REG - Touchstone Explrtn. - OPERATIONAL UPDATE

Touchstone ExplorationAnnouncement

10/04/2024 07:00

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RNS Number : 0023K  Touchstone Exploration Inc.  10 April 2024

 

OPERATIONAL UPDATE

 

CALGARY, ALBERTA (April 10, 2024) - Touchstone Exploration Inc. ("Touchstone",
"we", "our" or the "Company") (TSX, LSE: TXP) provides an operational update,
highlighted by drilling results at our Cascadura-3ST1 delineation well and our
CO-374 development well.

 

Highlights

·     The Cascadura-3ST1 delineation well was drilled to a total depth
of 8,252 feet, and openhole logs and drilling data indicated a total sand
thickness of approximately 900 feet in the targeted Herrera Formation.

·     The Cascadura-3ST1 well has been cased and production testing is
scheduled to commence in the third quarter of 2024 directly into the Cascadura
natural gas facility.

·     The construction for the flowline from the Cascadura C surface
location to the Cascadura natural gas processing facility is progressing, with
anticipated completion in the third quarter of 2024.

·     The hazard and operability analysis ("HAZOP") and engineering
designs for the expansion of the Cascadura facility have been approved, and
procurement for the expansion has commenced.

·     The CO-374 development well on our CO-1 block was drilled to a
total depth of 5,684 feet, with openhole logs and drilling data indicating a
sand thickness of approximately 400 feet in the Forest Formation and
approximately 300 feet in the Cruse Formation.

·     The CO-374 well has been cased for crude oil production and will
be completed once the CO-375 development well has been drilled and the rig is
moved from the location.

·     The CO-375 development well was spud on April 3, 2024 and is
targeting to be drilled to a total depth of 6,500 feet.

·     Achieved average net sales volumes of 7,015 boe/d in the first
quarter of 2024.

Paul Baay, President and Chief Executive Officer, commented:

 

"We are pleased with the successful results from the two delineation wells at
Cascadura, with both wells demonstrating the quality and scale of the
structure. In addition, the Cascadura-3ST1 well is the first to cross the
C-fault to the east side of the structure, an area where reserves have not
been previously assigned. The CO-374 development well is also noteworthy, as
it has the highest net pay we have observed to date on our crude oil legacy
blocks."

 

Cascadura-3ST1 Drilling Results

 

The Cascadura-3ST1 delineation well was spud on March 4, 2024 from our
Cascadura C surface location and reached a total depth of 8,252 feet on March
29, 2024. While drilling the well, a high-pressure gas kick was encountered at
a depth of approximately 7,500 feet which resulted in wellbore instability
issues. As a result, a portion of the wellbore was redrilled via a sidetrack.

 

Drilling samples and openhole wireline logs indicated over 900 feet of sand in
the targeted Herrera Formation, with over 230 feet of net hydrocarbon pay. The
top of the key Herrera Formation was detected at a measured depth of 6,852
feet, with sand and shows observed throughout the section to the total depth
of the well. Based on these encouraging results, the well has been cased for
future production.

 

We continue to  expect to test the recently drilled Cascadura wells directly
into the Cascadura natural gas facility in the third quarter of 2024.

 

Cascadura Infrastructure

 

We are currently progressing with the 1.6-kilometer road and flowline project,
spanning from our Cascadura C surface location to the Cascadura natural gas
facility. Presently, the flowline right-of-way has been fully cleared and
graded, road construction is approximately 65 percent complete, and the
watercourse culvert crossings are approximately 50 percent complete.
Additionally, the procurement of the flowline has been finalized and the
Company has issued a tender to local contractors for the installation of the
flowline and bridge construction.

 

Progress has also been made on the Cascadura facility expansion project. The
engineering designs and HAZOP have been completed and a new natural gas
separator has been procured. This separator is expected to increase the
facility's gross natural gas production capacity from approximately 90 MMcf/d
to 140 MMcf/d.

 

The Cascadura flowline and infrastructure upgrades remain on track for
completion in the third quarter of 2024.

 

Cascadura Optimization

 

Since the facility commenced operations in September 2023, choke adjustments
have been made to the Cascadura-1ST1 and Cascadura Deep-1 wells, resulting in
moderate success in increasing natural gas production rates. Further,
additional perforations were added to the Cascadura Deep-1 well with limited
success. The Company continues to monitor production rates from the wells and
will optimize production where possible.

 

CO-1 Drilling Operations

 

The CO-374 development well, located on our CO-1 block, was spud on March 1,
2024 and reached a total depth of 5,684 feet on March 22, 2024. The targeted
Lower Forest Formation was encountered at a depth of 3,491 feet and the Upper
Cruse Formation at a depth of 4,578 feet.

 

Drilling samples and openhole wireline logs indicated the presence of sands in
both the Forest and Cruse Formations. The Forest Formation indicated 400 feet
of sand, with approximately 250 feet of net hydrocarbon pay. Similarly, the
Cruse Formation indicated 300 feet of sand, with 150 feet of net hydrocarbon
pay. The well has been cased in preparation for oil production and will be
perforated when the CO-375 well is drilled and the rig is relocated.

 

The CO-375 development well, located on the same surface location as the
CO-374 well, was spud on April 3, 2024 and is targeting oil sands in the
Forest and Cruse Formations with a planned total depth of 6,500 feet.
Operations are underway with surface casing set and cemented at a depth of
1,495 feet.

 

First Quarter 2024 Sales Volumes

 

In the first quarter of 2024, we achieved average net sales volumes of 7,015
boe/d as follows:

·     Cascadura contributed average net sales volumes of 5,389 boe/d
consisting of:

-    net natural gas sales volumes of 30.8 MMcf/d or 5,127 boe/d with an
average realized price of $2.49 per Mcf; and

-    net natural gas liquids volumes of 262 bbls/d with an average realized
price of $69.60 per barrel;

·     Coho field net average natural gas sales volumes were 2.8 MMcf/d
or 460 boe/d at an average realized price of $2.28 per Mcf (excluding third
party processing fees); and

·     average net daily crude oil sales volumes were 1,166 bbls/d with
an average realized price of $69.97 per barrel.

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/___.YXAxZTpzaG9yZWNhcDphOm86NjhmMTNlYmU3ZjdlZDY3NWJjYWUxOWVmYTQ1NDRiZWY6NjozZTEzOjE1YmU5NzYwODE4MjE4YzI5YzY4ZDVjMGMzYTI2YzMwZTZjZGI1N2QzMmYwY2MxOThkYmVjMWVkMTFlMmMzZGI6cDpG)
or contact:

 

 Touchstone Exploration Inc.

 Paul Baay, President and Chief Executive Officer    Tel: +1 (403) 750-4487

 Scott Budau, Chief Financial Officer

 James Shipka, Chief Operating Officer

 Shore Capital (Nominated Advisor and Joint Broker)

 Daniel Bush / Toby Gibbs / Iain Sexton              Tel: +44 (0) 207 408 4090

 Canaccord Genuity (Joint Broker)

 Adam James / Ana Ercegovic                          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

 

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 percent 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 and
drilling data, including the Company's interpretations thereof; expected
drilling and completion 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 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

 

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, natural gas 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 "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 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
months and year ended December 31, 2023 accompanying our December 31, 2023
audited 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/d               barrels per day

boe/d               barrels of oil equivalent per day

Mcf                  thousand cubic feet

MMcf/d             million cubic feet per day

 

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.

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