TIDMTXP
RNS Number : 9249R
Touchstone Exploration Inc.
06 March 2023
2022 YEAR- RESERVES
CALGARY, ALBERTA (March 6, 2023) - Touchstone Exploration Inc.
("Touchstone", "we", "our", "us" or the "Company") (TSX, LSE: TXP)
announces our 2022 year-end reserves.
Our independent reserves evaluation was prepared by GLJ Ltd. ( "
GLJ " ) with an effective date of December 31, 2022 (the " Reserves
Report " ). Highlights of our total proved developed producing
("PDP"), total proved ("1P"), total proved plus probable ("2P") and
total proved plus probable plus possible ("3P") reserves from the
Reserves Report are provided below. All finding and development
("F&D") costs below include changes in future development
capital ("FDC"). Unless otherwise stated, all financial amounts
referenced herein are stated in United States dollars . Financial
information contained herein is based on the Company's unaudited
results for the year ended December 31, 2022 and is subject to
change. Readers are further cautioned to read the applicable
advisories contained herein.
Touchstone's 2022 year-end reserves reflect the sustainability
of our low decline asset base, as our 2022 capital program focused
on exploration activities on our Ortoire property, where we
completed construction of the Coho natural gas facility and
continued construction operations of the Cascadura natural gas and
liquids facility. Touchstone did not drill any development or
exploration wells in the 2022 year.
In 2022 we achieved initial production from our Coho-1 well,
which produced net volumes of 5.7 MMcf/d (approximately 955 boe/d)
in the fourth quarter of 2022 contributing to average quarterly
production volumes of 2,229 boe/d and average 2022 annual
production volumes of 1,581 boe/d.
2022 Year-end Reserves Report Highlights
-- Relative to year-end 2021 and after 2022 production, we
increased PDP gross reserves by 33% to 4,843 Mboe, decreased 1P
gross reserves by 0.7% to 38,463 Mboe, decreased 2P gross reserves
by 0.6% to 75,074 Mboe and decreased 3P gross reserves by 0.6% to
120,594 Mboe in 2022.
-- PDP reserves replaced 2022 annual production by 308%,
reflecting forecasted Coho-1 natural gas volumes that were brought
online in 2022.
-- Our net present value of future net revenues discounted at
10% ("NPV10") on a before tax PDP basis increased by 21% to $62.6
million, increased by 12% to $530.3 million on a 1P basis,
increased by 13% to $993.7 million on a 2P basis, and increased by
12% to $1.47 billion on a 3P basis from the prior year.
-- Realized after tax PDP NPV10 of $51.8 million representing an
increase of 45% from the prior year, after tax 1P NPV10 increased
by 22% from year-end 2021 to $256.6 million, after tax 2P NPV10
increased by 24% from the prior year to $450.6 million and after
tax 3P NPV10 increased by 22% from 2021 to $654.9 million.
-- Limited development operations and a focus on investing in
our natural gas facilities led to a 1P recycle ratio of 0.6 times
and a 2P recycle ratio of 0.2 times.
-- We continue to maintain a long producing reserve life index
("RLI") of 5.8 years PDP and 13.1 years 1P reflecting the low
decline nature of our asset base.
2022 Year-end Reserves Report Summary
Touchstone's year-end crude oil, natural gas and NGL reserves in
Trinidad were evaluated by independent reserves evaluator, GLJ, in
accordance with definitions, standards and procedures contained in
the Canadian Oil and Gas Evaluation Handbook and National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"). Additional reserves information as
required under NI 51-101 will be included in the Company's Annual
Information Form, which will be filed on SEDAR on or before March
31, 2023.
The reserve estimates set forth below are based upon GLJ's
Reserves Report dated March 3, 2023 with an effective date of
December 31, 2022. The Reserves Report uses the average price
forecasts of the three leading Canadian oil and gas evaluation
consultants (GLJ, McDaniel & Associates Consultants Ltd. and
Sproule Associates Ltd. (collectively, the "Consultants")). All
values in this announcement are based on the three Consultants'
average forecast pricing and GLJ's estimates of future operating
and capital costs as of December 31, 2022. Please refer to
"Advisories: Reserves Advisories" for further information. In
certain tables set forth below, the columns may not add due to
rounding.
2022 Reserves Summary by Category
PDP 1P 2P 3P
----------------------------------- ------- -------- -------- ----------
Total gross reserves(1)
(Mboe) 4,843 38,463 75,074 120,594
Reserve additions (reductions)(2)
(Mboe) 1,769 306 101 (164)
NPV10 before income tax(3)
($000's) 62,561 530,264 993,714 1,473,380
NPV10 after income tax(3)
($000's) 51,770 256,623 450,624 654,913
Notes:
(1) Gross reserves are the Company's working interest share before deduction of royalties.
(2) Reserve additions exclude period production. See "Advisories: Oil and Gas Metrics".
(3) Based on the three Consultants' average December 31, 2022
forecast prices and costs. See " Forecast prices and costs " .
Year-Over-Year Reserves Data
December December % Change
31, 2022 31, 2021(1)
----------------------------------------- ---------- ------------- ---------
PDP gross reserves(2) (Mboe) 4,843 3,648 33
1P gross reserves(2) (Mboe) 38,463 38,731 (1)
2P gross reserves(2) ( Mboe) 75,074 75,547 (1)
3P gross reserves(2) (Mboe) 120,594 121,332 (1)
PDP NPV10 before income tax(3) ($000's) 62,561 51,737 21
1P NPV10 before income tax(3) ($000's) 530,264 474,922 12
2P NPV10 before income tax(3) ($000's) 993,714 881,753 13
3P NPV10 before income tax(3) ($000's) 1,473,380 1,313,006 12
PDP NPV10 after income tax(3) ($000's) 51,770 35,781 45
1P NPV10 after income tax(3) ($000's) 256,623 210,036 22
2P NPV10 after income tax(3) ($000's) 450,624 363,068 24
3P NPV10 after income tax(3) ($000's) 654,913 535,613 22
Notes:
(1) Prior year reserve estimates per GLJ's independent reserves
evaluation dated March 4, 2022 with an effective date of December
31, 2021.
(2) Gross reserves are the Company's working interest share before deduction of royalties.
(3) Based on the three Consultants' average December 31, 2022
forecast prices and costs. See " Forecast prices and costs " .
Summary of Crude Oil and Natural Gas Reserves by Product
Type
Company Gross (1) Reserves Light Heavy Conventional Natural Total
and Medium Crude Natural Gas Liquids Oil Equivalent
Crude Oil Gas (MMcf) (Mbbl) (Mboe)
Oil (Mbbl) (Mbbl) (2)
---------------------------- ------------ -------- ------------- ------------- ----------------
Proved
Developed Producing 3,470 258 6,690 - 4,843
Developed Non-Producing 1,529 210 86,146 2,198 18,294
Undeveloped 4,979 - 53,841 1,373 15,326
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 1P 9,977 468 146,677 3,571 38,463
Probable 8,711 416 144,850 3,342 36,611
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 2P 18,688 884 291,527 6,913 75,074
Possible 5,902 332 205,894 4,972 45,520
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 3P 24,590 1,216 497,421 11,885 120,594
---------------------------- ------------ -------- ------------- ------------- ----------------
Company Net (3) Reserves Light Heavy Conventional Natural Total
and Medium Crude Natural Gas Liquids Oil Equivalent
Crude Oil Gas (MMcf) (Mbbl) (Mboe)
Oil (Mbbl) (Mbbl) (2)
---------------------------- ------------ -------- ------------- ------------- ----------------
Proved
Developed Producing 2,091 230 5,854 - 3,296
Developed Non-Producing 965 187 75,378 1,923 15,638
Undeveloped 3,658 - 47,111 1,202 12,712
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 1P 6,714 417 128,343 3,125 31,646
Probable 6,540 370 126,744 2,925 30,959
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 2P 13,254 787 255,086 6,049 62,605
Possible 4,342 295 180,157 4,350 39,013
---------------------------- ------------ -------- ------------- ------------- ----------------
Total 3P 17,596 1,082 435,243 10,399 101,618
---------------------------- ------------ -------- ------------- ------------- ----------------
Notes:
(1) Gross reserves are the Company's working interest share before deduction of royalties.
(2) NGLs are comprised of 100% condensate.
(3) Net reserves are the Company's working interest share after
the deduction of royalty obligations.
Summary of Net Present Values of Future Net Revenues (1)
Net Present Values Undiscounted Discounted Discounted Discounted Discounted
Before Income Taxes at 5% at 10% at 15% at 20%
($000's)
------------------------- ------------- ----------- ----------- ----------- -----------
Proved
Developed Producing 84,121 71,897 62,561 55,515 50,081
Developed Non-Producing 373,318 303,750 256,815 222,221 195,600
Undeveloped 349,815 268,045 210,888 169,542 138,744
------------------------- ------------- ----------- ----------- ----------- -----------
Total 1P 807,254 643,692 530,264 447,278 384,425
Probable 929,042 634,858 463,450 354,683 281,289
------------------------- ------------- ----------- ----------- ----------- -----------
Total 2P 1,736,296 1,278,550 993,714 810,961 665,714
Possible 1,162,845 706,880 479,666 350,833 270,402
------------------------- ------------- ----------- ----------- ----------- -----------
Total 3P 2,899,141 1,985,430 1,473,380 1,152,794 936,116
------------------------- ------------- ----------- ----------- ----------- -----------
Net Present Values Undiscounted Discounted Discounted Discounted Discounted
After Income Taxes (2) at 5% at 10% at 15% at 20%
($000's)
------------------------- ------------- ----------- ----------- ----------- -----------
Proved
Developed Producing 59,691 56,612 51,770 47,274 43,432
Developed Non-Producing 159,207 134,649 117,278 104,014 93,519
Undeveloped 153,285 114,778 87,576 67,879 53,270
------------------------- ------------- ----------- ----------- ----------- -----------
Total 1P 372,183 306,039 256,623 219,166 190,222
Probable 383,287 265,306 194,000 148,011 116,700
------------------------- ------------- ----------- ----------- ----------- -----------
Total 2P 755,470 571,344 450,624 367,177 306,922
Possible 474,034 296,499 204,289 150,949 117,211
------------------------- ------------- ----------- ----------- ----------- -----------
Total 3P 1,229,504 867,843 654,913 518,126 424,133
------------------------- ------------- ----------- ----------- ----------- -----------
Notes:
(1) Based on the three Consultants' average December 31, 2022
forecast prices and costs. See " Forecast prices and costs " .
(2) The after-tax net present values prepared by GLJ in the
evaluation of the Company's crude oil and natural gas assets
presented herein are calculated by considering current Trinidad tax
regulations and are based on the Company's estimated tax pools and
non-capital losses as of December 31, 2022. The values reflect the
expected income tax burden on the assets on a consolidated basis.
Values do not represent an estimate of the value at the business
entity level or consider tax planning, which may be significantly
different. See "Advisories: Unaudited Financial Information".
Reconciliation of Gross Reserves by Product Type
The following table sets forth a reconciliation of the Company's
total gross proved, gross probable and total gross proved plus
probable reserves as of December 31, 2022 by product type against
such reserves as at December 31, 2021 based on forecast prices and
cost assumptions.
Reserves Category and Light Heavy Conventional Natural Total
Factors and Medium Crude Natural Gas Liquids Oil Equivalent
Crude Oil Gas (MMcf) (Mbbl) (Mboe)
Oil (Mbbl) (Mbbl) (1)
---------------------------- ------------ -------- ------------- ------------- ----------------
Total Proved
December 31, 2021 (2) 10,174 471 147,093 3,571 38,731
Extensions and improved
recovery(3) 94 - - - 94
Technical revisions(4) 169 23 111 - 211
Production (460) (27) (527) - (574)
---------------------------- ------------ -------- ------------- ------------- ----------------
December 31, 2022 9,977 468 146,677 3,571 38,463
---------------------------- ------------ -------- ------------- ------------- ----------------
Total Probable
December 31, 2021 (2) 8,908 458 144,642 3,342 36,815
Technical revisions(4) (201) (42) 208 - (208)
Economic factors(5) 3 - - - 3
December 31, 2022 8,711 416 144,850 3,342 36,611
---------------------------- ------------ -------- ------------- ------------- ----------------
Total Proved plus Probable
December 31, 2021 (2) 19,082 929 291,735 6,914 75,547
Extensions and improved
recovery(3) 94 - - - 94
Technical revisions(4) (31) (18) 320 - 4
Economic factors(5) 3 - - - 3
Production (460) (27) (527) - (574)
---------------------------- ------------ -------- ------------- ------------- ----------------
December 31, 2022 18,688 884 291,527 6,913 75,074
---------------------------- ------------ -------- ------------- ------------- ----------------
Notes:
(1) NGLs are comprised of 100 percent condensate.
(2) Prior year reserve estimates per GLJ's independent reserves
evaluation dated March 4, 2022 with an effective date of December
31, 2021.
(3) Reserve amounts for Infill Drilling, Extensions and Improved
Recovery are combined and reported as "Extensions and Improved
Recovery".
(4) Technical revisions factor includes all changes in reserves
due to well performance and previously booked wells which were
drilled in the year.
(5) Economic factors are the change in reserves exclusively due to changes in pricing.
In comparison to December 31, 2021 on a proved plus probable
reserve basis, 2022 light and medium crude oil reserves declined
394 Mbbl. Improved recovery attributed to well recompletions was
offset by 2022 annual production. 2022 proved plus probable heavy
crude oil reserves decreased by 45 Mbbl from the prior year due to
downward technical revisions of 18 Mbbl associated with reduced
well performance at our Fyzabad block, combined with 27 Mbbl of
production. Proved plus probable conventional natural gas reserves
decreased by 208 MMcf relative to December 31, 2021, as an increase
from reduced surface loss estimates related to Coho was offset by
2022 production.
Future Development Costs
The following table provides information regarding the
development costs deducted in the estimation of the Company's
future net revenue using forecast prices and costs as included in
the Reserves Report.
Year ($000's) PDP 1P 2P 3P
------------------------- ---- ------- -------- --------
2023 190 23,648 26,938 26,938
2024 - 31,810 45,006 45,006
2025 - 8,841 38,067 38,067
2026 - 11,232 15,885 15,885
2027 - 11,213 15,470 15,470
Thereafter - - - -
------------------------- ---- ------- -------- --------
Total undiscounted 190 86,744 141,366 141,366
Total discounted at 10%
per year 181 72,435 116,145 116,145
------------------------- ---- ------- -------- --------
The following table sets forth the changes in undiscounted
future development costs included in the Reserves Report against
such costs in our December 31, 2021 reserves report prepared by GLJ
dated March 4, 2022.
($000's unless otherwise
stated) PDP 1P 2P 3P
------------------------------------- ------ -------- -------- --------
(Decrease) / increase in forecasted
capital costs (110) 3,450 5,685 5,685
Increase in forecasted wells - 4,757 4,720 4,720
Decrease in forecasted facility
and pipeline costs - (1,477) (2,613) (2,613)
------------------------------------- ------ -------- -------- --------
Total (decrease) / increase
in FDC from 2021 (110) 6,730 7,792 7,792
Total (decrease) / increase
in FDC from 2021 (%) (37) 8 6 6
------------------------------------- ------ -------- -------- --------
Forecast Pricing and Costs
Forecast pricing and costs are prices and costs that are
generally acceptable, in the opinion of GLJ, as being a reasonable
outlook of the future as of the evaluation effective date. The
forecast cost assumptions consider inflation with respect to future
operating and capital costs. The following table sets forth the
benchmark reference prices and inflation rates reflected in the
Reserves Data as of December 31, 2022. These price assumptions were
provided to the Company by GLJ and represented the average price
forecast of the three Consultants as of the date of the Reserves
Report.
Consultants Average Price Forecast
-----------------------------------------------------------
Forecast Year Brent Spot Henry Hub Inflation
Crude Oil(1) Natural Rate
Gas(1)
($/bbl) ($/MMBtu) (% per
year)
---------------- -------------- ------------ -----------
2023 84.67 4.74 0.0
2024 82.69 4.50 2.3
2025 81.03 4.31 2.0
2026 81.39 4.40 2.0
2027 82.65 4.49 2.0
2028 84.29 4.58 2.0
2029 85.98 4.67 2.0
2030 87.70 4.76 2.0
2031 89.46 4.86 2.0
2032 91.25 4.95 2.0
+2.0% / +2.0% /
Thereafter year year 2.0
Note:
(1) This summary table identifies benchmark reference pricing
schedules that might apply to a reporting issuer. Product sales
prices will reflect these reference prices with further adjustments
for specific marketing arrangements, quality differentials and
transportation to point of sale.
Capital Program Efficiency
2022 2022 - 2020 Total
--------------------------------------- ---------------- --------------------
1P 2P 1P 2P
--------------------------------------- ------- ------- --------- ---------
Estimated capital expenditures(1),(4)
($000's) 11,330 11,330 57,763 57,763
Change in FDC ($000's) 6,730 7,792 41,369 69,685
--------------------------------------- ------- ------- --------- ---------
F&D costs (2),(4) ($000's) 18,060 19,122 99,132 127,448
--------------------------------------- ------- ------- --------- ---------
Reserve additions (2),(3)
(Mboe) 306 101 28,193 54,588
F&D costs per boe (2),(4)
($/boe) 59.02 189.33 3.52 2.33
Estimated operating netback
(1),(4) ($/boe) 33.42 33.42 25.16 25.16
Recycle ratio (2),(4) 0.6x 0.2x 7.2x 10.8x
--------------------------------------- ------- ------- --------- ---------
Notes:
(1) Financial information is based on the Company's preliminary
2022 unaudited financial statements and is therefore subject to
change. See "Advisories: Unaudited Financial Information".
(2) See "Advisories: Reserves Advisory" and "Advisories: Oil and Gas Metrics".
(3) Based on gross reserves, which are the Company's working
interest share before deduction of royalties.
(4) Non-GAAP financial measure. See "Advisories: Non-GAAP Financial Measures ".
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:
Paul Baay, President and Chief Executive Officer Tel: +1 (403) 750-4487
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
FTI Consulting (Financial PR)
Nick Hennis / Ben Brewerton Tel: +44 (0) 203 727 1000
Email: touchstone@fticonsulting.com
Advisories
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. The forward-looking statements
contained in this announcement speak only as of the date thereof
and are expressly qualified by this cautionary statement.
Specifically, this announcement includes, but is not limited to
statements relating to the Company's exploration plans and
strategies; the sustainability and low decline nature of our asset
base; estimated crude oil, NGL and natural gas reserves and the net
present values of future net revenue therefrom; and the forecasted
future production, commodity prices, inflation rates and all future
costs used by GLJ in their evaluation.
In addition, information and statements relating to reserves are
by their nature forward-looking statements, as they involve the
implied assessment, based on certain estimates and assumptions,
that the reserves described exist in the quantities predicted or
estimated, and can be profitably produced in the future. The
recovery and reserve estimates of Touchstone's reserves provided
herein are estimates only, and there is no guarantee that the
estimated reserves will be recovered. Consequently, actual results
may differ materially from those anticipated in the forward-looking
statements.
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 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.
Reserves Advisory
The disclosure in this announcement summarizes certain
information contained in the Reserves Report but represents only a
portion of the disclosure required under NI 51-101. Full disclosure
with respect to the Company's reserves as at December 31, 2022 will
be contained in the Company's Annual Information Form for the year
ended December 31, 2022 which will be filed on SEDAR on or before
March 31, 2023.
The recovery and reserve estimates of crude oil, NGL and natural
gas reserves provided herein are estimates only, and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may eventually prove to be greater than or less than the
estimates provided herein. This announcement summarizes the crude
oil, NGL and natural gas reserves of the Company and the net
present values of future net revenue for such reserves using
forecast prices and costs as at December 31, 2022 prior to
provision for interest and finance costs, general and
administration expenses, and the impact of any financial
derivatives. It should not be assumed that the present worth of
estimated future net revenues presented in the tables above
represent the fair market value of the reserves. There is no
assurance that the forecast prices and costs assumptions will be
attained, and variances could be material.
"Proved Developed Producing Reserves" are those reserves that
are expected to be recovered from completion intervals open at the
time of the estimate. These reserves may be currently producing, or
if shut-in, they must have previously been on production, and the
date of resumption of production must be known with reasonable
certainty.
"Proved" reserves are those reserves that can be estimated with
a high degree of certainty to be recoverable. It is likely that the
actual remaining quantities recovered will exceed the estimated
proved reserves.
"Probable" reserves are those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the sum of the estimated proved plus probable
reserves.
"Possible" reserves are those additional reserves that are less
certain to be recovered than probable reserves. There is a 10%
probability that the quantities actually recovered will equal or
exceed the sum of proved plus probable plus possible reserves. It
is unlikely that the actual remaining quantities recovered will
exceed the sum of the estimated proved plus probable plus possible
reserves.
In the Reserves Report, GLJ forecasted reserve volumes and
future cash flows based upon current and historical well
performance through to the economic production limit of individual
wells. Notwithstanding established precedence and contractual
options for the continuation and renewal of the Company's existing
licence, sub-licence and marketing agreements , in many cases the
forecasted economic limit of individual wells is beyond the current
term of the relevant agreements. There is no certainty as to any
renewal of the Company's existing exploration, production, and
marketing arrangements.
Oil and Gas Measures
Where applicable, natural gas has been converted to barrels of
oil equivalent based on six thousand cubic feet to one barrel 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.
Oil and Gas Metrics
This announcement contains several oil and gas metrics that are
commonly used in the oil and gas industry such as reserves
additions, reserve life index, finding and development costs, and
recycle ratio. These metrics have been prepared by Management and
do not have standardized meanings or standardized methods of
calculation, and therefore such measures may not be comparable to
similar measures presented by other companies and should not be
used to make comparisons. Such metrics have been included herein to
provide readers with additional measures to evaluate the Company's
performance; however, such measures are not reliable indicators of
the future performance of the Company, and future performance may
not compare to the performance in prior periods, and therefore such
metrics should not be unduly relied upon. The Company uses these
oil and gas metrics for its own performance measurements and to
provide shareholders with measures to compare the Company's
operations over time. Readers are cautioned that the information
provided by these metrics, or that can be derived from the metrics
presented in this announcement, should not be relied upon for
investment purposes.
Reserve additions are calculated as the change in reserves from
the beginning to the end of the applicable period excluding period
production. Management uses this measure to determine the relative
change of its reserves base over a period of time.
RLI is calculated by dividing the applicable reserves by
forecasted 2023 production volumes derived from the Reserve
Report.
F&D costs represent the costs of exploration and development
incurred (refer to "Advisories: Non-GAAP Financial Measures").
Specifically, F&D is calculated as the sum of exploration and
development capital expenditures incurred in the period and the
change in future development costs required to develop those
reserves. The Company's annual audit of its December 31, 2022
consolidated financial statements is not complete. Accordingly,
unaudited exploration and development capital expenditure amounts
used in the calculation of F&D costs are Management's estimates
and are subject to change. F&D costs per barrel is determined
by dividing current period reserve additions to the corresponding
period's F&D costs. Readers are cautioned that the aggregate of
capital expenditures incurred in the most recent financial year and
the change during that year in estimated FDC generally will not
reflect total F&D costs related to reserves additions for that
year. Management uses F&D costs as a measure of its ability to
execute its capital program, the success in doing so, and of the
Company's asset quality.
Recycle ratio is a measure used by Management to evaluate the
effectiveness of its capital reinvestment program and is calculated
by dividing the annual F&D costs per barrel to operating
netback per barrel prior to realized gains or losses on commodity
derivative contracts in the corresponding period (refer to
"Advisories: Non-GAAP Financial Measures"). The Company's annual
audit of its December 31, 2022 consolidated financial statements is
not complete. Accordingly, unaudited operating netbacks used in
calculations of recycle ratios are Management's estimates and are
subject to change. The recycle ratio compares netbacks from
existing reserves to the cost of finding new reserves and may not
accurately indicate the investment success unless the replacement
of reserves are of equivalent quality as the produced reserves.
Unaudited Financial Information
Certain annual 2022 financial information disclosed herein
including capital expenditures and operating netback are based on
unaudited estimated results and are subject to the same limitations
as discussed in the forward-looking statements advisory disclosed
herein. These estimated results are subject to change upon
completion of the Company's audited financial statements for the
year ended December 31, 2022, and changes could be material.
Touchstone anticipates filing its audited consolidated financial
statements and related management's discussion and analysis for the
year ended December 31, 2022 on SEDAR on March 24, 2023.
Supplemental Information Regarding Product Types
This announcement includes references to fourth quarter and
annual 2022 production. The following table provides production by
product type composition as defined by NI 51-101.
Period Light Heavy Conventional Natural Total
and Medium Crude Natural Gas Liquids Oil Equivalent
Crude Oil Gas (Mcf/d) (bbls/d) (boe/d)
Oil (bbls/d) (bbls/d)
------------------------ -------------- ---------- ------------- ------------- ----------------
Fourth quarter of 2022 1,207 67 5,729 - 2,229
Annual 2022 1,265 75 1,444 - 1,581
Non-GAAP Financial Measures
This announcement may reference various non-GAAP financial
measures, non-GAAP ratios, capital management measures and
supplementary financial measures as such terms are defined in
National Instrument 52-112 - Non-GAAP and Other Financial Measures
Disclosure. Such measures are not recognized measures under GAAP
and do not have a standardized meaning prescribed by International
Financial Reporting Standards ("IFRS" or "GAAP") and therefore may
not be comparable to similar financial measures disclosed by other
issuers. Readers are cautioned that the 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. Non-GAAP financial measures
presented herein include operating netback, capital expenditures,
F&D costs and recycle ratio.
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 and
natural gas sales. Operating netback per boe is a non-GAAP ratio
calculated by dividing the operating netback by total production
volumes for the period. The following table presents the
computation of estimated operating netback disclosed herein, using
unaudited financial information for the year ended December 31,
2022 in both periods presented.
($000's unless otherwise Year ended Three years
stated) December ended December
31, 2022 31, 2022
----------------------------- ----------- ----------------
Petroleum and natural
gas sales 42,944 92,104
Royalties (14,641) (29,380)
Operating expenses (9,022) (23,006)
------------------------------- ----------- ----------------
Estimated operating netback 19,281 39,718
------------------------------- ----------- ----------------
Production (boe) 567,987 1,578,775
Estimated operating netback
($/boe) 33.42 25.16
------------------------------- ----------- ----------------
Capital expenditures is a non-GAAP financial measure that is
calculated as the sum of exploration and evaluation asset
expenditures and property, plant and equipment expenditures
included in the Company's consolidated statements of cash flows and
is most directly comparable to cash flows used in investing
activities. Touchstone considers capital expenditures to be a
useful measure of its investment in its existing asset base.
The following table presents the computation of estimated
capital expenditures disclosed herein, using unaudited financial
information for the year ended December 31, 2022 in both periods
presented.
($000's) Year ended Three years
December ended December
31, 2022 31, 2022
-------------------------------------------- ----------- ----------------
Exploration and evaluation asset
expenditures 9,788 47,755
Property, plant and equipment expenditures 1,542 10,008
--------------------------------------------- ----------- ----------------
Estimated capital expenditures 11,330 57,763
--------------------------------------------- ----------- ----------------
Refer to "Advisories: Oil and Gas Metrics" regarding F&D
costs and recycle ratio.
Abbreviations
Mbbl thousand barrels
MMcf million cubic feet
MMBtu million British Thermal Units
NGL(s) natural gas liquid(s)
boe barrels of oil equivalent
boe/d barrels of oil equivalent per day
Mboe thousand barrels of oil equivalent
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 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.
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END
UPDUVAWROBUORAR
(END) Dow Jones Newswires
March 06, 2023 02:00 ET (07:00 GMT)
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