REG - Touchstone Explrtn. - 3rd Quarter Results
13/11/2024 07:15
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RNS Number : 9826L Touchstone Exploration Inc. 13 November 2024
THIRD QUARTER 2024 RESULTS AND UPDATED GUIDANCE
CALGARY, ALBERTA (November 13, 2024) - Touchstone Exploration Inc.
("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) reports financial
and operating results for the three and nine months ended September 30, 2024
and updated 2024 guidance.
Selected financial information is outlined below and should be read in
conjunction with our September 30, 2024 unaudited interim condensed
consolidated financial statements and related Management's discussion and
analysis, both of which are 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.
Third Quarter 2024 Financial and Operating Highlights
· Achieved average quarterly production of 5,211 boe/d (75 percent
natural gas), a 54 percent increase relative to 3,391 boe/d produced in the
third quarter of 2023 (60 percent natural gas), reflecting a full quarter of
natural gas production from the Cascadura field, slightly offset by Cascadura
natural gas and associated liquids natural declines.
· Realized petroleum and natural gas sales of $13,253,000 compared to
$11,682,000 in the equivalent quarter of 2023, primarily attributed to a 93
percent increase in natural gas production volumes, slightly offset by a
reduction in average realized crude oil and liquids pricing.
- Crude oil production contributed $7,603,000 of petroleum sales at an
average realized price of $66.72 per barrel.
- Cascadura field production volumes in the quarter contributed
$4,908,000 of natural gas sales at an average realized price of $2.50 per Mcf
and $306,000 of petroleum sales at an average realized price of $67.15 per
barrel.
- Natural gas production from the Coho-1 well contributed $436,000 of
natural gas sales in the quarter at an average realized price of $2.16 per
Mcf.
· Generated an operating netback of $7,408,000, a 23 percent increase
from the third quarter of 2023, primarily due to increased petroleum and
natural gas sales and related royalties, as well as a 2 percent reduction in
operating expenses.
· Achieved quarterly funds flow from operations of $3,024,000 in the
third quarter of 2024 compared to $2,432,000 in the prior year equivalent
period, attributed to the increase in operating netback partially offset by
$722,000 of transaction costs incurred in the quarter.
· Recognized net earnings of $1,847,000 ($0.01 per basic and diluted
share) compared to net earnings of $988,000 ($0.00 per basic and diluted
share) in the comparative quarter of 2023.
· $3,068,000 in quarterly capital investments primarily focused on the
completion of two Cascadura development wells, advancing the construction of
the flowline from the Cascadura C site to the Cascadura natural gas processing
facility and construction of the Cascadura B drilling pad.
· Exited the third quarter of 2024 with a cash balance of
$6,549,000 and a net debt position of $29,593,000, resulting in a net debt to
annual funds flow from operations ratio of 1.25 times, well within the
Company's internal target of 2.0 times or below.
· Touchstone continued to accumulate Trinidad onshore acreage,
executing two exploration and production licences in the third quarter for the
Charuma and Cipero blocks.
Post Period-end Operating Highlights
· Primarily based from ongoing declines from our Cascadura-1ST1 and
Cascadura-2ST1 wells, as well as the Cascadura facility being shut-in four
days to accommodate the tie-in of the Cascadura C flow line and expansion
project, we sold average net volumes of 3,993 boe/d in October 2024, comprised
of:
- average natural gas sales volumes of 16.4 MMcf/d (2,726 boe/d); and
- average crude oil and natural gas liquid sales volumes of 1,267
bbls/d.
· On November 2, 2024, we safely commissioned the flowline connecting the
Cascadura-2ST1 and Cascadura-3ST1 wells to our natural gas processing plant
and commenced production testing operations.
· We entered into a minimum six-year exploration and production licence
for an 80 percent operating working interest in the Rio Claro block effective
November 5, 2024, which is strategically located adjacent to our Ortoire block
and surrounds our Balata East field.
· On November 9, 2024, production testing of the Cascadura-2ST1 well
was completed, with the well placed on continuous production at a choke
restricted gross natural gas flow rate of approximately 20 MMcf/d and 400
bbls/d of NGLs.
· Cascadura-3ST1 production testing operations were completed on
November 12, 2024, and the Company intends to place the well on permanent
production at a choke restricted initial gross rate of approximately 600 to
700 bbls/d of oil.
Financial and Operating Results Summary
Three months ended September 30, % change Nine months ended September 30, % change
2024 2023 2024 2023
Operational
Average daily production
Crude oil((1)) (bbls/d) 1,239 1,183 5 1,188 1,197 (1)
NGLs((1)) (bbls/d) 50 176 (72) 137 59 100
Crude oil and liquids((1)) (bbls/d) 1,289 1,359 (5) 1,325 1,256 5
Natural gas((1)) (Mcf/d) 23,531 12,191 93 27,349 7,203 100
Average daily production (boe/d)((2)) 5,211 3,391 54 5,883 2,457 100
Average realized prices((3))
Crude oil((1)) ($/bbl) 66.72 71.89 (7) 70.01 66.38 5
NGLs((1)) ($/bbl) 67.15 78.12 (14) 70.34 78.12 (10)
Crude oil and liquids((1)) ($/bbl) 66.74 72.69 (8) 70.04 66.94 5
Natural gas((1)) ($/Mcf) 2.47 2.31 7 2.47 2.23 11
Realized commodity price ($/boe)((2)) 27.65 37.44 (26) 27.25 40.76 (33)
Production mix (% of production)
Crude oil and liquids((1)) 25 40 23 51
Natural gas((1)) 75 60 77 49
Operating netback ($/boe)((2))
Realized commodity price((3)) 27.65 37.44 (26) 27.25 40.76 (33)
Royalties((3)) (7.11) (10.23) (30) (6.62) (11.70) (43)
Operating expenses((3)) (5.08) (7.94) (36) (4.50) (10.44) (57)
Operating netback((3)) 15.46 19.27 (20) 16.13 18.62 (13)
Notes:
(1) Refer "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) Non-GAAP financial measure. Refer to "Advisories - Non-GAAP Financial
Measures" for further information.
Three months ended September 30, % change Nine months ended September 30, % change
2024 2023 2024 2023
Financial
($000's except per share amounts)
Petroleum and natural gas sales 13,253 11,682 13 43,927 27,339 61
Cash from operating activities 3,607 343 100 12,359 4,231 100
Funds flow from operations 3,024 2,432 24 13,134 3,241 100
Net earnings 1,847 988 87 8,814 638 100
Per share - basic and diluted 0.01 0.00 n/a 0.04 0.00 n/a
Exploration capital expenditures 452 3,498 (87) 620 17,043 (96)
Development capital expenditures 2,616 111 100 19,953 720 100
Capital expenditures((1)) 3,068 3,609 (15) 20,573 17,763 16
Working capital deficit((1)) 3,865 13,419 (71)
Principal long-term bank debt 25,728 16,500 56
Net debt((1)) - end of period 29,593 29,919 (1)
Share Information (000's)
Weighted avg. shares outstanding:
Basic 236,382 233,541 1 235,189 233,243 1
Diluted 236,749 237,138 - 236,578 236,947 -
Outstanding shares - end of period 236,461 234,213 1
Note:
(1) Non-GAAP financial measure. Refer to "Advisories - Non-GAAP Financial
Measures" for further information.
Outlook and Guidance
We remain committed to financial discipline and maximizing value from our
portfolio of development and exploration assets. Our primary near-term
strategy is to increase cash flow through the development of the Cascadura
field. Our revised 2024 guidance is summarized in the table below.
Summary((1)) 2024 Guidance 2024 Updated Guidance 2024 Updated Guidance
(December 19, 2023) (August 13, 2024) (November 12, 2024)
Capital expenditures((2)) ($000's) 33,000 35,000 28,000
Average daily production (boe/d) 9,100 to 9,700 7,700 to 8,300 5,600 to 6,200
% natural gas 82% 82% 76%
% crude oil and liquids 18% 18% 24%
Average Brent crude oil price ($/bbl) 75.00 82.00 80.00
% realized discount to Brent price 18% 16% 16%
Funds flow from operations((3)) ($000's) 32,000 28,000 17,000
Net debt - end of year((2)(3)) ($000's) 25,000 28,000 32,000
Notes:
(1) Forward-looking statement representing Management estimates. Refer to
"Advisories - Forward-looking Statements" for further information.
(2) Non-GAAP financial measure. Refer to "Advisories - Non-GAAP Financial
Measures" for further information.
(3) The financial performance measures provided in the Company's 2024
guidance are based on the midpoint of the average production forecast, being
5,900 boe/d (formerly 9,400 boe/d and 8,000 boe/d).
In the third quarter of 2024, we faced delays in completing the final
commissioning of the flowline connecting our Cascadura C well pad to the
Cascadura natural gas processing facility. Additionally, bridge construction
required for relocating the drilling rig to the Cascadura B well site was
delayed.
Our capital guidance from August 13, 2024 originally planned for drilling two
Cascadura development wells from the Cascadura B well pad in the fourth
quarter of 2024. However, inclement weather delayed bridge construction, and
we now anticipate drilling one Cascadura development well in December 2024,
with the second well and related completion activities rescheduled for the
first quarter of 2025. Consequently, our 2024 capital expenditures are
expected to decrease from approximately $35 million to $28 million. Production
from these two additional Cascadura B development wells is projected to
commence in 2025, pending successful drilling, completion, and tie-in
operations.
Our previous guidance projected initial production from the two Cascadura C
wells by the end of September 2024. Production testing for our Cascadura-2ST1
and Cascadura-3ST1 development wells commenced on November 2, 2024. On
November 9, 2024, the Cascadura-2ST1 well was placed on continuous production
at an initial, choke-restricted gross natural gas flow rate of approximately
20 MMcf/d, accompanied by associated NGLs. Testing on the Cascadura-3ST1 well
has verified it as a producer of medium gravity crude oil with natural gas.
Touchstone plans to initiate continuous production from the Cascadura-3ST1
well at a choke-restricted initial gross production rate between 600 to 700
barrels of oil per day.
The delay in first production, along with updates to the type curves and
commodity types for Cascadura-2ST1 and Cascadura-3ST1 based on initial test
data, has led us to further update the midpoint of our 2024 annual production
guidance from 8,000 boe/d to 5,900 boe/d. Earlier production expectations were
based on the Cascadura-1ST1 natural gas type curve, which has since been
adjusted with our production testing data and anticipated online volumes.
With a revised average mid-point production forecast and updated estimates for
the 2024 average Brent crude oil price, we now expect to generate
approximately $17 million in funds flow from operations, down from our
previous forecast of $28 million. In line with the adjustments to our 2024
capital program, we have also revised our year-end 2024 net debt guidance to
$32 million, reflecting a 14 percent increase from our previous guidance.
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) 750-4405
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.
Working Interest
Touchstone has an 80 percent operating working interest in the Cascadura
field, which is located on the Ortoire block onshore in the Republic of
Trinidad and Tobago. Heritage Petroleum Company Limited holds the remaining 20
percent working interest. All Cascadura production testing figures disclosed
herein are gross volumes.
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, outlook and development plans; the focus of
Touchstone's remaining 2024 capital plan, including anticipated remaining
developmental drilling activities, locations, the timing thereof and related
production and cash flows therefrom; anticipated 2024 annual average
production and production by commodity; forecasted Cascadura-3ST1 online
rates, forecasted production decline rates; 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 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 and
comprehensive income.
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 and
comprehensive income 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 nine months ended September 30, 2024 accompanying
our September 30, 2024 unaudited interim condensed consolidated financial
statements, both of which are 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 5,900 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 new Cascadura wells that commenced production testing
operations on November 2, 2024.
Touchstone expects that approximately 21 percent of its midpoint average
production guidance will be comprised of crude oil, 3 percent NGLs, and 76
percent conventional natural gas. See the "Advisories - Product Type
Disclosures" section herein for further information.
Annual Financial Guidance((1)(2)) Units 2024 Guidance 2024 Updated Guidance 2024 Updated Guidance
(December 19, 2023) (August 13, 2024) (November 12, 2024)
Realized commodity price((3)) $/boe 23.10 24.50 27.40
Expenses
Royalties as a % of petroleum and natural gas sales((3)) % 19.5 21.5 23.9
Operating expenses((3)) $/boe 3.50 3.80 4.70
General and administration expenses((3)) $/boe 3.10 3.40 4.80
Cash finance expenses((3)) $/boe 1.00 1.00 1.30
Current income tax expenses((3)) $/boe 1.80 1.20 0.90
Transaction costs $000's - 1,500 2,000
Notes:
(1) Forward-looking statement representing Management estimates. Refer to
"Advisories - Forward-looking Statements" for further information.
(2) The financial performance measures provided in the Company's 2024
guidance are based on the midpoint of the average production forecast, being
5,900 boe/d (formerly 9,400 boe/d and 8,000 boe/d).
(3) Non-GAAP financial measure. Refer to "Advisories - Non-GAAP Financial
Measures" 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 fourth quarter of 2024 would increase
funds flow from operations by approximately $330,000 (decrease by $330,000).
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.
The Company's average production for October 2024 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) Heavy Crude Oil Natural Gas Liquids (bbls/d) Conventional Natural Gas (Mcf/d) Total Oil Equivalent (boe/d)
(bbls/d)
October 2024 1,198 44 25 16,353 3,993
For further 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 nine months ended September 30, 2024 accompanying our September
30, 2024 unaudited interim condensed consolidated financial statements, both
of which are 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)
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