REG - Touchstone Explrtn. - Q2 2022 FINANCIAL AND OPERATING RESULTS
11/08/2022 07:00
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RNS Number : 6344V Touchstone Exploration Inc. 11 August 2022
SECOND QUARTER 2022 FINANCIAL AND OPERATING RESULTS
CALGARY, ALBERTA (August 11, 2022) - Touchstone Exploration Inc.
("Touchstone", "we", "our", "us" or the "Company") (TSX, LSE: TXP) reports its
operating and financial results for the three and six months ended June 30,
2022. Selected information is outlined below and should be read in conjunction
with our June 30, 2022 unaudited interim condensed consolidated financial
statements and related Management's discussion and analysis, both of which
will be available under our profile on SEDAR (www.sedar.com
(http://www.sedar.com/) ) and on our website (www.touchstoneexploration.com
(http://www.touchstoneexploration.com/) ). Unless otherwise stated, all
financial amounts herein are rounded to thousands of United States dollars.
Second Quarter 2022 Financial and Operational Highlights
· Achieved quarterly average crude oil production volumes of 1,420
barrels per day ("bbls/d"), representing a 2 percent increase relative to the
preceding quarter and a 1 percent increase from the 1,402 bbls/d produced in
the second quarter of 2021.
· Realized petroleum sales of $12,596,000 from an average crude oil
price of $97.48 per barrel compared to petroleum sales of $7,586,000 from an
average realized price of $59.06 per barrel in the comparative quarter of
2021.
· Generated an operating netback of $44.99 per barrel, a 19 percent
increase from the first quarter of 2022 and a 71 percent increase from the
$26.30 per barrel reported in the second quarter of 2021.
· Recognized current income tax expenses of $1,547,000 in the
quarter compared to $432,000 in the second quarter of 2021, driven by
$1,043,000 in supplemental petroleum tax expenses based on our average
realized oil price exceeding the $75.00 per barrel threshold in 2022.
· Our funds flow from operations was $1,133,000 in the quarter,
which was net of $540,000 accrued for reclamation costs related to the
previously announced oil spill which occurred as a result of vandalism in June
2022.
· Recognized a net loss of $262,000 in the quarter compared to a
net loss of $284,000 reported in the same period of 2021, reflecting the
$540,000 provision for oil spill reclamation costs.
· Capital investments of $3,368,000 primarily focused on facility
and pipeline expenditures related to the Coho-1 facility and investments
directed to the Cascadura natural gas facility.
· Exited the quarter with cash of $9,425,000, a working capital
surplus of $346,000 and $30,000,000 drawn on our term credit facility,
resulting in a net debt position of $23,654,000.
Post Period-End Highlights
· Daily crude oil sales averaged 1,303 bbls/d in July 2022 with a
realized price of $89.52 per barrel.
· Preparation for Coho gas facility and pipeline pre-commissioning
operations is underway, which will be followed by system commissioning
operations to introduce natural gas from the Coho-1 well into the facility and
pipeline.
· Received confirmation from the Trinidad and Tobago Environmental
Management Authority that determination of our Certificate of Environmental
Clearance application for development operations in the Cascadura area will be
made by September 15, 2022.
Paul Baay, President and Chief Executive Officer, commented:
"This quarter represents the end of an era for the Company as a pure crude oil
producer in Trinidad with the next quarter seeing a transition to a
combination of oil and natural gas production from our Coho-1 gas well. Our
team has maintained base production while remaining focused on our Coho and
Cascadura projects including associated commissioning operations and
regulatory approvals, which are both progressing. Our Trinidad team
successfully implemented our emergency response plan in response to the
vandalism at Fyzabad which had a minimal impact to the environment and
residents affected in the area but resulted in reclamation costs which we
fully accrued for in the quarter. We will continue to complete the restoration
required and work with our insurance provider to identify any costs that may
be recoverable under our policy."
Financial and Operating Results Summary
Three months ended June 30, % change Six months ended % change
June 30,
2022 2021 2022 2021
Operational
Average daily oil production((1)) (bbls/d) 1,420 1,402 1 1,408 1,350 4
Brent benchmark price((2)) ($/bbl) 113.84 68.98 65 107.20 64.95 65
Operating netback ($/bbl)
Realized sales price((3)) 97.48 59.06 65 90.61 55.90 62
Royalties((3)) (34.97) (17.98) 94 (31.80) (16.94) 88
Operating expenses((3)) (17.52) (14.78) 19 (17.35) (14.72) 18
Operating netback((3)) 44.99 26.30 71 41.46 24.24 71
Financial
($000's except per share amounts)
Petroleum sales 12,596 7,586 66 23,092 13,706 68
Cash from (used in) operating activities 3,516 1,008 249 3,849 (226) n/a
Funds flow from operations 1,133 1,205 (6) 2,559 1,743 47
Per share - basic and diluted((3)) 0.01 0.01 - 0.01 0.01 -
Net loss (262) (284) (8) (498) (744) (33)
Per share - basic and diluted (0.00) (0.00) - (0.00) (0.00) -
Exploration capital expenditures 2,932 6,664 (56) 4,806 9,618 (50)
Development capital expenditures 436 125 249 1,116 252 343
Capital expenditures 3,368 6,789 (50) 5,922 9,870 (40)
( )
Working capital surplus((3)) (346) (4,671) (93)
Principal long-term balance of term loan 24,000 7,500 220
Net debt((3)) - end of period 23,654 2,829 736
Share Information (000's)
Weighted average shares outstanding - basic and diluted 212,204 209,757 1 211,517 209,579 1
Outstanding shares - end of period 212,275 210,732 1
Notes:
(1) References to crude oil production volumes in the above table and
elsewhere in this announcement refer to light, medium and heavy crude oil
product types as defined in National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities. Our reported crude oil production is a
mix of light and medium crude oil and heavy crude oil for which there is not a
precise breakdown given our oil sales volumes typically represent blends of
more than one type of crude oil.
(2) References to Brent benchmark pricing in the above table and elsewhere
in this announcement refer to the average daily closing spot prices of Dated
Brent over the specified time period. Source: US Energy Information
Administration.
(3) Non-GAAP financial measure. See "Advisories: Non-GAAP Financial
Measures" for further information.
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.
Mr. Paul Baay, President and Chief Executive Officer
Tel: +1 (403) 750-4487
Mr. Scott Budau, Chief Financial Officer
Mr. 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 / Gordon
Hamilton
Tel: +44 (0) 207 523 8000
Camarco (Financial PR)
Billy Clegg / Emily Hall / Lily Pettifar
Tel:
+44 (0) 203 781 8330
Advisories
Non-GAAP Financial Measures
Certain financial measures in this announcement do not have a standardized
meaning as prescribed by International Financial Reporting Standards ("IFRS"
or "GAAP") and therefore are considered non-GAAP financial measures. These
financial measures may not be comparable to similar financial measures
disclosed by other issuers. Readers are cautioned that any 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, liquidity and
ability to generate funds to finance its operations. Below is a description of
the non-GAAP financial measures, non-GAAP ratios, capital management measures
and supplementary financial measures disclosed herein.
Funds flow from operations and funds flow from operations per share
Funds flow from operations is included in the Company's consolidated
statements of cash flows. Touchstone considers funds flow from operations to
be a key measure of operating performance as it demonstrates the Company's
ability to generate the funds necessary to finance capital expenditures and
repay debt. Management believes that by excluding the temporary impact of
changes in non-cash operating working capital, funds flow from operations
provides a useful measure of the Company's ability to generate cash that is
not subject to short-term movements in non-cash operating working capital.
Funds flow from operations per share is a non-GAAP ratio calculated by
dividing funds flow from operations by the weighted average number of common
shares outstanding during the applicable period on a basic and dilutive basis.
Operating netback
The Company 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 sales. Operating
netback per barrel is a non-GAAP ratio calculated by dividing the operating
netback by crude oil and NGL sales volumes for the period.
Working capital and net debt
Touchstone closely monitors its capital structure with a goal of maintaining a
strong financial position to fund current operations and future growth.
Working capital and net debt are capital management measures used by
Management to steward the Company's overall debt position and assess overall
financial strength.
Management monitors working capital and net debt as part of the Company's
capital structure to assess its true debt and liquidity position and to manage
capital and liquidity risk. Working capital is calculated as current assets
minus current liabilities as they appear on the consolidated statements of
financial position. Net debt is calculated by summing the Company's working
capital and the principal (undiscounted) long-term amount of senior secured
debt.
Supplementary Financial Measures
The following supplementary financial measures are disclosed herein.
Realized sales price per barrel - is comprised of petroleum sales as
determined in accordance with IFRS, divided by the Company's total crude oil
sales volumes for the period.
Royalties per barrel - is comprised of royalties as determined in accordance
with IFRS, divided by the Company's total crude oil sales volumes for the
period.
Operating expenses per barrel - is comprised of operating expenses as
determined in accordance with IFRS, divided by the Company's total crude oil
sales volumes for the period.
Refer to the "Non-GAAP Financial Measures" advisory section in the Company's
June 30, 2022 Management's discussion and analysis for reconciliations of
non-GAAP financial measures included herein to applicable GAAP measures.
Forward-Looking Statements
Certain information provided in this announcement may constitute
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 "expects",
"plans", "anticipates", "believes", "intends", "estimates", "projects",
"potential" and similar expressions, or are events or conditions that "will",
"would", "may", "could" or "should" occur or be achieved.
Forward-looking statements in this announcement may include, but are not
limited to, statements relating to the Company's development and exploration
plans and strategies, including anticipated future natural gas production, the
receipt of regulatory approvals, the expectation of the Company filing a
pollution insurance claim and receiving proceeds therefrom, and Touchstone's
current and future financial position including the sufficiency of resources
to fund future capital expenditures and maintain financial liquidity. 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 2021 Annual
Information Form dated March 25, 2022 which is available under the Company's
profile on SEDAR (www.sedar.com (http://www.sedar.com/) ) 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 to update publicly or revise any
forward-looking statements made herein or otherwise, whether as a result of
new information, future events or otherwise.
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Financial Position
Unaudited, stated in thousands of United States dollars
As at June 30, December 31, 2021
2022
Assets
Current assets
Cash 9,425 17,936
Accounts receivable 9,192 7,546
Crude oil inventory 99 143
Prepaid expenses 880 1,055
Assets held for sale 1,121 1,176
20,717 27,856
Exploration and evaluation assets 56,090 50,760
Property, plant and equipment 62,114 61,275
Restricted cash 1,138 1,178
Other assets 569 673
Abandonment fund 1,344 1,278
Total assets 141,972 143,020
Liabilities
Current liabilities
Accounts payable and accrued liabilities 10,844 16,000
Income taxes payable 1,858 236
Term loan 6,000 3,000
Liabilities associated with assets held for sale 1,669 1,695
20,371 20,931
Lease liabilities 2,085 2,265
Term loan 23,943 26,896
Other liabilities 546 908
Decommissioning liabilities 11,741 10,012
Deferred income taxes 15,074 14,450
Total liabilities 73,760 75,462
Shareholders' equity
Shareholders' capital 102,093 101,757
Contributed surplus 4,149 3,466
Other comprehensive loss (13,086) (13,219)
Deficit (24,944) (24,446)
Total shareholders' equity 68,212 67,558
Total liabilities and shareholders' equity 141,972 143,020
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Loss and Comprehensive Loss
Unaudited, stated in thousands of United States dollars (except per share
amounts)
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Revenue
Petroleum sales 12,596 7,586 23,092 13,706
Less: royalties (4,519) (2,310) (8,105) (4,153)
Petroleum revenue, net of royalties 8,077 5,276 14,987 9,553
Other revenue 11 8 20 31
Total revenue 8,088 5,284 15,007 9,584
Expenses
Operating 2,264 1,899 4,421 3,610
General and administration 1,897 1,614 3,870 3,149
Net finance 617 425 1,560 574
Net (gain) loss on asset dispositions (85) 4 (120) (21)
Foreign exchange (gain) loss (140) 96 (196) 196
Equity-based compensation 399 156 643 266
Depletion and depreciation 975 819 1,905 1,622
Impairment 35 (19) 171 10
Other 540 - 540 -
Total expenses 6,502 4,994 12,794 9,406
Earnings before income taxes 1,586 290 2,213 178
Provision for income taxes
Current expense 1,547 432 2,175 773
Deferred expense 301 142 536 149
Total income tax expense 1,848 574 2,711 922
Net loss (262) (284) (498) (744)
Currency translation adjustments (267) 225 133 270
Comprehensive loss (529) (59) (365) (474)
Net loss per common share
Basic and diluted (0.00) (0.00) (0.00) (0.00)
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
Unaudited, stated in thousands of United States dollars
Six months ended June 30,
2022 2021
Shareholders' capital
Balance, beginning of period 101,757 101,385
Equity-based settlements 336 372
Balance, end of period 102,093 101,757
Contributed surplus
Balance, beginning of period 3,466 2,476
Equity-based settlements (119) (132)
Equity-based compensation expense 643 266
Equity-based compensation capitalized 159 81
Balance, end of period 4,149 2,691
Other comprehensive loss
Balance, beginning of period (13,219) (13,331)
Other comprehensive income 133 270
Balance, end of period (13,086) (13,061)
Deficit
Balance, beginning of period (24,446) (30,165)
Net loss (498) (744)
Balance, end of period (24,944) (30,909)
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Cash Flows
Unaudited, stated in thousands of United States dollars
Three months ended June 30, Six months ended June 30,
2022 2021 2022 2021
Operating activities
Net loss (262) (284) (498) (744)
Items not involving cash from operations:
Net (gain) loss on asset dispositions (85) 4 (120) (21)
Unrealized foreign exchange (gain) loss (139) 113 (279) 187
Equity-based compensation 399 156 643 266
Depletion and depreciation 975 819 1,905 1,622
Impairment 35 (19) 171 10
Other (41) 274 251 274
Deferred income tax expense 301 142 536 149
Decommissioning expenditures (50) - (50) -
Funds flow from operations 1,133 1,205 2,559 1,743
Change in non-cash working capital 2,383 (197) 1,290 (1,969)
Cash from (used in) operating activities 3,516 1,008 3,849 (226)
Investing activities
Exploration and evaluation expenditures (2,932) (6,664) (4,806) (9,618)
Property, plant and equipment expenditures (436) (125) (1,116) (252)
Abandonment fund expenditures (30) (28) (59) (55)
Proceeds from asset dispositions 100 103 135 207
Change in non-cash working capital (1,186) 1,389 (6,806) (3,097)
Cash used in investing activities (4,484) (5,325) (12,652) (12,815)
Financing activities
Changes in restricted cash 35 - 40 -
Production liability payments (168) (101) (308) (182)
Net finance lease receipts 91 36 187 34
Issuance of common shares 142 240 217 240
Change in non-cash working capital 25 18 58 40
Cash from financing activities 125 193 194 132
Change in cash (843) (4,124) (8,609) (12,909)
Cash, beginning of period 10,148 15,451 17,936 24,281
Impact of foreign exchange on foreign denominated cash balances 120 (113) 98 (158)
Cash, end of period 9,425 11,214 9,425 11,214
Supplementary information for cash flow from operating activities:
Interest paid in cash 588 147 1,128 294
Income taxes paid in cash 520 37 556 59
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