TIDMTXP
RNS Number : 5684T
Touchstone Exploration Inc.
26 March 2021
TOUCHSTONE ANNOUNCES YEAR- 2020 RESULTS
CALGARY, ALBERTA (March 26, 2021) - Touchstone Exploration Inc.
( " Touchstone ", "we", "our", "us" or the " Company " ) (TSX, LSE:
TXP) reports its operating and financial results for the three
months and year ended December 31, 2020. Selected information is
outlined below and should be read in conjunction with Touchstone's
December 31, 2020 audited consolidated financial statements, the
related Management's discussion and analysis and Annual Information
Form, all of which will be available under the Company's profile on
SEDAR (www.sedar.com) and the Company's website
(www.touchstoneexploration.com). Unless otherwise stated, all
financial amounts herein are rounded to thousands of United States
dollars .
2020 Highlights
-- Achieved annual crude oil sales of 1,392 barrels per day
("bbls/d"), a 24 percent decrease relative to the 1,825 bbls/d
produced in 2019. As expected and consistent with 2019, our crude
oil production has reduced due to the ongoing impact of natural
declines, reflecting a strategic focus on our Ortoire exploration
program which has limited development capital investment.
-- Executed a high impact, incident free $17,861,000 exploration
program, primarily focused on drilling two gross (1.6 net)
wells.
-- Despite limited capital and operational development asset
investment and considerably lower crude oil pricing, generated
funds flow from operations of $263,000 (2019 - $6,840,000) and an
operating netback of $14.49 per barrel (2019 - $26.61).
-- Continued to focus on discretionary cost reductions, with
operating costs on a per barrel basis decreasing by 12 percent and
general and administration expenses declining by 6 percent relative
to 2019.
-- Recognized a net loss of $11,030,000 ($0.06 per share)
compared to a net loss of $5,620,000 ($0.04 per share) in 2019,
driven by $11,418,000 in net impairment losses recorded in the year
predominantly based on lower forecasted crude oil pricing.
-- Established a $20 million term loan with a Trinidad based
financial institution and successfully accessed capital markets to
continue our Ortoire exploration program, raising total net
proceeds of $39.2 million from two oversubscribed equity
financings.
-- Maintained financial flexibility, exiting the year with cash
of $24,281,000, a working capital balance of $12,933,000 and
$7,500,000 drawn on our $20 million term credit facility, resulting
in a net surplus of $5,433,000.
-- Business continuity plans remain effective across our
locations in response to COVID-19 with minimal health and safety
impacts or disruptions to production.
Paul Baay, President and Chief Executive Officer, commented:
"2020 presented significant challenges to the wider oil and gas
industry due to the impact of COVID-19 on working operations and
the volatile nature of global oil prices. It is against that
backdrop that I am delighted to report another year of significant
progress at Touchstone in which we have enhanced our financial
position significantly, encountered major natural gas discoveries
as well as signed a historic long-term natural gas sales agreement
with the National Gas Company of Trinidad and Tobago.
I would like to thank the entire team at Touchstone for their
dedication, perseverance and flexibility during this difficult
period which has enabled us to achieve such success. As a result of
their hard work, the Company is very well positioned for another
year of growth as we move forward with our exploration, development
and production program at Ortoire and across the wider portfolio.
"
2020 Annual Summary and Outlook
The resilience and quality of our employees and asset base were
demonstrated throughout an extremely challenging operational and
financial period in 2020. The impacts on our business due to
COVID-19 and the associated volatility in crude oil prices forced
prompt decisions to preserve financial flexibility and protect the
health of our employees and stakeholders. We remain focused on
protecting the health of our employees and communities while
ensuring a decisive response for our investors. We will continue to
follow the advice of public health officials in supporting our
employees, their families, and our business partners.
Despite these challenges, Touchstone continued with its focus on
improving financial liquidity, capturing cost savings, and
increasing the long-term value of our core assets. We managed our
business prudently during the year, progressing with our Ortoire
exploration program and maintaining our base production while
continuing safe and reliable operations.
The enhanced liquidity provided from our debt refinancing and
our 2020 equity financings are expected to allow us to fund our
exploration program in 2021, with a core focus on drilling our
final work commitment exploration well (Royston-1), completing our
2D seismic program, testing our two exploration wells drilled in
2020, and bringing our Coho-1 and Cascadura-1ST1 discoveries onto
production in 2021.
Our primary objective remains to bring our two natural gas
exploration discoveries at Ortoire onto production in 2021.
Additionally, production testing operations are ongoing at our
Chinook-1 and Cascadura Deep-1 prospects, and we anticipate
drilling our Royston-1 location in the second quarter of 2021. As
the current economic and health related challenges persist, we will
continue to adapt our business operations and capital programs to
ensure health and safety and enhance long-term shareholder
value.
Financial and Operating Results Summary
Three months ended % change Year ended % change
December 31, December 31,
--------- ---------
2020 2019 2020 2019
--------------- ---------------------- ---------------------- --------- ---------------------- ---------------------- ---------
Operating
Highlights
Average daily
oil
production(1)
(bbls/d) 1,274 1,690 (25) 1,392 1,825 (24)
Net wells
drilled 1.6 0.8 100 1.6 1.6 -
Brent
benchmark
price
($/bbl) 44.32 63.17 (30) 41.96 64.28 (35)
Operating
netback(2)
($/bbl)
Realized sales
price 37.66 57.38 (34) 38.34 58.01 (34)
Royalties (10.48) (17.05) (39) (10.74) (16.49) (35)
Operating
expenses (13.28) (15.21) (13) (13.11) (14.91) (12)
--------------- ---------------------- ---------------------- --------- ---------------------- ---------------------- ---------
13.90 25.12 (45) 14.49 26.61 (46)
--------------- ---------------------- ---------------------- --------- ---------------------- ---------------------- ---------
Notes:
(1) The Company's 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 since the Company's oil sales volumes
typically represent blends of more than one type of crude oil.
(2) Non-GAAP financial measure that does not have a standardized
meaning prescribed by IFRS and therefore may not be comparable with
the calculation of similar measures presented by other companies.
See "Non-GAAP Measures" for further information.
Three months ended % change Year ended % change
December 31, December 31,
--------- ---------
2020 2019 2020 2019
---------------- ----------------------- ----------------------- --------- ----------------------- ----------------------- ---------
Financial
Highlights
($000's except
as
indicated)
Petroleum sales 4,414 8,920 (51) 19,592 38,654 (49)
Cash from
operating
activities 167 2,090 (92) 2,296 5,454 (58)
Funds flow
(used in)
from
operations(2) (736) 2,018 n/a 263 6,840 (96)
Per share -
basic
and
diluted(1)(2) (0.00) 0.01 n/a 0.00 0.04 (100)
Net earnings
(loss) 1,655 (3,549) n/a (11,030) (5,620) 96
Per share -
basic
and diluted 0.01 (0.02) n/a (0.06) (0.04) 50
Exploration
capital
expenditures 9,031 5,838 55 17,861 10,113 77
Development
capital
expenditures 186 157 18 709 1,388 (49)
---------------- ----------------------- ----------------------- --------- ----------------------- ----------------------- ---------
Total capital
expenditures 9,217 5,995 54 18,570 11,501 61
---------------- ----------------------- ----------------------- --------- ----------------------- ----------------------- ---------
Working capital
(surplus)
deficit(1) (12,933) 1,139 n/a
Principal
non-current
balance of
term loan 7,500 15,364 (51)
Net (surplus)
debt(1)
- end of
period (5,433) 16,503 n/a
---------------- ----------------------- ----------------------- --------- ----------------------- ----------------------- ---------
Share
Information
(000's)
Weighted avg.
shares
outstanding
Basic 197,686 160,691 23 183,781 155,830 18
Diluted 206,072 160,691 28 183,781 155,830 18
Outstanding
shares
- end of
period 209,400 160,703 30
Notes:
(1) Non-GAAP financial measure that does not have a standardized
meaning prescribed by IFRS and therefore may not be comparable with
the calculation of similar measures presented by other companies.
See "Non-GAAP Measures" for further information.
(2) Additional GAAP term included in the Company's consolidated
statements of cash flows. Funds flow from operations represents net
loss excluding non-cash items. See "Non-GAAP Measures" for further
information.
Annual operating results
Throughout 2020, we conducted minimal capital development
activity and continued to allocate capital to exploration
activities on our Ortoire property. As a result, crude oil
production during the fourth quarter averaged 1,274 bbls/d, a 25
percent decrease relative to the 1,690 bbls/d produced in the
fourth quarter of 2019 based on the ongoing impact of natural
declines. Further, commencing in March 2020, we deliberately
reduced discretionary operating expenditures in response to lower
crude oil pricing, focusing on performing well interventions on
those deemed high priority. Accordingly, annual 2020 crude oil
production averaged 1,392 bbls/d, representing a decrease of 24
percent from crude oil production delivered in 2019. We invested
$709,000 in development activities in 2020, which mainly consisted
of recompletion activities on legacy wellbores and upgrades to our
oilfield service equipment to maintain base production levels.
We remained heavily focused on our Ortoire exploration
activities in 2020, investing $17,861,000 in exploration assets
during the year. In 2020, we drilled two gross exploration wells
(1.6 net) and incurred production testing costs on the
Cascadura-1ST1 well drilled in December 2019. The Chinook-1
exploration well reached its total depth on October 13, 2020, and
we concluded drilling operations on Cascadura Deep-1 on December
19, 2020.
Annual financial results
We reported funds flow from operations of $263,000 in 2020
versus $6,840,000 generated in the prior year. Petroleum sales
recognized in 2020 decreased by 49 percent or $19,062,000 from
2019, reflecting a 34 percent reduction in our realized sales
pricing as a result of the COVID-19 pandemic and a 24 percent
decline in crude oil production volumes from limited capital and
operational investment. The reduction in 2020 petroleum sales
resulted in a 50 percent decline in royalty expenses compared to
2019. In response to the drastic decrease in realized crude oil
pricing, we instituted cost-saving initiatives, decreasing annual
operating expenses by 33 percent and 12 percent on an absolute and
per barrel basis from 2019, respectively. As a result, our annual
2020 operating netback was $14.49 per barrel versus $26.61 per
barrel reported in 2019. In addition, we reduced annual 2020
general and administration expenses by 6 percent in comparison to
2019. Finance expenses increased by $3,419,000 from 2019, as
non-cash finance expenses increased by $1,734,000 predominately as
a result of the Company's term loan refinancing. Further,
Touchstone recognized a one-time $1,286,000 income tax interest
reversal recorded in net finance expenses in the prior year.
Relative to 2019, current income tax expense decreased by
$5,094,000 or 95 percent, reflective of $4,914,000 in supplemental
petroleum taxes incurred in the prior year from higher realized
crude oil pricing.
We recorded a net loss of $11,030,000 ($0.06 per share) in 2020
compared to a net loss of $5,620,000 ($0.04 per share) in 2019.
Touchstone recognized net impairment losses of $11,418,000 in 2020
compared to impairment losses of $7,960,000 recorded in 2019. 2020
impairments were a result of $795,000 of licence costs on non-core
exploration assets and $10,623,000 in net property and equipment
impairments. $19,215,000 in impairment losses were recognized in
the first quarter of 2020 based on the precipitous decline in
forward crude oil pricing, while net property and equipment
impairment recoveries of $8,592,000 were recorded in the fourth
quarter of 2020 based on our updated reserve report and a recovery
of forward oil prices as at December 31, 2020. The net impairment
losses were minimized by their corresponding effect on deferred
taxes, as a recovery of $6,273,000 was recognized during the year
ended December 31, 2020 (2019 - $1,813,000).
On the basis of the successful results from the first three
Ortoire exploration wells, we undertook a private placement that
closed on November 12, 2020 in order to support the completion of
the initial phase of exploration work on the Ortoire block, raising
net proceeds of $28,386,000. Touchstone exited the year with a cash
balance of $24,281,000, a working capital surplus of $12,933,000
and $7,500,000 drawn on our term credit facility resulting in a net
surplus position of $5,433,000. Our near-term liquidity is
augmented by $12.5 million of undrawn credit capacity.
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
Shore Capital (Nominated Advisor and Joint Broker)
Nominated Advisor: Edward Mansfield / Daniel Bush / Michael McGloin Tel: +44 (0) 207 408 4090
Corporate Broking: Jerry Keen
Canaccord Genuity (Joint Broker)
Adam James / Henry Fitzgerald O'Connor / Thomas Diehl Tel: +44
(0) 207 523 8000
Camarco (Financial PR)
Nick Hennis / Billy Clegg Tel: +44 (0) 203 781 8330
Advisories
Non-GAAP Measures
This announcement contains terms commonly used in the oil and
natural gas industry, including funds flow from operations, funds
flow from operations per share, operating netback, working capital
and net debt. These terms do not have a standardized meaning
prescribed under Generally Accepted Accounting Principles ("GAAP")
or IFRS and may not be comparable to similar measures presented by
other companies. Shareholders and investors are cautioned that
these measures should not be construed as alternatives to cash flow
from operating activities, net earnings, net earnings per share,
total assets, total liabilities, or other measures of financial
performance as determined in accordance with GAAP. Management uses
these Non-GAAP measures for its own performance measurement and to
provide stakeholders with measures to compare the Company's
operations over time.
Funds flow from operations is an additional GAAP measure
included in the Company's consolidated statements of cash flows.
Funds flow from operations represents net earnings (loss) excluding
non-cash items. Touchstone considers funds flow from operations to
be an important measure of the Company's ability to generate the
funds necessary to finance capital expenditures and repay debt. The
Company calculates funds flow from operations per share by dividing
funds flow from operations by the weighted average number of common
shares outstanding during the applicable period.
The Company uses operating netback as a key performance
indicator of field results. Operating netback is presented on a
total and per barrel basis and is calculated by deducting royalties
and operating expenses from petroleum sales. If applicable, the
Company also discloses operating netback both prior to realized
gains or losses on derivatives and after the impacts of derivatives
are included. Realized gains or losses represent the portion of
risk management contracts that have settled in cash during the
period, and disclosing this impact provides Management and
investors with transparent measures that reflect how the Company's
risk management program can impact netback metrics. The Company
considers operating netback to be a key measure as it demonstrates
Touchstone's profitability relative to current commodity prices.
This measurement assists Management and investors with evaluating
operating results on a historical basis.
The Company closely monitors its capital structure with a goal
of maintaining a strong financial position in order to fund current
operations and the future growth of the Company. The Company
monitors working capital and net (surplus) debt as part of its
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
(surplus) debt is calculated by summing the Company's working
capital and the principal (undiscounted) non-current amount of
senior secured debt.
Please refer to the Company's December 31, 2020 Management's
Discussion and Analysis for reconciliations of Non-GAAP Measures
contained 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
is not limited to, statements relating to the Company's exploration
plans and strategies, including anticipated drilling, timing,
production testing, development, tie-in, facilities construction,
and ultimate production from exploration wells; the Company's
expectation regarding future demand for the Company's petroleum
products and economic activity in general; the impacts of COVID-19
on the Company's business and measures taken in response thereto;
uncertainty regarding COVID-19 and the impact it will have on
future petroleum pricing, global financial markets and the
Company's operations; and the sufficiency of resources and
available financing 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 2020 Annual
Information Form dated March 25, 2021 which will be filed on SEDAR
and can be accessed at www.sedar.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.
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
FR JAMTTMTBTTTB
(END) Dow Jones Newswires
March 26, 2021 03:00 ET (07:00 GMT)
Touchstone Exploration (LSE:TXP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Touchstone Exploration (LSE:TXP)
Historical Stock Chart
From Apr 2023 to Apr 2024
