REG - Touchstone Explrtn. - Announcement of private placement

Touchstone ExplorationAnnouncement

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RNS Number : 8565H  Touchstone Exploration Inc.  08 May 2025

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION. NO SECURITIES OF
THE COMPANY ARE BEING OFFERED TO ANY PERSON RESIDENT IN CANADA OR OTHERWISE
SUBJECT TO THE SECURITIES LAW OF ANY JURISDICTION OF CANADA.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (596/2014/EU) AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED ('MAR'). UPON
THE PUBLICATION OF THIS ANNOUNCEMENT, SUCH INFORMATION WILL NO LONGER
CONSTITUTE INSIDE INFORMATION.

 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT ITSELF
CONSTITUTE AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO BUY,
SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE COMPANY.

 

 

TOUCHSTONE EXPLORATION ANNOUNCES PRIVATE PLACEMENT AND AN ACQUISITION
FINANCING UPDATE

 

CALGARY, ALBERTA (May 8, 2025) - Touchstone Exploration Inc. ("Touchstone" or
the "Company") (TSX, LSE: TXP) announces that it has successfully raised
£15.375 million (approximately US$20.5 million) by way of a private placement
of 75,000,000 new common shares of no par value in the Company with certain
institutional and other investors in the United Kingdom (the "Private
Placement").

 

Touchstone is also pleased to announce that it has additionally signed a
binding term sheet with its Trinidad-based lender, Republic Bank Limited
("RBL"), to provide debt financing for the previously announced transaction to
acquire the entire share capital of Shell Trinidad Central Block Limited (the
"Acquisition").

 

Private Placement

 

The placement price of 20.5 pence (approximately C$0.38) per new common share
represents an 11.8 percent discount to 23.25 pence, which was the closing
price of the Company's common shares on the AIM market of the London Stock
Exchange ("AIM") on May 7, 2025. The new common shares will, when issued,
represent approximately 24.1 percent of the total issued share capital of the
Company as enlarged by the Private Placement.

 

The new common shares will, when issued, rank pari passu in all respects with
the Company's existing issued common shares. All new common shares being
issued by the Company pursuant to the Private Placement will be freely
transferable; however, any of these new common shares that are resold to
residents of Canada (or any person otherwise subject to the securities laws of
any jurisdiction of Canada) will be subject to applicable Canadian securities
laws, which may include restrictions on resale, whether through a Canadian
exchange or otherwise.

 

Applications have been made for the new common shares to be admitted to
trading on the Toronto Stock Exchange ("TSX") and AIM (the "Admission").
Subject to the receipt of required approvals from the TSX and AIM, it is
expected that settlement of the Private Placement and Admission will occur at
or before 8.00 a.m. (BST) on May 15, 2025. The Private Placement is
conditional, among other things, upon Admission becoming effective and the
placing agreement entered into between the Company and OAK Securities in
connection with the Private Placement not being terminated in accordance with
its terms. The Private Placement is not conditional on the Acquisition.

 

The Company currently has 236,460,661 common shares in issue. Following
Admission, the Company's issued share capital will consist of 311,460,661
common shares. The Company does not hold any common shares in treasury and,
therefore, following Admission, the total number of voting rights attributable
to the common shares in the capital of the Company will be 311,460,661. This
figure may be used by shareholders to determine if they are required to notify
their interest in, or a change to their interest in, the Company.

 

The Private Placement was arranged by Portillion Capital and OAK Securities.

 

Use of Proceeds of Private Placement

 

The Company intends to use the net proceeds from the Private Placement to
finance the following development activities and provide additional working
capital to:

·      finish drilling and completion of the Cascadura-4ST1 development
well;

·      drilling and completing the Cascadura-5 development well;

·      tie-in the Cascadura-4ST1 and Cascadura-5 wells; and

·      drill and complete two Central block development wells (subject
to completion of the Acquisition).

Rather than finance the 2025 capital budget as previously announced through an
expansion of its debt facilities, the Company intends to finance its 2025
capital budget by way of the Private Placement. The Cascadura-4ST1 and
Cascadura-5 development wells formed part of the Company's 2025 capital budget
announced on December 9, 2024. The planned drilling of the two Central block
development wells will replace two of the Cascadura development wells
previously included in the 2025 capital budget. As previously noted, revised
2025 guidance will be issued by the Company subsequent to completion of the
Acquisition.

 

Financing of the Acquisition

 

As previously announced, on December 13, 2024 the Company's wholly owned
Trinidadian subsidiary, Touchstone Exploration (Trinidad) Ltd. ("TETL") signed
a conditional share purchase agreement (the "SPA") to acquire 100 percent of
Shell Trinidad Central Block Limited ("STCBL") from BG Overseas Holdings
Limited. STCBL holds a 65 percent participating interest in the onshore
Central block exploration and production licence, as well as four producing
gas wells and a gas processing plant in Trinidad, with state-owned Heritage
Petroleum Company Limited holding the remaining 35 percent participating
interest. Under the terms of the SPA, on closing Touchstone will pay $23
million in cash plus December 31, 2024 cash and abandonment fund balances,
currently estimated to be approximately $30 million.

 

TETL has signed a binding term sheet with RBL providing for a new $30 million
six-year non-revolving term loan to partially fund the Acquisition. TETL and
RBL are currently preparing a Fourth Amended and Restated Loan Agreement and
related security registrations (the "Amended Bank Loan Agreement"). Subject to
the execution of the Amended Bank Loan Agreement, Touchstone intends to use
the net proceeds from the term loan together with existing cash resources to
fund the cash consideration payable under the terms of the Acquisition. The
Acquisition is expected to close during the second quarter of 2025.

 

The Acquisition

 

As first announced on December 13, 2024, the Acquisition will be
transformational for Touchstone. Gross field estimated production from the
Central block from March 1, 2025 through April 15, 2025 was approximately 17.5
MMcf/d of natural gas and 185 bbls/d of NGLs (approximately 3,075 boe/d),
equating to net production of approximately 2,000 boe/d for STCBL.

 

Touchstone has assessed the pro forma net working interest reserves in STCBL,
as of April 1, 2025 (based on a 65 percent working interest), to be
approximately 3.2 MMboe of proved developed producing reserves, 5.1 MMboe of
total proved reserves, and 5.6 MMboe of total proved plus probable reserves.
These estimates correspond to before tax NPV10 values of approximately $41.7
million, $85.7 million, and $95.5 million, and after tax NPV10 values of
approximately $19.4 million, $38.5 million, and $42.9 million, respectively.
The estimates are based on reasonable assumptions. Actual results may differ
materially from these projections, and all figures remain subject to change
and are contingent upon completion of the Acquisition.

 

STCBL holds one natural gas marketing contract accessing the Trinidad domestic
market, and two natural gas marketing contracts accessing the Atlantic LNG
facility in Trinidad. The pricing associated with the LNG contracts is a
combination of commodities including Brent oil, Henry Hub natural gas and
world LNG pricing. The pricing varies monthly depending on market conditions,
which differs from the Company's current natural gas contract, which is a
fixed price arrangement for volumes produced from the Ortoire block.

 

Following completion of the Acquisition, the Company's initial Central block
development plan will focus on the optimization of the four existing wells
prior to drilling the two development wells set out above. Combined with the
Cascadura development drilling noted above, the Company's 2025 budgeted
capital activity has the potential to increase production during the second
half of 2025 to between 8,000 and 9,000 boe/d, prior to natural declines. As
noted above, revised 2025 guidance will be issued by the Company subsequent to
completion of the Acquisition.

 

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
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, EVP Engineering and BD

James Shipka, EVP Asset Development and HSE

 

Shore Capital (Nominated Advisor and Joint Broker)

Daniel Bush / Toby Gibbs / Tom
Knibbs
Tel: +44 (0) 20 7408 4090

 

Canaccord Genuity (Joint Broker)

Adam James / Charlie
Hammond
Tel: +44 (0) 20 7523 8000

 

OAK Securities (Broker to the Private
Placement)                     Tel: +44 (0) 20 3973 3678

Jerry Keen / Calvin Man

 

FTI Consulting (Financial PR)

Nick Hennis / Ben Brewerton / Lucy Wigney
                               Tel: +44 (0) 20
3727 1000

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

 

Advisories

 

Currency

 

For reference purposes in this announcement, one British pound has been
translated into United States dollars ("$" or "US$") at a rate of 1.00 to
1.38, and one British pound has been translated into Canadian dollars ("C$")
at a rate of 1.00 to 1.84.

 

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 anticipated size, pricing and
closing date of the Private Placement, the satisfaction of all required
conditions and approvals (including approvals from the TSX and AIM) for
completion of the Private Placement, the Company's intended use of the net
proceeds of the Private Placement, including the potential undertaking,
timing, number, locations and costs of future exploration and development well
drilling and the resulting production therefrom; the sufficiency of resources
and available financing to fund future exploration and development well
drilling and completion operations; the anticipated purchase price, completion
of the Acquisition and the timing thereof and the Company's expected financing
for the Acquisition, the timing thereof and ultimate closing thereof; field
estimated production from the Acquisition assets; estimated natural gas and
NGL reserves relating to the Acquisition, the net present values of future net
revenues therefrom, and the forecasted future production, commodity prices,
inflation rates and future costs used by the independent reserves evaluator in
their evaluation. 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.

 

Information and statements relating to reserves are by their nature
forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described exist in the
quantities predicted or estimated, and can be profitably produced in the
future. The recovery and reserve estimates of reserves information provided
herein are estimates only, and there is no guarantee that the estimated
reserves will be recovered. All reserves information disclosed herein are
contingent on completion of the Acquisition. Consequently, actual results may
differ materially from those anticipated in the forward-looking statements
(see "Advisories: Reserves Disclosure").

 

For further information regarding the Acquisition and related advisories
thereto, refer to the Company's announcement dated December 13, 2024 entitled
"Touchstone Exploration Announces the Acquisition of Central Block" and its
announcement dated April 29, 2025 entitled "Touchstone Exploration Provides
Acquisition Update" which are both available online under our profile on
SEDAR+ (www.sedarplus.ca
(https://url.avanan.click/v2/___http:/www.sedarplus.ca___.YXAxZTpzaG9yZWNhcDphOm86MjgxOGM3ODIwMGE3Y2NhN2M0YzM0ZDgyNTlmMjU3NjQ6Njo5ZmI0OjI1M2QwNTIzMGJhYzY5M2RmY2NhOWQwM2QwYjczZTZlMjg3ZWZmNTMwNjYyMzFhMjYxNWE3MzI5NmU0Njc2NWQ6cDpUOk4)
) and on our website (www.touchstoneexploration.com
(https://url.avanan.click/v2/___http:/www.touchstoneexploration.com___.YXAxZTpzaG9yZWNhcDphOm86MjgxOGM3ODIwMGE3Y2NhN2M0YzM0ZDgyNTlmMjU3NjQ6NjplM2E0OjAxNGRkNTZkYzU1N2U4YWQ1MWVkY2Y1NmExYWNhYzJmNTI4ZTE4ZTQ0YmNkNDY2ZjYzMTNlYjdhYWE4ZGZjYjY6cDpUOk4)
).

 

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 under
the Company's profile on SEDAR+ (www.sedarplus.ca
(https://url.avanan.click/v2/___http:/www.sedarplus.ca/___.YXAxZTpzaG9yZWNhcDphOm86MjgxOGM3ODIwMGE3Y2NhN2M0YzM0ZDgyNTlmMjU3NjQ6NjpjYjE5OjNjN2RhYzMzYzhlYjkxMDkwMWQyMDg2YmI0YTgxYjdiMmM1MWEyYjJmY2EyMmE0MDkzYjhiNTcxMTZiNDY2NDU6cDpUOk4)
) and on the Company's website (www.touchstoneexploration.com
(https://url.avanan.click/v2/___http:/www.touchstoneexploration.com/___.YXAxZTpzaG9yZWNhcDphOm86MjgxOGM3ODIwMGE3Y2NhN2M0YzM0ZDgyNTlmMjU3NjQ6Njo5ZTQ4OmM3YTUxNmYyMTlhMWNmM2FlNjQyNDEzZDZhYjc0OWEyZWZhNzRhZDg2M2MzNWJkOGYyMDM1ZDQzZDU1ODc2YzM6cDpUOk4)
). 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.

Important Notice

 

No prospectus or admission document will be made available in connection with
the matters contained in this announcement.

 

In any EEA Member State that has implemented Directive 2003/71/EC (together
with any implementing measures in any Member State and as superseded by
Regulation (EU) 2017/1129 (as applicable) ("the Prospectus Directive") other
than the United Kingdom), this announcement is only addressed to and directed
at persons in such member states who are qualified investors within the
meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified
Investors"). In addition, in the United Kingdom, this announcement is
addressed and directed only at Qualified Investors who (i) are persons who
have professional experience in matters relating to investments falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order"), (ii) are persons who are high
net worth entities falling within Article 49(2)(a) to (d) of the Order, and
(iii) to persons to whom it may otherwise be lawful to communicate it to (all
such persons being referred to as "Relevant Persons"). Any investment or
investment activity to which this announcement relates is available only to
Relevant Persons in the United Kingdom and Qualified Investors in any member
state of the EEA other than the United Kingdom and will be engaged in only
with such persons. Other persons should not rely or act upon this announcement
or any of its contents.

 

This announcement must not be acted on or relied on by persons who are not
Relevant Persons. Persons distributing this announcement must satisfy
themselves that it is lawful to do so. Any investment or investment activity
to which this announcement relates is available only to Relevant Persons and
will be engaged in only with Relevant Persons. This announcement does not
itself constitute an offer for sale or subscription of any securities in the
Company.

 

Neither this announcement nor any copy of it may be taken or transmitted,
published or distributed, directly or indirectly, in whole or in part, in,
into or from the United States of America (including its territories and
possessions, any state of the United States of America (the "United States" or
the "US")), Australia, Japan or the Republic of South Africa or transmitted,
distributed to, or sent by, any national or resident or citizen of any such
countries or any other jurisdiction where to do so would constitute a
violation of the relevant securities laws of such jurisdiction (each a
"Restricted Jurisdiction"). Any failure to comply with this restriction may
constitute a violation of United States, Australian, Japanese or South African
securities laws.

 

This announcement does not constitute, or form part of, any offer or
invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for any shares or other securities in any Restricted Jurisdiction or
in Canada. The Private Placement and the distribution of this announcement and
other information in connection with the Private Placement and Admission in
certain jurisdictions may be restricted by law and persons into whose
possession this announcement and any document or other information referred to
herein comes should inform themselves about and observe any such restrictions.
Any failure to comply with these restrictions may constitute a violation of
the securities laws of any such jurisdiction.

 

The new common shares referred to in this announcement are not being offered
or sold in Canada, and no securities commission or similar authority in any
jurisdiction of Canada, has reviewed has in any way reviewed or passed upon
the merits of the new common shares or reviewed this announcement, and any
representation to the contrary is an offence. The Company is relying on an
exemption from the requirements under the Securities Act (Alberta) to provide
prospective purchasers of the new common shares with a prospectus and, as a
consequence of purchasing the new common shares pursuant to such exemption,
certain protections, rights and remedies provided by the Securities Act
(Alberta), including statutory rights of rescission or damages will not be
available to it.

 

The new common shares referred to in this announcement have not been and will
not be registered under the United States Securities Act of 1933, as amended
(the "US Securities Act") or under the securities laws of any state or other
jurisdiction of the United States, and may not be offered, sold or transferred
within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US Securities
Act. The new common shares have not been and will not be approved or
disapproved by the US Securities and Exchange Commission, any state securities
commission or other regulatory authority in the United States, nor have any of
the foregoing authorities passed upon or endorsed the merits of the Private
Placement or the accuracy or adequacy of this announcement. Any representation
to the contrary is a criminal offence in the United States.

 

The information contained in this announcement is for background purposes only
and does not purport to be full or complete.

 

No reliance may or should be placed for any purposes whatsoever on the
information contained in this announcement or its accuracy, completeness or
fairness. The information in this announcement is subject to change. However,
the Company does not undertake to provide the recipient of this announcement
with any additional information, or to update this announcement or to correct
any inaccuracies, and the distribution of this announcement shall not be
deemed to be any form of commitment on the part of the Company to proceed with
the Private Placement or any transaction or arrangement referred to in this
announcement.

 

This announcement has not been approved by any competent regulatory authority.
OAK Securities (a trading name of Merlin Partners LLP, which is authorised and
regulated by the Financial Conduct Authority) is acting exclusively for the
Company and no one else in connection with the proposed Private Placement and
Admission and will not be acting for any other person or otherwise responsible
to any person other than the Company for providing the protections afforded to
clients of OAK Securities or for advising any other person in respect of the
Private Placement and Admission.

 

Shore Capital & Corporate Limited and Shore Capital Stockbrokers Limited
(either individually or collectively "Shore Capital") which are authorised and
regulated by the Financial Conduct Authority in the United Kingdom, are acting
exclusively as nominated adviser and joint broker to Touchstone and for no-one
else in connection with the subject matter of this announcement and will not
be responsible to anyone other than Touchstone for providing the protections
afforded to clients of Shore Capital, or for providing advice in relation to
any matter referred to herein. Neither Shore Capital & Corporate Limited
nor Shore Capital Stockbrokers Limited, nor any of their subsidiaries or
affiliates owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under statute or
otherwise) to any person who is not a client of Shore Capital in connection
with this announcement, any statement contained herein or otherwise.

 

Reserves Disclosure

 

The disclosure in this announcement summarizes certain information contained
in an independent engineering report of the STCBL assets dated March 31, 2025
(the "Report"). The report was prepared in accordance with definitions,
standards and procedures contained in the Canadian Oil and Gas Evaluation
Handbook and National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"). All March 31, 2025 reserves presented are based
on the average price forecasts of the three leading Canadian oil and gas
evaluation consultants (GLJ, McDaniel & Associates Consultants Ltd. and
Sproule Associates Ltd.) dated January 1, 2025 and estimated costs effective
March 31, 2025. All reserves values and future net revenue values contained in
this announcement are derived from the Report unless otherwise noted. Unless
otherwise noted, reserve references in this announcement are STCBL "gross
reserves". STCBL gross reserves are the entity's total working interest
reserves before the deduction of any royalties payable.

 

The recovery and reserve estimates of STCBL's natural gas and NGL reserves
provided herein are estimates only, and there is no guarantee that the
estimated reserves will be recovered. Actual reserves may eventually prove to
be greater than or less than the estimates provided herein. There are numerous
uncertainties inherent in estimating quantities of petroleum and natural gas
reserves and the future cash flows attributed to such reserves. The reserve
and associated cash flow information set forth herein are estimates only. This
announcement summarizes the natural gas and NGL reserves of STCBL and the net
present values of future net revenue for such reserves using forecast costs as
at March 31, 2025 prior to provision for interest and finance costs, general
and administration expenses, and the impact of any financial derivatives. It
should not be assumed that the estimates of future net revenues presented
herein represent the fair market value of the reserves. There is no assurance
that the forecast prices and costs assumptions will be attained, and variances
could be material.

 

This announcement includes certain reserves information that combines
information of both Touchstone and STCBL for the purpose of presenting such
information after giving effect to the planned Acquisition of STCBL. This
combined information has been prepared by the Company for illustrative
purposes only. Any combined reserves information in this announcement is not
necessarily indicative of the financial position or results of operations that
actually would have occurred had Touchstone acquired STCBL at or as of the
dates indicated, nor is it indicative of the Company's future operating
results or financial position following the completion of the Acquisition.
This combined reserves information reflects assumptions and adjustments that
are based upon preliminary estimates assuming the successful completion of the
Acquisition. These estimates may be revised as additional information becomes
available and as additional analyses are performed, and may prove to be
incorrect. Accordingly, the final accounting adjustments related to the
Acquisition may differ materially from the combined reserves information
reflected herein.

 

"Proved Developed Producing" reserves are those reserves that are expected to
be recovered from completion intervals open at the time of the
estimate. These reserves may be currently producing, or if shut-in, they must
have previously been on production, and the date of resumption of production
must be known with reasonable certainty.

 

"Proved" reserves are those reserves that can be estimated with a high degree
of certainty to be recoverable. It is likely that the actual remaining
quantities recovered will exceed the estimated proved reserves.

 

"Probable" reserves are those additional reserves that are less certain to be
recovered than proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.

 

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

 

Competent Persons Statement

 

In accordance with the AIM Rules for Companies, the technical information
contained in this announcement has been reviewed and approved by James Shipka,
Executive Vice President Asset Development and HSE of Touchstone Exploration
Inc. Mr. Shipka is a qualified person as defined in the London Stock
Exchange's Guidance Note for Mining and Oil and Gas Companies and is a Fellow
of the Geological Society of London (BGS) as well as a member of the Canadian
Society of Petroleum Geologists and the Geological Society of Trinidad and
Tobago. Mr. Shipka has a Bachelor of Science in Geology from the University of
Calgary and has over 30 years of oil and gas exploration and development
experience.

 

Abbreviations

 

The following abbreviations referenced in this announcement have the meanings
set forth below:

 

bbl(s)                barrel(s)

bbls/d               barrels per day

boe                  barrels of oil equivalent

boe/d               barrels of oil equivalent per day

MMboe             million barrels of oil equivalent

Mcf                  thousand cubic feet

MMcf                million cubic feet

MMcf/d             million cubic feet per day

LNG                  liquefied natural gas

NGL(s)              Natural gas liquid(s)

NPV10              the net present value of future net revenues
discounted at ten percent

 

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rns@lseg.com (mailto:rns@lseg.com)
 or visit
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