TIDMTXP
RNS Number : 1798Z
Touchstone Exploration Inc.
12 May 2023
FIRST QUARTER 2023 FINANCIAL AND OPERATING RESULTS
CALGARY, ALBERTA (May 12, 2023) - Touchstone Exploration Inc. (
" Touchstone ", "we", "our", "us" or the " Company " ) (TSX, LSE:
TXP) reports its operating and financial results for the three
months ended March 31, 2023. Selected information is outlined below
and should be read in conjunction with our March 31, 2023 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 .
First Quarter 2023 Financial and Operational Highlights
-- Produced quarterly average volumes of 2,139 boe/d,
representing a 53 percent increase relative to the 1,396 boe/d
produced in the prior year equivalent quarter and a 4 percent
decrease compared to the fourth quarter of 2022.
-- Natural gas production from our Coho-1 well averaged net
volumes of 5.1 MMcf/d (854 boe/d) in the quarter and contributed
$976,000 of net natural gas sales at an average realized price of
$2.12/Mcf.
-- Realized petroleum and natural gas sales of $8,476,000
compared to $10,496,000 in the 2022 comparative quarter, as the
incremental $976,000 in net natural gas sales were offset by
decreased crude oil sales of $2,996,000, reflecting a 22 percent
decline in realized crude oil pricing and an 8 percent decrease in
crude oil production.
-- Generated an operating netback of $3,652,000, representing a
23 percent decrease from the 2022 equivalent quarter primarily
attributed to a 19 percent decline in petroleum and natural gas
sales.
-- Reported funds flow from operations of $803,000 in the
quarter compared to $691,000 in the preceding quarter and
$1,443,000 in the prior year equivalent quarter.
-- Recognized a net loss of $279,000 ($0.00 per basic share) in
the quarter compared to a net loss of $236,000 ($0.00 per basic
share) reported in the same period of 2022.
-- $9,019,000 in quarterly capital investments primarily focused
on expenditures directed to the drilling of the Royston-1X
sidetrack well and progressing construction of the Cascadura
natural gas and liquids facility.
-- Exited the quarter with a cash balance of $10,859,000, a
working capital deficit of $4,383,000 and a principal balance of
$25,500,000 remaining on our term credit facility, resulting in a
net debt position of $23,883,000.
-- Natural gas and liquids facility construction operations on
the Cascadura A surface location have progressed and we continue to
target completion and commissioning for first production at
Cascadura on or about June 30, 2023.
-- Construction of the Cascadura C surface location is complete,
which will be the location of our first Cascadura development
well.
-- The second production test of the Royston-1X well is expected
to commence in late May 2023 once the service rig has moved onto
the lease following the drilling rig being moved to the Cascadura C
location.
Financial and Operating Results Summary
Three months ended
------------------------------------------
March 31, March 31,
December
2023 31, 2022 2022
------------------------------------------ ----------- ---------- ----------
Operational
Average daily production
Crude oil(1) (bbls/d) 1,285 1,274 1,396
Natural gas(1) (Mcf/d) 5,124 5,729 -
------------------------------------------ ----------- ---------- ----------
Average daily production (boe/d)
(2) 2,139 2,229 1,396
------------------------------------------ ----------- ---------- ----------
Average realized prices(3)
Crude oil(1) ($/bbl) 64.86 75.10 83.55
Natural gas(1) ($/Mcf) 2.12 2.11 -
------------------------------------------ ----------- ---------- ----------
Realized commodity price ($/boe)
(2) 44.03 48.36 83.55
------------------------------------------ ----------- ---------- ----------
Production mix (% of production)
Crude oil(1) 60 57 100
Natural gas(1) 40 43 -
Operating netback ($/boe) (2)
Realized commodity price(3) 44.03 48.36 83.55
Royalties(3) (13.01) (15.24) (28.55)
Operating expenses(3) (12.05) (12.07) (17.17)
------------------------------------------ ----------- ---------- ----------
Operating netback(3) 18.97 21.05 37.83
------------------------------------------ ----------- ---------- ----------
Financial ($000's except per share
amounts)
Petroleum and natural gas sales 8,476 9,919 10,496
Cash from (used in) operating activities 913 (1,189) 350
Funds flow from operations(3) 803 691 1,443
Net loss (279) (1,921) (236)
Per share - basic and diluted (0.00) (0.01) (0.00)
Exploration capital expenditures 8,750 2,290 1,874
Development capital expenditures 269 219 680
------------------------------------------ ----------- ---------- ----------
Capital expenditures(3) 9,019 2,509 2,554
------------------------------------------ ----------- ---------- ----------
Working capital deficit (surplus)(3) 4,383 (4,992) (4,259)
Principal long-term balance of
term loan 19,500 21,000 25,500
Net debt(3) - end of period 23,883 16,008 21,241
------------------------------------------ ----------- ---------- ----------
Share Information (000's)
Weighted average shares outstanding
- basic and diluted 233,037 217,106 210,823
Outstanding shares - end of period 233,037 233,037 211,164
Notes:
(1) In the table above and elsewhere in this announcement,
references to "crude oil" refer to light and medium crude oil and
heavy crude oil product types combined and references to "natural
gas" refer to conventional natural gas, all as defined in National
Instrument 51-101 Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"). Refer to "Advisories - Product Type
Disclosures" for further information.
(2) In the table above and elsewhere in this announcement,
references to "boe" mean barrels of oil equivalent that are
calculated using the energy equivalent conversion method. Refer to
"Advisories - Oil and Natural Gas Measures" for further
information.
(3) Non-GAAP financial measure. See "Advisories - Non-GAAP
Financial Measures" for further information.
Annual and Special Meeting of Shareholders
Touchstone's virtual-only Annual and Special Meeting of
Shareholders (the "Meeting") will be held on Thursday, June 29,
2023 at 10:30 a.m. (Mountain time).
Registered and beneficial shareholders will be mailed a
notice-and-access notification and form of proxy on or around May
30, 2023, advising as to the electronic availability of the Meeting
materials, including the 2023 Management Information Circular, the
2022 audited consolidated financial statements and related
management's discussion and analysis. For holders of our depositary
interests, our Management Information Circular and form of
direction will be mailed on or about May 30, 2023. Subsequent to
the mailing date, the Meeting materials will be available on our
website (
www.touchstoneexploration.com/investors/shareholder-meetings ) and
under our profile on SEDAR ( http://www.sedar.com/ www.sedar.com
).
Touchstone's annual audited consolidated financial statements
and related management's discussion and analysis for the year ended
December 31, 2022 were also mailed on April 4, 2023 to those
shareholders who elected to receive physical copies. Shareholders
may also access these documents on our website and under our
profile on SEDAR .
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.
Paul Baay, President and Chief Executive Officer Tel: +1 (403) 750-4487
Scott Budau, Chief Financial Officer
James Shipka, Chief Operating Officer
Shore Capital (Nominated Advisor and Joint Broker)
Daniel Bush / Toby Gibbs / Iain Sexton Tel: +44 (0) 207 408
4090
Canaccord Genuity (Joint Broker)
Adam James / 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,
forward-looking statements relating to the Company's development
and exploration plans and strategies; Cascadura facility
construction operations and the expected timing of completion and
initial production therefrom; anticipated future drilling
operations and locations; the timing of anticipated Royston-1X well
completion and testing operations ; 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 2022 Annual Information
Form dated March 23, 2023 which will be 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.
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. Below is a description of the
non-GAAP financial measures, non-GAAP ratios, capital management
measures and supplementary financial measures disclosed in this
announcement.
Funds flow from operations
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.
Operating netback
Touchstone 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. The most directly comparable financial measure to operating
netback disclosed in the Company's consolidated financial
statements is petroleum and natural gas revenue net of royalties.
Operating netback per boe is a non-GAAP ratio calculated by
dividing the operating netback by total production volumes for the
period. Presenting operating netback on a per boe basis allows
Management to better analyze performance against prior periods on a
comparable basis.
Capital expenditures
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 used in investing activities.
Touchstone considers capital expenditures to be a useful measure of
its investment in its existing asset base.
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.
Working capital is calculated as current assets minus current
liabilities as they appear on the consolidated balance sheets. 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
Realized commodity price per boe - is comprised of petroleum and
natural gas sales as determined in accordance with IFRS, divided by
the Company's total production volumes for the period.
Royalties per boe - is comprised of royalties as determined in
accordance with IFRS, divided by the Company's total production
volumes for the period.
Operating expenses per boe - is comprised of operating expenses
as determined in accordance with IFRS, divided by the Company's
total production volumes for the period.
For information regarding such measures, including
reconciliations to the nearest GAAP measures, please refer to the
"Advisories - Non-GAAP Financial Measures" section in the Company's
Management's discussion and analysis for the three months ended
March 31, 2023 accompanying our March 31, 2023 unaudited interim
condensed consolidated financial statements which will be available
on our website ( www.touchstoneexploration.com ) and under our
SEDAR profile ( www.sedar.com ) .
Oil and Natural 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.
Product Type Disclosures
For information regarding specific product disclosures in
accordance with NI 51-101, please refer to the "Advisories -
Product Type Disclosures" section in the Company's Management's
discussion and analysis for the three months ended March 31, 2023
accompanying our March 31, 2023 unaudited interim condensed
consolidated financial statements which will be available on our
website ( www.touchstoneexploration.com ) and under our SEDAR
profile ( www.sedar.com ) .
Abbreviations
bbls/d barrels per day
boe barrels of oil equivalent
boe/d barrels of oil equivalent per day
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
MMcf/d million cubic feet per day
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END
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May 12, 2023 02:00 ET (06:00 GMT)
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