/d and updates to
both our 2024 average Brent crude oil price and percent realized discount to
Brent benchmark pricing, we now expect to generate approximately $28 million
in funds flow from operations compared to our previous forecast of $32
million. Our annual funds flow from operations includes an estimated $1.5
million in transaction costs from the proposed acquisition of Trinity
Exploration and Production Plc, which were not incorporated into our previous
guidance. In combination with the revision to our 2024 capital program, we
have revised our year-end 2024 net debt guidance to $28 million, representing
a 12 percent increase from previous guidance.
2024 Updated Guidance Summary
Annual Guidance Summary((1)) Updated Guidance Previous Guidance((2)) Variance
Amount %
Capital expenditures((3)) ($000's) 35,000 33,000 2,000 6
Average daily production (boe/d) 7,700 to 8,300 9,100 to 9,700
% natural gas 82% 82%
% crude oil and liquids 18% 18%
Average Brent crude oil price ($/bbl) 82.00 75.00 7.00 9
% realized discount to Brent price 16% 18% (2) (11)
Funds flow from operations((4)) ($000's) 28,000 32,000 (4,000) (13)
Net debt - end of year((3)(4)) ($000's) 28,000 25,000 3,000 12
Notes:
(1) Forward-looking statement representing Management estimates.
Additional information regarding the assumptions used are provided in the
"Advisories - Assumptions for Updated 2024 Guidance" section herein.
(2) As announced on December 19, 2023.
(3) Non-GAAP financial measure. See the "Advisories - Non-GAAP Financial
Measures" section herein for further information.
(4) The financial performance measures provided in the Company's updated
2024 guidance are based on the midpoint of the average production forecast,
being 8,000 boe/d (formerly (9,400 boe/d).
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 Baay, President and Chief Executive
Officer Tel: +1 (403) 750-4487
Scott Budau, Chief Financial Officer
Brian Hollingshead, Executive Vice President Engineering and Business
Development
Shore Capital (Nominated Advisor and Joint Broker)
Daniel Bush / Toby Gibbs / Tom
Knibbs
Tel: +44 (0) 207 408 4090
Canaccord Genuity (Joint Broker)
Adam James / Charlie
Hammond
Tel: +44 (0) 207 523 8000
FTI Consulting (Financial PR)
Nick Hennis / Ben Brewerton
Tel: +44 (0) 203 727 1000
Email: touchstone@fticonsulting.com (mailto:touchstone@fticonsulting.com)
Advisories
This announcement contains information that qualified or may have qualified as
inside information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 ("MAR") as it forms part of UK domestic law by virtue
of the EUWA ("UK MAR"), encompassing information relating to the Company's
updated 2024 guidance. 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.
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", "plan",
"anticipate", "believe", "intend", "maintain", "continue to", "pursue",
"design", "result in", "sustain" "estimate", "potential", "growth",
"near-term", "long-term", "forecast", "contingent" 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; the focus of Touchstone's
remaining 2024 capital plan, including pursuing developmental drilling
activities and optimizing existing natural gas and liquids infrastructure
capacity; anticipated 2024 annual average and exit production and production
by commodity; forecasted production decline rates; anticipated developmental
drilling activities, including locations, the timing thereof and related
production and cash flows therefrom; anticipated 2024 capital expenditures
including estimations of costs and inflation incorporated therein; anticipated
timing of well tie-in operations, well completion activities and production
coming online; forecasted 2024 average Brent reference price and the Company's
budgeted realized price in relation thereto; forecasted royalty, operating,
general and administration, cash finance, income tax expenses and transaction
costs; anticipated funds flow from operations and net debt; and Touchstone's
current and future financial position, including the sufficiency of resources
to fund future capital expenditures and maintain financial liquidity. 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 2023
Annual Information Form dated March 20, 2024 which is available under the
Company's profile on SEDAR+ (www.sedarplus.ca (http://www.sedarplus.ca/) ) 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 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.
This announcement contains future-oriented financial information and financial
outlook information (collectively, "FOFI") about Touchstone's prospective
results of operations and production included in its updated 2024 guidance,
all of which are subject to the same assumptions, risk factors, limitations,
and qualifications as set forth in the paragraphs above. The FOFI contained in
this announcement was approved by Management as of the date of this
announcement and was provided for the purpose of providing further information
about Touchstone's future business operations. This information has been
provided for illustration only and, with respect to future periods, is based
on budgets and forecasts that are speculative and are subject to a variety of
contingencies and may not be appropriate for other purposes. Touchstone and
its Management believe that FOFI has been prepared on a reasonable basis,
reflecting Management's best estimates and judgments, and represents, to the
best of Management's knowledge and opinion, the Company's expected course of
action. However, because this information is highly subjective, it should not
be relied on as necessarily indicative of future results. Touchstone disclaims
any intention or obligation to update or revise any FOFI contained herein,
whether as a result of new information, future events or otherwise, unless
required pursuant to applicable law. Readers are cautioned that the FOFI
contained herein should not be used for purposes other than for which it is
disclosed herein, and the financial outlook information contained herein is
not conclusive and is subject to change. Variations in forecasted crude oil
and liquids prices, differences in the amount and timing of capital
expenditures, and variances in average production estimates and decline rates
can have a significant impact on the key performance measures included in the
guidance disclosed herein. Management does not have firm commitments for all
of the costs, expenditures, prices or other financial assumptions used to
prepare the financial outlook or assurance that such operating results will be
achieved and, accordingly, the complete financial effects of the forecasted
costs, expenditures, prices and operating results are not objectively
determinable. The actual results of the Company's operations and the resulting
financial results will vary from the amounts set forth in this announcement
and such variations may be material.
Non-GAAP 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 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
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 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 disclosed in the Company's consolidated
balance sheets.
Net debt to funds flow from operations ratio
The Company monitors its capital structure using a net debt to funds flow from
operations ratio, which is a non-GAAP ratio and a capital management measure
calculated as the ratio of the Company's net debt to trailing twelve months
funds flow from operations for any given period.
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 boe, realized NGL sales per boe 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 net earnings (loss)
and comprehensive income (loss).
Realized crude oil and liquids sales per boe - 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.
Royalties per boe, operating expenses per boe, general and administration
expenses per boe and current income tax expense per boe - are comprised of the
respective line item on the consolidated statements of net earnings (loss) and
comprehensive income (loss) as determined in accordance with IFRS, divided by
the Company's total production volumes for the period.
Royalties as a percentage of petroleum and natural gas sales - is comprised of
royalties as determined in accordance with IFRS, divided by petroleum and
natural gas sales as determined in accordance with IFRS.
Cash finance expenses per boe - is comprised of cash finance expenses, divided
by the Company's total production volumes for the period. Cash finance
expenses are calculated as net finance expenses as determined in accordance
with IFRS, less accretion on bank debt and accretion on decommissioning
obligations, both of which are non-cash in nature.
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 and six months ended June 30, 2024 accompanying our
June 30, 2024 unaudited interim condensed consolidated financial statements,
both of which will be available on our website (www.touchstoneexploration.com
(http://www.touchstoneexploration.com/) ) and under our SEDAR+ profile
(www.sedarplus.ca (http://www.sedarplus.ca/) ). Our Management's discussion
and analysis 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.
Assumptions for Updated 2024 Guidance
The significant assumptions used in the forecast of average daily production,
funds flow from operations and net debt are summarized below. These key
performance measures are based on the midpoint of our updated 2024 average
production guidance of 8,000 boe/d.
Production estimates contained herein are expressed as anticipated average
production over the calendar 2024 year. All production volumes disclosed
herein are based on Company working interest before royalty burdens. In
determining anticipated 2024 production, Touchstone considered historical
drilling, completion, production results and decline rates for prior years and
the year-to-date 2024 period and considered the estimated impact on production
of the Company's remaining 2024 expected drilling and completion activities.
Touchstone expects that approximately 14 percent of its midpoint average
production guidance will be comprised of crude oil, 4 percent NGLs, and 82
percent conventional natural gas. See the "Advisories - Product Type
Disclosures" section herein for further information.
Annual Financial Guidance((1)) Units Updated Guidance Previous Guidance((2)) Variance
Amount %
Realized commodity price((2)) $/boe 24.50 23.10 1.40 6
Expenses
Royalties as a % of petroleum and natural gas sales((2)) % 21.5 19.5 2.0 10
Operating expenses((2)) $/boe 3.80 3.50 0.30 9
General and administration expenses((2)) $/boe 3.40 3.10 0.30 10
Cash finance expenses((2)) $/boe 1.00 1.00 - -
Current income tax expenses((2)) $/boe 1.20 1.80 (0.60) (33)
Transaction costs $000's 1,500 - 1,500 n/a
Notes:
(1) The financial performance measures included in the Company's updated
2024 guidance are based on the midpoint of the average production forecast,
being 8,000 boe/d (formerly (9,400 boe/d).
(2) Non-GAAP financial measure. See the "Advisories - Non-GAAP Financial
Measures" section herein for further information.
Variations in forecasted crude oil and liquids prices, differences in the
amount and timing of capital expenditures, and variances in average production
estimates and decline rates can have a significant impact on the key
performance measures included in the guidance disclosed herein. The actual
results of the Company's operations and the resulting financial results will
vary from the amounts set forth in this announcement and such variations may
be material.
Using the midpoint of the Company's updated production guidance and holding
all other assumptions constant, a $5/bbl increase (decrease) in the forecasted
average Brent crude oil price for the second half of 2024 would increase funds
flow from operations by approximately $620,000 (decrease by $710,000).
Assuming capital expenditures are unchanged, the impact on funds flow from
operations is estimated to result in an equivalent decrease (increase) in
forecasted year end 2024 net debt.
Oil and Natural Gas Measures
Where applicable, natural gas has been converted to barrels of oil equivalent
(boe) based on six thousand cubic feet (Mcf) to one barrel (bbl) 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. This conversion factor is an industry accepted norm and is not based
on either energy content or prices.
Product Type Disclosures
This announcement includes references to crude oil, NGLs, crude oil and
liquids, natural gas, and average daily production volumes. Under National
Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("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 crude oil and medium crude oil" and "heavy crude
oil" combined product types; references to "NGLs" refer to condensate; and
references to "natural gas" refer to the "conventional natural gas" product
type, all as defined in the instrument. In addition, references to "crude oil
and liquids" herein include crude oil and NGLs.
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 most recent Management's discussion and analysis for the three
and six months ended June 30, 2024 accompanying our June 30, 2024 unaudited
interim condensed consolidated financial statements, both of which will be
available on our website (www.touchstoneexploration.com
(http://www.touchstoneexploration.com/) ) and under our SEDAR+ profile
(www.sedarplus.ca (http://www.sedarplus.ca/) ).
Abbreviations
The following abbreviations are referenced in this announcement:
bbls(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
NGL(s) natural gas liquid(s)
Touchstone Exploration Inc.
Interim Condensed Consolidated Balance Sheets
Unaudited, stated in thousands of United States dollars
As at June 30, December 31, 2023
2024
Assets
Current assets
Cash 6,990 8,186
Accounts receivable 11,122 12,852
Inventory 91 91
Prepaid expenses 1,071 764
Assets held for sale 1,181 677
20,455 22,570
Exploration and evaluation assets 5,130 5,030
Property, plant and equipment 120,129 108,148
Restricted cash 1,042 785
Other assets 251 334
Abandonment fund 2,544 2,081
Total assets 149,551 138,948
Liabilities
Current liabilities
Accounts payable and accrued liabilities 15,872 15,013
Income taxes payable 355 240
Current portion of bank debt 6,000 13,000
Liabilities associated with assets held for sale 902 1,898
23,129 30,151
Lease liabilities 2,620 2,888
Bank debt 25,738 14,977
Decommissioning liabilities 9,650 9,733
Deferred income taxes 20,739 21,433
Total liabilities 81,876 79,182
Shareholders' equity
Shareholders' capital 115,526 114,965
Contributed surplus 6,702 6,166
Other comprehensive loss (13,279) (13,124)
Deficit (41,274) (48,241)
Total shareholders' equity 67,675 59,766
Total liabilities and shareholders' equity 149,551 138,948
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Earnings (Loss) and Comprehensive
Income (Loss)
Unaudited, stated in thousands of United States dollars (except per share
amounts)
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
Revenue
Petroleum and natural gas sales 14,090 7,181 30,674 15,657
Less: royalties (3,585) (2,152) (7,262) (4,656)
Petroleum and natural gas revenue, net of royalties 10,505 5,029 23,412 11,001
Other revenue 34 22 52 34
Total revenue 10,539 5,051 23,464 11,035
Expenses
Operating 2,378 2,203 4,822 4,523
General and administration 2,608 2,376 4,974 4,477
Net finance 761 631 1,440 1,062
Transaction costs 840 - 1,220 -
Exploration 76 - 170 -
Gain on asset dispositions (1,535) (800) (1,535) (800)
Foreign exchange (gain) loss (122) 48 (69) (62)
Equity-based compensation 309 252 710 613
Depletion and depreciation 1,782 1,041 4,034 2,418
Impairment (reversal) (22) 14 502 29
Other - (440) - (440)
Total expenses 7,075 5,325 16,268 11,820
Earnings (loss) before income taxes 3,464 (274) 7,196 (785)
Provision for income taxes
Current expense 75 180 919 395
Deferred expense (recovery) 50 (383) (690) (830)
Total income tax expense (recovery) 125 (203) 229 (435)
Net earnings (loss) 3,339 (71) 6,967 (350)
Currency translation adjustments 142 207 (155) 204
Comprehensive income (loss) 3,481 136 6,812 (146)
Net earnings (loss) per common share
Basic and diluted 0.01 (0.00) 0.03 (0.00)
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
For the six months ended June 30
Unaudited, stated in thousands of United States dollars
2024 2023
Shareholders' capital
Balance, beginning of period 114,965 114,635
Equity-based settlements 561 108
Balance, end of period 115,526 114,743
Contributed surplus
Balance, beginning of period 6,166 4,905
Equity-based settlements (200) (39)
Equity-based compensation expense 710 613
Equity-based compensation capitalized 26 104
Balance, end of period 6,702 5,583
Other comprehensive loss
Balance, beginning of period (13,124) (13,517)
Other comprehensive (loss) income (155) 204
Balance, end of period (13,279) (13,313)
Deficit
Balance, beginning of period (48,241) (27,643)
Net earnings (loss) 6,967 (350)
Balance, end of period (41,274) (27,993)
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Cash Flows
Unaudited, stated in thousands of United States dollars
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
Operating activities
Net earnings (loss) 3,339 (71) 6,967 (350)
Items not involving cash from operations:
Gain on asset dispositions (1,535) (800) (1,535) (800)
Unrealized foreign exchange (gain) loss (23) 52 (3) (67)
Equity-based compensation expense 309 252 710 613
Depletion and depreciation expense 1,782 1,041 4,034 2,418
Impairment (reversal) expense (22) 14 502 29
Other 68 (81) 125 (186)
Deferred income tax expense (recovery) 50 (383) (690) (830)
Decommissioning expenditures - (18) - (18)
Funds flow from operations 3,968 6 10,110 809
Change in non-cash working capital (585) 2,969 (1,358) 3,079
Cash from operating activities 3,383 2,975 8,752 3,888
Investing activities
Exploration and evaluation expenditures (60) (4,795) (168) (13,545)
Property, plant and equipment expenditures (5,483) (340) (17,337) (609)
Abandonment fund expenditures (226) (56) (527) (122)
Proceeds from asset dispositions - 250 - 250
Change in non-cash working capital (5,297) (4,312) 4,951 112
Cash used in investing activities (11,066) (9,253) (13,081) (13,914)
Financing activities
Changes in restricted cash (316) 59 (257) 118
Advance of bank debt, net of fees 9,747 7,000 9,747 7,000
Repayment of bank debt (4,500) (1,500) (6,000) (3,000)
Net finance lease (payments) receipts (125) 95 (754) (200)
Issuance of common shares 361 69 361 69
Change in non-cash working capital 3 (122) (7) (252)
Cash from financing activities 5,170 5,601 3,090 3,735
Decrease in cash (2,513) (677) (1,239) (6,291)
Cash, beginning of period 9,537 10,859 8,186 16,335
Impact of foreign exchange on foreign denominated cash balances (34) (44) 43 94
Cash, end of period 6,990 10,138 6,990 10,138
Supplementary information for cash from operating activities:
Interest paid in cash 615 501 1,155 1,031
Income taxes paid in cash 448 86 806 1,099
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