REG - Touchstone Explrtn. - ACQUISITION OF CENTRAL BLOCK

Touchstone ExplorationAnnouncement

13/12/2024 07:00

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RNS Number : 0202Q  Touchstone Exploration Inc.  13 December 2024

 

ACQUISITION OF CENTRAL BLOCK

 

CALGARY, ALBERTA (December 13, 2024) - Touchstone Exploration Inc.
("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) is pleased to
announce that its wholly owned subsidiary, Touchstone Exploration (Trinidad)
Ltd. ("TETL"), has entered into an agreement with BG Overseas Holdings Limited
to acquire all the share capital of Shell Trinidad Central Block Limited
("STCBL") (the "Acquisition").

 

Under the terms of the Acquisition, TETL will pay BG Overseas Holdings Limited
$23 million consideration in cash prior to closing adjustments. Completion of
the Acquisition is subject to customary regulatory and partner approvals,
including the approval of the Ministry of Energy and Energy Industries.
Touchstone  is in active discussions with its Trinidad-based lender, Republic
Bank Limited, to fund the Acquisition upon closing. The Acquisition will have
an effective date of January 1, 2025, has a four-month long stop date,  and
is expected to close during the second quarter of 2025.

 

STCBL holds a 65 percent operating working interest in the Central block
exploration and production licence and gas processing plant in the Republic of
Trinidad and Tobago with Heritage Petroleum Company Limited ("HPCL") holding a
35 percent working interest. Current gross production from the Central block
is approximately 18.0 MMcf/d of natural gas and 200 bbls/d of natural gas
liquids (approximately 3,200 boe/d).

 

Acquisition Highlights

·      Access to Atlantic LNG: STCBL is a party to natural gas sales
contracts for the Central block asset, providing access to both local and LNG
world gas market pricing.

·      Opportunity for Development: Touchstone has identified numerous
infill well locations as well as a deeper Cretaceous prospect at Central
block.

·      Strategic Infrastructure: The midstream assets of STCBL include
an 80 MMcf/d gas processing plant (the "Evergreen Facility"), field natural
gas and liquids flowlines, and a gas export pipeline to both the domestic
market and the Atlantic LNG facility.

·      Increased Production: The Acquisition increases Touchstone's base
net production by approximately 2,080 boe/d (94 percent natural gas) at
current field estimated rates and provides incremental corporate cash flows.

Paul Baay, President and Chief Executive Officer, commented:

 

"We are pleased to enter into an agreement to purchase the Central block
asset. The asset is a strategic fit with Touchstone's current land base and
provides us access to world LNG prices for natural gas. The infrastructure
associated with the assets provides processing and takeaway capacity for
natural gas in the Herrera fairway. During 2025 we will consider pursuing an
infill development drilling program at Central block and look to boost
production and LNG sales."

 

The Acquisition

 

The Central block assets include four wells in the Carapal Ridge, Baraka, and
Baraka East liquids rich natural gas pools. In addition to existing low
decline field production, the Central block asset base has facility
optimization potential, infill drilling opportunities and exploration
prospects.

 

STCBL holds three gas marketing contracts: one accessing the Trinidad domestic
market, and two contracts accessing the Atlantic LNG facility in Trinidad. The
Central block is situated in the Herrera fairway and is contiguous with
Touchstone's Ortoire block, providing strategic potential for natural gas
egress and marketing options from future discoveries. Our Coho natural gas
production is currently processed at Central block, and the Acquisition
provides synergy potential for the field.

The Acquisition is subject to the fulfillment of certain conditions precedent
and customary regulatory approvals, including the Company's ability to receive
funding to complete the Acquisition. Hence, no assurances can be given that
the Acquisition will ultimately be completed. Due to confidentiality terms in
the agreement, Touchstone is not able to provide further information to the
market on this Acquisition until the transaction is effectively closed, or
terminated, as the case may be.

 

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
(https://url.avanan.click/v2/___http:/www.touchstoneexploration.com/___.YXAxZTpzaG9yZWNhcDphOm86NzY3MDI3ZGJhNjJkMTBmN2M5YjgzOTJiZGY5NzNkZDg6NjphOTg1OjlmZDcwMWJhZDA2YzEwMDg1MjJhMGQzMzZjNWZjZTVlMzYyMDBhZTlkZDUzNDBlNjQ5OTc0OWEzOWVjOTNmYTI6cDpUOk4)
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

 

Advisories

 

Inside information

 

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.

 

AIM Rule 12 Disclosure

 

For the financial year ended December 31, 2023 and for the 11 months ended
November 30, 2024, STCBL generated unaudited profits before taxation of $15.2
million and $1.1 million, respectively. STCBL's unaudited net assets at
November 30, 2024 were $30.9 million before any pre-Acquisition closing
restructuring.

 

Currency

 

Unless otherwise stated, all financial amounts presented herein are stated in
United States dollars.

 

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" and similar
expressions, or are events or conditions that "will", "would", "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 anticipated purchase price, timing
and ultimate completion of the Acquisition; the Company's expected financing
for the Acquisition; the highlights of the Acquisition and its expected
benefits and synergies; current field estimated net production rates from the
Central block; expectations with regards to the potential for STCBL's
portfolio to create facility optimization potential, infill drilling
opportunities and exploration prospects; and the anticipated increase of
capital expenditures, cash flows and production resulting from the
Acquisition. 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.

 

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. We
use 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 natural gas liquids, natural gas, and
average daily field estimated 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 "natural gas
liquids" refer to condensate; and references to "natural gas" refer to the
"conventional natural gas" product type, all as defined in the instrument.

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:

 

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

MMcf                million cubic feet

MMcf/d             million cubic feet per day

LNG                  liquefied natural gas

 

 

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