REG - Touchstone Explrtn. - CASCADURA-2 DRILLING RESULTS & OPERATIONAL UPDATE

Touchstone ExplorationAnnouncement

08/02/2024 07:15

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RNS Number : 4114C  Touchstone Exploration Inc.  08 February 2024

 

TOUCHSTONE ANNOUNCES CASCADURA-2 DRILLING RESULTS AND AN OPERATIONAL UPDATE

 

CALGARY, ALBERTA (February 8, 2024) - Touchstone Exploration Inc.
("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) is pleased to
announce an operational update, highlighted by the drilling results of the
Cascadura-2 delineation well.

 

Highlights

·     The Cascadura-2 delineation well was drilled to a total depth of
7,132 feet.

·     Drilling of the well was suspended prior to the planned total
depth of 8,300 feet to preserve the substantial pay section observed in the
well after high pressure gas zones were encountered.

·     Cascadura-2 openhole logs and drilling data indicated a total sand
thickness of approximately 525 feet in the targeted Herrera formation.

·     The Cascadura-2 well is currently being cased and production
testing is scheduled to commence in the third quarter of 2024 directly into
the Cascadura natural gas facility.

·     Spudding of the Cascadura-3 development well is scheduled to
commence within the next two weeks.

·     Flow line procurement has commenced to tie-in future production
from the Cascadura C surface location to the Cascadura natural gas processing
facility.

·     Completed the first stage of additional perforations at Cascadura
Deep-1 where we are currently monitoring initial increased pressure and
production rates.

·     Drilling at our CO-1 block is scheduled to commence prior to the
end of February, with two wells to be drilled from a single surface location.

·     Achieved average net sales volumes of 8,504 barrels of oil
equivalent per day ("boe/d") in the fourth quarter of 2023 and annual 2023 net
sales volumes of 3,981 boe/d.

Paul Baay, President and Chief Executive Officer, commented:

 

"The encouraging Cascadura-2 delineation well drilling results represent a
great start to 2024. Cascadura-2 has proved up the concept of highly
productive sands extending significantly to the east of our initial Cascadura
discovery. We estimate that the well was drilled for under $6 million on a
gross basis, which further enhances the economics of this prolific hydrocarbon
fairway. With this new data point we can design a multi year drilling program
to fully develop the structure. This well has not defined the eastern most
edge of the structure, which warrants further delineation through future
drilling."

 

Cascadura-2 Drilling Results

 

The Cascadura-2 delineation well was spud on January 6, 2024 from our
Cascadura C surface location and reached a total depth of 7,132 feet on
February 4, 2024. While we planned to drill the well to a total depth of 8,300
feet, the gas sands encountered proved difficult to manage, and we ceased
drilling to preserve the substantial pay section observed in the well.

 

Drilling samples and openhole wiring logs indicated over 525 feet of sands in
the targeted Herrera formation with hydrocarbon shows observed in samples and
at surface throughout the primary intervals. The top of the key Herrera
formation was detected at a measured depth of 6,186 feet, with sand and shows
observed throughout the section to the total depth of the well. Based on these
encouraging results, we are currently installing casing for future production.

 

We expect to test the well directly into the Cascadura natural gas facility in
the third quarter of 2024.

Cascadura-3 Development Well

 

The Star Valley #205 drilling rig will be walked to the Cascadura-3
development well location on our Cascadura C site when casing installation at
Cascadura-2 is complete. We expect to spud the well within the next two weeks,
which will target the same Herrera formation as the existing Cascadura
producing wells.

 

Cascadura Infrastructure

 

The Company has commenced clearing the road from the Cascadura C surface
location to the Cascadura natural gas facility. A flowline network will be
installed to tie-in development wells drilled at the Cascadura C surface
location, which is located approximately 1.6 kilometres northeast of the
Cascadura facility. We are also planning to install an additional gas
separator at the Cascadura facility to increase gross natural gas production
capacity from approximately 90 million cubic feet per day ("MMcf/d") to 140
MMcf/d. The flowline and infrastructure upgrades are anticipated to be
completed in the third quarter of 2024.

 

Cascadura Optimization

 

Touchstone continues to optimize Cascadura Deep-1 and Cascadura-1ST1 well
production. The first stage of additional perforations was completed in the
Cascadura Deep-1 well on January 27, 2024. We continue to monitor production
as the well stabilizes, and we are currently evaluating deeper sands for
additional perforations to further optimize production from the well
throughout 2024. Currently, Cascadura-1ST1 production is restricted based on
surface choke size. Prior to the end of the month, we intend to replace the
current surface choke with a larger unit, which will enable increased natural
gas production.

 

CO-1

 

As previously announced, Touchstone intends to drill two wells from one
surface location on the CO-1 block. Drilling operations remain on schedule,
with the spudding of the first well expected before the end of February 2024.

 

2023 Sales Volumes

 

In the fourth quarter of 2023, we achieved average net sales volumes of 8,504
boe/d as follows:

·     Cascadura field contributed average net sales volumes of 6,854
boe/d (8,566 boe/d gross) consisting of:

-     net natural gas sales volumes of 37.4 MMcf/d or 6,232 boe/d (46.7
MMcf/d or 7,789 boe/d gross); and

-     net natural gas liquids volumes of 622 barrels per day (777 barrels
per day gross);

·     net average natural gas sales volumes from Coho were 3.1 MMcf/d or
517 boe/d (3.9 MMcf/d or 646 boe/d gross); and

·     average net and gross daily crude oil sales volumes were 1,133
barrels per day.

On a 2023 annual basis, Touchstone averaged net sales volumes of 3,981 boe/d,
consisting of 35 percent crude oil and liquids and 65 percent natural gas
volumes.

 

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 or contact:

 

 Touchstone Exploration Inc.                         Tel: +1 (403) 750-4487

 Paul Baay, President and Chief Executive Officer

 James Shipka, Chief Operating Officer

 Shore Capital (Nominated Advisor and Joint Broker)  Tel: +44 (0) 207 408 4090

 Daniel Bush / Toby Gibbs / Iain Sexton

 Canaccord Genuity (Joint Broker)                    Tel: +44 (0) 207 523 8000

  Adam James / Ana Ercegovic

 FTI Consulting (Financial PR)                       Tel: +44 (0) 203 727 1000

 Nick Hennis / Ben Brewerton                         Email: touchstone@fticonsulting.com (mailto:touchstone@fticonsulting.com)

 

Advisories

 

Working Interest and Currency

 

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 ("Heritage") holds the
remaining 20 percent working interest. Touchstone has a 100 precent working
interest in the CO-1 block via a sublicense agreement with Heritage.

 

Unless otherwise stated, all financial amounts presented herein are stated in
United States dollars, and all production volumes disclosed herein are sales
volumes based on Company working interest before royalty burdens.

 

Forward-Looking Statements

 

The information provided in this announcement contains certain forward-looking
statements and information (collectively, "forward-looking statements") within
the meaning of applicable securities laws. Such forward-looking statements
include, without limitation, forecasts, estimates, expectations and objectives
for future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical facts and
are generally, but not always, identified by the words "expect", "plan",
"anticipate", "believe", "intend", "maintain", "continue to", "pursue",
"design", "result in", "sustain" "estimate", "potential", "growth",
"near-term", "long-term", "forecast", "contingent" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or "should"
occur or be achieved. The forward-looking statements contained in this
announcement speak only as of the date hereof and are expressly qualified by
this cautionary statement.

 

Specifically, this announcement includes, but is not limited to,
forward-looking statements relating to: the Company's business plans,
strategies, priorities and development plans; the quality and quantity of
prospective hydrocarbon accumulations based on openhole wireline logs,
including the Company's interpretations thereof; expected drilling activities,
including locations and the timing thereof, anticipated timing of well tie-in
operations and facility upgrades; anticipated timing of future well production
testing; the Company's expectation of increased future production from well
optimization activities; and Touchstone's current and future financial
position, including the sufficiency of resources to fund future capital
expenditures and maintain financial liquidity. The Company's actual decisions,
activities, results, performance, or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements and
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur or, if any of them do,
what benefits that Touchstone will derive from them.

 

Although the Company believes that the expectations and assumptions on which
the forward-looking statements are based are reasonable, undue reliance should
not be placed on the forward-looking statements because the Company can give
no assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very nature they
involve inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. Certain of these risks are set out in more detail in the Company's 2022
Annual Information Form dated March 23, 2023 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.

 

Product Type Disclosures

 

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
"natural gas liquids" refer to condensate; and references to "natural gas"
refer to the "conventional natural gas" product type, as such terms are
defined in National Instrument 51-101 Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"). References to "crude oil and liquids" herein include
crude oil and natural gas liquids.

 

For information regarding historical production 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, 2023 available on
SEDAR+ (www.sedarplus.ca (http://www.sedarplus.ca/) ) and on the Company's
website (www.touchstoneexploration.com (http://www.touchstoneexploration.com/)
).

 

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.

 

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,
Chief Operating Officer 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.

 

 

This announcement contains inside information for the purposes of Article 7 of
the UK version of the Market Abuse Regulation (EU) No.596/2014, which forms
part of UK law by virtue of the European Union (Withdrawal) Act 2018.

 

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