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
----------------------------------- -------- -------- --------- ---------
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IR GPUMWRUPPPUU
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