TIDMTXP

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 ) and on our website ( 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   % change     Six months ended   % change 
                                  ended June 30,                        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 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 ) and on the Company's website ( 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     Six months ended 
                                         ended June 30,             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      Six months ended 
                                         ended June 30,              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 
-----------------------------------  --------  --------  ---------  --------- 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR GPUMWRUPPPUU

(END) Dow Jones Newswires

August 11, 2022 02:00 ET (06:00 GMT)

Touchstone Exploration (LSE:TXP)
Gráfico Histórico do Ativo
De Set 2022 até Out 2022 Click aqui para mais gráficos Touchstone Exploration.
Touchstone Exploration (LSE:TXP)
Gráfico Histórico do Ativo
De Out 2021 até Out 2022 Click aqui para mais gráficos Touchstone Exploration.