REG - Touchstone Explrtn. - THIRD QUARTER 2025 RESULTS
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RNS Number : 3300H Touchstone Exploration Inc. 13 November 2025
THIRD QUARTER 2025 RESULTS
CALGARY, ALBERTA (November 13, 2025) - Touchstone Exploration Inc.
("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) reports its
financial and operating results for the three and nine months ended September
30, 2025. Selected financial information is outlined below and should be read
in conjunction with Touchstone's September 30, 2025 unaudited interim
condensed consolidated financial statements and related Management's
discussion and analysis, both of which are available online 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.
Third Quarter 2025 Highlights
· Production: Averaged 5,141 boe/d in the third quarter of 2025 (71
percent natural gas), compared to 4,399 boe/d (69 percent natural gas) in the
second quarter of 2025 and 5,211 boe/d (75 percent natural gas) in the third
quarter of 2024. Central volumes contributed approximately 2,217 boe/d during
the third quarter.
· Petroleum and Natural Gas Sales: Totaled $12.70 million, a 4
percent decrease from $13.25 million recorded in the comparative prior year
quarter.
- Crude oil sales: $5.84 million from average production of 1,051
bbls/d at an average realized price of $60.30 per barrel.
- NGL sales: $1.34 million from average production volumes of 436
bbls/d at an average realized price of $33.41 per barrel.
- Natural gas sales: $5.52 million from average production of 21.9
MMcf/d (3,654 boe/d) at an average realized price of $2.74 per Mcf.
· Operating Netback: Generated $5.86 million in operating netback,
a 21 percent decrease from the third quarter of 2024, primarily due to
decreased petroleum and natural gas sales and related royalties and increased
natural gas operating expenses.
· Funds Flow from Operations: Declined to $0.74 million from $3.02
million in the prior year equivalent quarter, largely driven by lower
operating netbacks, higher cash finance expenses, and increased current income
taxes, partially offset by lower transaction costs.
· Net Loss: Recorded a net loss of $2.06 million ($0.01 per share)
compared to net earnings of $1.85 million ($0.01 per share) in the third
quarter of 2024. The variance was primarily driven by the decrease in
year-over-year funds flow from operations, $1.50 million in additional
depletion and depreciation expense, and the absence of a $0.78 million gain on
asset disposition recognized in the prior year.
· Capital Investments: Invested $9.60 million with the majority of
expenditures focused on Cascadura drilling operations and the procurement of
compression equipment for the Cascadura natural gas processing facility.
· Convertible Debt Financing: Issued a three-year secured
convertible debenture (the "Debenture") on August 8, 2025, bearing interest at
5 percent per annum to a private investor. The Debenture is convertible at
approximately US$0.22 (C$0.30) per share and the investor received 6,250,000
warrants exercisable at C$0.40 per share for two years. Proceeds from the
financing supported the completion of the Company's Cascadura development
drilling activities.
· Financial Position: Net debt increased to $77.75 million at
September 30, 2025, reflecting the issuance of the Debenture.
· Strategic Disposition: Entered into an agreement to divest the
non-core Fyzabad property to a Trinidad-based third party for consideration of
three turnkey drilling wells on the Company's WD-8 and WD-4 blocks. The
property contributed average production of 49 bbls/d during the third quarter
of 2025, with $2.59 million in net liabilities classified as held for sale at
September 30, 2025. The transaction remains subject to customary regulatory
approvals.
Post Period-end Highlights
· Private Placement: On October 30, 2025, Touchstone raised gross
proceeds of approximately $9.1 million (£7 million) from the issuance of
63,636,363 common shares at 11 pence sterling (approximately C$0.205) per
share.
· Bank Waiver Obtained: Following completion of the October private
placement, Touchstone received a waiver from its lender, which waives the
testing of the debt service coverage financial covenant under its loan
agreement for the year ended December 31, 2025.
· Production Update: Field-estimated production for October 2025
averaged 4,691 boe/d, a 3.3 percent decrease from 4,852 boe/d in September.
The decline primarily reflected approximately two days of planned maintenance
at the Central facility. Estimated October production volumes comprised 19.7
MMcf/d of net natural gas production (3,289 boe/d) and 1,402 bbls/d of net
crude oil and liquids production.
· Drilling Update: The drilling rig is currently being mobilized to
the newly constructed Central block location to drill a well targeting a
previously identified natural gas zone with bypassed pay potential. Any
successful results are expected to be tied into the Company's existing natural
gas processing facility in the first quarter of 2026.
Paul Baay, Chief Executive Officer, commented:
"Third quarter production reflected strong performance from the Central field
and the stabilization of existing wells at both Cascadura and Coho, with
legacy oil production continuing to underpin our low decline rates.
The Cascadura-5 well commenced production on November 1, 2025, as planned;
however, initial rates did not exhibit the high flush production observed in
previous wells. Notably, for the first time, we encountered 26-degree API
gravity crude oil from Cascadura. This represents an important new data point,
adding further complexity to our understanding of the field's structure.
While oil produced at Cascadura is approximately four times more valuable than
natural gas on a per-boe basis at current pricing, initial production rates
were below expectations. However, based on newly acquired data, we have
identified additional reservoir intervals for perforation in both the
Cascadura-2ST1 and Cascadura-5 wells. Encouragingly, these zones are capable
of producing water-free oil and can be accessed at minimal cost without the
use of a service rig.
We now have an opportunity to re-evaluate and refine our reservoir model at
Cascadura as we advance drilling at the Central block and proceed with the
compression installation at Cascadura, which remains on schedule to commence
operations in the second quarter of 2026. All Cascadura wells, including
Cascadura-2ST1 and Cascadura-5, are expected to benefit from compression. In
addition, we have completed reprocessing of the three-dimensional seismic
data, which will be integral to ongoing field evaluation.
The Central asset continues to outperform the estimates established at the
time of acquisition. As we enter the next phase of development, we plan to
drill up to four additional development wells and may conduct fracture
stimulations on two existing wells. The drilling rig is currently mobilizing
from Cascadura to the Central field, where it is expected to remain for the
next year as we optimize production and prepare for the anticipated natural
gas price increase stipulated in our marketing contract in May 2027.
We also continue to work constructively with the National Gas Company of
Trinidad and Tobago on revising gas pricing at Cascadura, as current pricing
does not adequately reflect the capital intensity of development or align with
that received by other producers in the country."
Third Quarter 2025 Financial and Operating Results Overview
Three months ended September 30, % change Nine months ended September 30, % change
2025 2024 2025 2024
Operational
Average daily production
Crude oil((1)) (bbls/d) 1,051 1,244 (16) 1,118 1,190 (6)
NGLs((1)) (bbls/d) 436 45 100 230 135 70
Crude oil and liquids((1)) (bbls/d) 1,487 1,289 15 1,348 1,325 2
Natural gas((1)) (Mcf/d) 21,926 23,531 (7) 19,647 27,349 (28)
Average daily production (boe/d)((2)) 5,141 5,211 (1) 4,623 5,883 (21)
Production mix (% of production)
Crude oil and liquids((1)) 29 25 29 23
Natural gas((1)) 71 75 71 77
Average realized prices((3))
Crude oil((1)) ($/bbl) 60.30 66.79 (10) 60.92 70.03 (13)
NGLs((1)) ($/bbl) 33.41 65.35 (49) 35.71 70.18 (49)
Crude oil and liquids((1)) ($/bbl) 52.42 66.74 (21) 56.62 70.04 (19)
Natural gas((1)) ($/Mcf) 2.74 2.47 11 2.61 2.47 6
Realized commodity price ($/boe)((2)) 26.84 27.65 (3) 27.59 27.25 1
Operating netback ($/boe)((2))
Realized commodity price((3)) 26.84 27.65 (3) 27.59 27.25 1
Royalty expense((3)) (6.00) (7.11) (16) (6.58) (6.62) (1)
Operating expense((3)) (8.46) (5.08) 67 (7.50) (4.50) 67
Operating netback((3)) 12.38 15.46 (20) 13.51 16.13 (16)
Financial
($000's except per share amounts)
Petroleum and natural gas sales 12,696 13,253 (4) 34,816 43,927 (21)
Cash from operating activities 4,850 3,607 34 10,227 12,359 (17)
Funds flow from operations 735 3,024 (76) 4,748 13,134 (64)
Net (loss) earnings (2,064) 1,847 n/a (2,733) 8,814 n/a
Per share - basic and diluted (0.01) 0.01 n/a (0.01) 0.04 n/a
Capital expenditures((3)) 9,602 3,068 100 20,934 20,573 2
Acquisition expenditure - - n/a 28,400 - n/a
Principal balance of bank debt 59,875 32,353 85
Principal balance of convertible debenture 12,500 - n/a
Net debt((3)) 77,753 29,593 100
Share Information (000's)
Weighted avg. shares outstanding:
Basic 261,097 236,382 10 248,824 235,189 6
Diluted 261,097 236,749 10 248,824 236,578 5
Outstanding shares - end of period 261,097 236,461 10
Notes:
(1) Refer to "Advisories - Product Type Disclosures" for further
information.
(2) Refer to "Advisories - Oil and Natural Gas Measures" for further
information.
(3) Specified or supplementary financial measure. Refer to "Advisories -
Non-GAAP Financial Measures" for further information.
Cascadura-5 Well Update
Cascadura-5 was successfully brought onstream as planned on November 1, 2025,
and is currently producing through a 70 percent choke to the Cascadura natural
gas facility. Since coming online, the well has averaged gross production of
approximately 500 boe/d, comprised of liquids-rich natural gas and 26-degree
API gravity crude oil, with no associated water.
Cascadura-5 is the first well in Block B to produce medium-gravity crude oil
in addition to natural gas. Preliminary production data suggest that a lower
sand interval perforated in the well is contributing a crude oil leg. This
result will be evaluated further to determine the potential for optimization
opportunities in existing Block B wells and to assess future development
implications across the block.
2025 Outlook and Revised Guidance
On October 24, 2025, the Company released its revised 2025 operational and
financial guidance (the "Revised Guidance"). Following initial production
results from Cascadura-5, Touchstone provides the following updates (the
"November Guidance") to the Revised guidance.
Annual Guidance Summary((1)) November Guidance Revised Guidance((2)) Variance
Amount %
Capital expenditures((3)) ($000's) 27,000 26,000 1,000 4
Average daily production (boe/d) 4,700 5,000 (300) (6)
% natural gas 71% 73% (2)
% crude oil and liquids 29% 27% 2
Funds flow from operations ($000's) 4,000 6,000 (2,000) (33)
Net debt - end of year((3)) ($000's) 69,000 65,000 4,000 6
Notes:
(1) Forward-looking statement and financial outlook information based on
Management current estimates. Refer to "Advisories - Forward-looking
Statements".
(2) As disclosed in the Company's October 24, 2025 announcement.
(3) Specified or supplementary financial measure. Refer to the
"Advisories - Non-GAAP Financial Measures" section of this MD&A.
Since coming online on November 1, 2025, the Cascadura-5 well has produced
estimated gross average daily volumes of 2.4 MMcf/d of natural gas and 106
bbls/d of crude oil (approximately 506 boe/d), below the Revised Guidance,
which had anticipated gross volumes of approximately 17.0 MMcf/d of natural
gas and 275 bbls/d of associated liquids (approximately 3,108 boe/d) over the
initial 30 days.
Based on this lower-than-expected performance, the Company now expects 2025
average daily production of 4,700 boe/d, representing a decrease of
approximately 300 boe/d (6 percent) relative to the 5,000 boe/d midpoint in
the Revised Guidance.
As a result of the forecasted decline in production, the Company expects funds
flow from operations of approximately $4 million for 2025, down from $6
million in the Revised Guidance.
Capital expenditures are expected to total $27 million, representing a nominal
$1 million increase compared to the Revised Guidance.
Reflecting the anticipated reduction in funds flow from operations combined
with the higher capital program, Touchstone now expects to exit 2025 with net
debt of approximately $69 million, an increase of $4 million (6 percent)
relative to the $65 million disclosed in the Revised Guidance.
Liquidity
Touchstone's near-term development strategy remains focused on enhancing
operating cash flows through continued field development activities. The
Company will maintain a disciplined approach to future capital spending to
preserve financial liquidity while executing its operational plans.
The September 30, 2025 unaudited interim condensed consolidated financial
statements include a going concern statement. In a downside scenario, and in
the absence of mitigating actions, the Company's current cash resources may
not be sufficient to fund expected operating and development expenditures and
scheduled bank debt repayments over the next twelve months. These
circumstances represent material uncertainties that may cast significant doubt
on the Company's ability to continue as a going concern.
As at September 30, 2025, Touchstone had a working capital deficit of $16.74
million, excluding the carrying value of the Debenture, which may be converted
into common shares at any time prior to its August 2028 maturity. The
Company's going concern assessment is dependent on the timely collection of
value-added tax receivables and anticipated incremental production from its
2025 development program, which has experienced additional costs and
operational challenges to date.
In the event that expected cash inflows from value-added tax receivables and
increased production are delayed, Management is evaluating and prepared to
implement various contingency measures to address remaining capital
requirements. These measures may include adjustments to planned operational
activities and, if required, consideration of additional debt or equity
financing.
Management continues to closely monitor the Company's liquidity position to
ensure that operating cash flows, available credit capacity, and working
capital remain sufficient to support ongoing financial obligations, planned
capital programs, and 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 the
Company's 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; field estimated production; the
Company's intended use of proceeds of the private placement; the focus of
Touchstone's remaining 2025 capital plan, including pursuing developmental
drilling activities and optimizing existing natural gas and liquids
infrastructure capacity; anticipated 2025 annual average production by
commodity; forecasted production decline rates; anticipated developmental
drilling and facility upgrade activities, including locations, the timing
thereof and related production and cash flows therefrom; anticipated 2025
capital expenditures including estimations of costs and inflation incorporated
therein; anticipated timing of drilling and completion and facility upgrading
activities, well tie-in operations and production coming online; forecasted
future commodity prices; forecasted royalty, operating, general and
administration, cash finance and income tax expenses; 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 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 2024
Annual Information Form dated March 19, 2025 which is available online 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.
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 November 2025 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 FOFI contained herein is not conclusive and is
subject to change. Variations in forecasted commodity 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.
Assumptions for November Guidance
Production estimates contained herein are expressed as anticipated average
production over the calendar 2025 year. All production volumes disclosed
herein are based on Company working interest before royalty burdens. In
determining anticipated 2025 production, Touchstone considered historical
drilling, completion, production results and decline rates for prior years and
the year-to-date 2025 period. The key assumptions underpinning the November
Guidance forecast for average daily production, funds flow from operations,
and net debt are outlined below.
Annual Production Guidance((1)) Units November Guidance Revised Guidance((2)) Variance
Amount %
Midpoint average daily production
Light and medium crude oil bbls/d 1,055 1,035 20 2
Heavy crude oil bbls/d 45 45 - -
Crude oil bbls/d 1,100 1,080 20 2
Condensate bbls/d 90 130 (40) (31)
Other NGLs 160 170 (10) (6)
Crude oil and liquids bbls/d 1,350 1,380 (30) (2)
Conventional natural gas Mcf/d 20,100 21,720 (1,620) (7)
Midpoint average daily production boe/d 4,700 5,000 (300) (6)
Annual Financial Guidance((1)) Units November Guidance Revised Guidance((2)) Variance
Amount %
Realized commodity price((3)) $/boe 27.00 26.20 0.80 3
Expenses
Royalties as a % of petroleum and natural gas sales((3)) % 23 23 - -
Operating expenses((3)) $/boe 8.20 7.60 0.60 8
General and administration expenses((3)) $/boe 6.10 5.70 0.40 7
Cash finance expenses((3)) $/boe 2.70 2.50 0.20 8
Current income tax expenses((3)) $/boe 1.00 0.90 0.10 11
Notes:
(1) Forward-looking statement representing Management estimates. See
"Advisories - Forward-looking Statements".
(2) As disclosed in the Company's October 24, 2025 announcement.
(3) Non-GAAP financial measure. See the "Advisories - Non-GAAP Financial
Measures" section herein for further information.
Variations in the amount of future equity raises, forecasted commodity 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 November production guidance and holding
all other assumptions constant, a 20 percent increase (decrease) in forecasted
average realized commodity prices would increase funds flow from operations by
approximately $1.12 million (decrease by approximately $0.70 million).
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 2025 net debt.
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 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
loss and comprehensive loss.
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.
Royalty expense as a percentage of petroleum and natural gas sales - is
comprised of royalty expense as determined in accordance with IFRS, divided by
petroleum and natural gas sales as determined in accordance with IFRS.
Operating expense per boe - is comprised of operating expense as determined in
accordance with IFRS, divided by the Company's total production volumes for
the period.
General and administration expense per boe - is comprised of general and
administration expense as determined in accordance with IFRS, divided by the
Company's total production volumes for the period.
Cash finance expense per boe - is comprised of cash finance expense divided by
the Company's total production volumes for the period. Cash finance expenses
are calculated as net finance expense as determined in accordance with IFRS,
less accretion on bank debt, accretion on decommissioning obligations, and
minor non-cash items, all of which are non-cash in nature. The Company
discloses net finance expense as cash or non-cash to demonstrate the true cost
of finance expense to assist Management with evaluating results on a
historical basis.
Current income tax expense per boe - is comprised of current income tax
expenses 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 and nine months ended September 30, 2025 accompanying
our September 30, 2025 unaudited interim condensed consolidated financial
statements, both of which are available online 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 might be misleading, particularly if
used in isolation. As well, given that the value ratio, based on the current
price of crude oil to natural gas, is significantly different from the 6:1
energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an
indication of value.
Product Type Disclosures
This announcement includes references to crude oil, NGLs, crude oil and
liquids, and natural gas total and average daily production volumes. In
accordance with National Instrument 51-101 - Standards of Disclosure for Oil
and Gas Activities ("NI 51-101"), disclosure of production volumes must
include segmentation by product type as defined in the instrument. In this
MD&A, references to "crude oil" include the combined product types light
crude oil 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 average field estimated production for October 2025 consists of
the following product types as defined in NI 51-101 using a conversion ratio
of 6 Mcf to 1 boe where applicable.
Period Light and Medium Crude Oil (bbls/d) Heavy Crude Oil Condensate (bbls/d) Other NGLs (bbls/d) Conventional Natural Gas (Mcf/d) Total Oil Equivalent (boe/d)
(bbls/d)
October 2025 971 42 117 272 19,732 4,691
For further information regarding specific product disclosures in accordance
with NI 51-101, please refer to the "Advisories - Product Type Disclosures"
section of the Company's most recent Management's discussion and analysis for
the three and nine months ended September 30, 2025 accompanying our September
30, 2025 unaudited interim condensed consolidated financial statements, both
of which are available online on the Company's profile on SEDAR+
(www.sedarplus.ca (http://www.sedarplus.ca/) ) and website
(www.touchstoneexploration.com (http://www.touchstoneexploration.com/) ).
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
API American Petroleum Institute
LNG liquefied natural gas
NGL(s) natural gas liquid(s)
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