TIDMTXP
RNS Number : 0068J
Touchstone Exploration Inc.
11 August 2023
SECOND QUARTER 2023 FINANCIAL AND OPERATING RESULTS
CALGARY, ALBERTA (August 11, 2023) - 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, 2023.
Selected information is outlined below and should be read in
conjunction with our June 30, 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 .
Paul Baay, President and Chief Executive Officer, commented:
"I am pleased to provide an update on our financial and
operational results for the second quarter of the 2023 financial
year. The results come as we continue to focus our efforts on the
commissioning of the Cascadura facility and completing production
testing at Royston-1X. We look forward to providing shareholders
with further updates in the near term."
Second Quarter 2023 Financial and Operational Highlights
-- Achieved quarterly production average volumes of 1,827 boe/d,
representing a 29 percent increase relative to the 1,420 boe/d
produced in the prior year equivalent quarter.
-- Natural gas production from our Coho-1 well averaged net
volumes of 4.2 MMcf/d (703 boe/d) in the quarter and contributed
$811,000 of net natural gas sales at an average realized price of
$2.11/Mcf.
-- Realized petroleum and natural gas sales of $7,181,000
compared to $12,596,000 in the 2022 comparative quarter, as
$811,000 in net natural gas sales were offset by decreased crude
oil sales of $6,226,000, reflecting a 36 percent decline in
realized crude oil pricing and a 21 percent decrease in crude oil
production.
-- Generated an operating netback of $2,826,000, representing a
51 percent decrease from the 2022 equivalent quarter primarily
attributed to the 43 percent decline in petroleum and natural gas
sales.
-- Reported funds flow from operations of $6,000 in the quarter
compared to $803,000 in the preceding quarter and $1,150,000 in the
prior year equivalent quarter.
-- Recognized a net loss of $71,000 ($0.00 per basic share) and
comprehensive income of $136,000 in the quarter compared to a net
loss of $262,000 ($0.00 per basic share) and a comprehensive loss
of $529,000 reported in the same period of 2022.
-- $5,135,000 in quarterly capital investments primarily focused
on expenditures related to the construction of the Cascadura
natural gas and liquids facility and two Royston-1X production
tests.
-- Amended our Trinidad based loan agreement in May 2023,
allowing for an additional $7 million revolving loan component that
was fully drawn in June 2023 to provide liquidity while we complete
construction of the Cascadura facility.
-- Exited the quarter with a cash balance of $10,138,000, a bank
debt principal balance of $31,000,000 and a net debt position of
$28,913,000.
Financial and Operating Results Summary
Three months % change Six months ended % change
ended June 30, June 30,
---------------------------- --------- ---------
2023 2022 2023 2022
---------------------------- -------- -------- --------- --------- -------- ---------
Operational
Average daily production
Crude oil(1) (bbls/d) 1,124 1,420 (21) 1,204 1,408 (14)
Natural gas(1) (Mcf/d) 4,215 - n/a 4,667 - n/a
---------------------------- -------- -------- --------- --------- -------- ---------
Average daily production
(boe/d) (2) 1,827 1,420 29 1,982 1,408 41
---------------------------- -------- -------- --------- --------- -------- ---------
Average realized prices(3)
Crude oil(1) ($/bbl) 62.26 97.48 (36) 63.64 90.61 (30)
Natural gas(1) ($/Mcf) 2.11 - n/a 2.12 - n/a
---------------------------- -------- -------- --------- --------- -------- ---------
Realized commodity
price ($/boe) (2) 43.19 97.48 (56) 43.64 90.61 (52)
---------------------------- -------- -------- --------- --------- -------- ---------
Production mix (%
of production)
Crude oil(1) 62 100 61 100
Natural gas(1) 38 - 39 -
Operating netback
($/boe) (2)
Realized commodity
price(3) 43.19 97.48 (56) 43.64 90.61 (52)
Royalties(3) (12.94) (34.97) (63) (12.98) (31.80) (59)
Operating expenses(3) (13.25) (17.52) (24) (12.61) (17.35) (27)
---------------------------- -------- -------- --------- --------- -------- ---------
Operating netback(3) 17.00 44.99 (62) 18.05 41.46 (56)
---------------------------- -------- -------- --------- --------- -------- ---------
Financial
($000's except per
share amounts)
Petroleum and natural
gas sales 7,181 12,596 (43) 15,657 23,092 (32)
Cash from operating
activities 2,975 3,533 (16) 3,888 3,883 -
Funds flow from operations 6 1,150 (99) 809 2,593 (69)
Net loss (71) (262) (73) (350) (498) (30)
Per share - basic
and diluted (0.00) (0.00) - (0.00) (0.00) -
Exploration capital
expenditures 4,795 2,932 64 13,545 4,806 182
Development capital
expenditures 340 436 (22) 609 1,116 (45)
---------------------------- -------- -------- --------- --------- -------- ---------
Capital expenditures(3) 5,135 3,368 52 14,154 5,922 139
---------------------------- -------- -------- --------- --------- -------- ---------
Working capital deficit
(surplus)(3) 10,913 (346) n/a
Principal long-term
bank debt 18,000 24,000 (25)
Net debt(3) - end
of period 28,913 23,654 22
---------------------------- -------- -------- --------- --------- -------- ---------
Share Information
(000's)
Weighted average shares
outstanding - basic
and diluted 233,144 212,204 10 233,091 211,517 10
Outstanding shares
- end of period 233,428 212,275 10
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.
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 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 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.
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
Management monitors working capital and net debt as part of the
Company's capital structure to evaluate its true debt and liquidity
position and to manage capital and liquidity risk. Working capital
is calculated by subtracting current liabilities from current
assets as they appear on the applicable consolidated balance sheet.
Net debt is calculated by summing the Company's working capital and
the principal (undiscounted) long-term amount of senior secured
debt and is most directly comparable to total liabilities.
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 and six months
ended June 30, 2023 accompanying our June 30, 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 and six months ended June 30,
2023 accompanying our June 30, 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
Touchstone Exploration Inc.
Interim Condensed Consolidated Balance Sheets
Unaudited, stated in thousands of United States dollars
As at June 30, December
31, 2022
2023
------------------------------------------ --- ---------- ----------
Assets
Current assets
Cash 10,138 16,335
Accounts receivable 6,734 7,487
Inventory 101 129
Prepaid expenses 941 1,342
Assets held for sale - 1,122
17,914 26,415
Exploration and evaluation assets 65,310 51,352
Property, plant and equipment 66,098 67,162
Restricted cash 903 1,021
Other assets 412 481
Abandonment fund 1,567 1,446
----------------------------------------------- ---------- ----------
Total assets 152,204 147,877
----------------------------------------------- ---------- ----------
Liabilities
Current liabilities
Accounts payable and accrued liabilities 15,519 12,737
Income taxes payable 308 1,014
Current portion of bank debt 13,000 6,000
Liabilities associated with assets held
for sale - 1,672
28,827 21,423
Lease liabilities 1,662 1,373
Bank debt 17,961 20,962
Decommissioning liabilities 11,017 11,182
Deferred income taxes 13,717 14,557
----------------------------------------------- ---------- ----------
Total liabilities 73,184 69,497
----------------------------------------------- ---------- ----------
Shareholders' equity
Shareholders' capital 114,743 114,635
Contributed surplus 5,583 4,905
Other comprehensive loss (13,313) (13,517)
Deficit (27,993) (27,643)
----------------------------------------------- ---------- ----------
Total shareholders' equity 79,020 78,380
----------------------------------------------- ---------- ----------
Total liabilities and shareholders'
equity 152,204 147,877
----------------------------------------------- ---------- ----------
Touchstone Exploration Inc.
Interim Condensed Consolidated Statements of Loss and
Comprehensive Income (Loss)
Unaudited, stated in thousands of United States dollars (except
per share amounts)
Three months Six months ended
ended June 30, June 30,
----------------------------------
2023 2022 2023 2022
---------------------------------- -------- -------- --------- --------
Revenue
Petroleum and natural gas
sales 7,181 12,596 15,657 23,092
Less: royalties (2,152) (4,519) (4,656) (8,105)
----------------------------------- -------- -------- --------- --------
Petroleum and natural gas
revenue, net of royalties 5,029 8,077 11,001 14,987
Other revenue 22 11 34 20
----------------------------------- -------- -------- --------- --------
Total revenue 5,051 8,088 11,035 15,007
----------------------------------- -------- -------- --------- --------
Expenses
Operating 2,203 2,264 4,523 4,421
General and administration 2,376 1,897 4,477 3,870
Net finance 631 617 1,062 1,560
Gain on asset dispositions (800) (85) (800) (120)
Foreign exchange loss (gain) 48 (140) (62) (196)
Equity-based compensation 252 399 613 643
Depletion and depreciation 1,041 975 2,418 1,905
Impairment 14 35 29 171
Other (440) 540 (440) 540
Total expenses 5,325 6,502 11,820 12,794
----------------------------------- -------- -------- --------- --------
(Loss) earnings before
income taxes (274) 1,586 (785) 2,213
Provision for income taxes
Current expense 180 1,547 395 2,175
Deferred (recovery) expense (383) 301 (830) 536
----------------------------------- -------- -------- --------- --------
Total income tax (recovery)
expense (203) 1,848 (435) 2,711
----------------------------------- -------- -------- --------- --------
Net loss (71) (262) (350) (498)
Currency translation adjustments 207 (267) 204 133
----------------------------------- -------- -------- --------- --------
Comprehensive income (loss) 136 (529) (146) (365)
----------------------------------- -------- -------- --------- --------
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
For the six months ended June 30
Unaudited, stated in thousands of United States dollars
2023 2022
--------------------------------------- --------- ---------
Shareholders' capital
Balance, beginning of period 114,635 101,757
Equity-based settlements 108 336
---------------------------------------- --------- ---------
Balance, end of period 114,743 102,093
---------------------------------------- --------- ---------
Contributed surplus
Balance, beginning of period 4,905 3,466
Equity-based settlements (39) (119)
Equity-based compensation expense 613 643
Equity-based compensation capitalized 104 159
---------------------------------------- --------- ---------
Balance, end of period 5,583 4,149
---------------------------------------- --------- ---------
Other comprehensive loss
Balance, beginning of period (13,517) (13,219)
Other comprehensive income 204 133
---------------------------------------- --------- ---------
Balance, end of period (13,313) (13,086)
---------------------------------------- --------- ---------
Deficit
Balance, beginning of period (27,643) (24,446)
Net loss (350) (498)
---------------------------------------- --------- ---------
Balance, end of period (27,993) (24,944)
---------------------------------------- --------- ---------
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,
----------------------------------
2023 2022 2023 2022
---------------------------------- -------- -------- --------- ---------
Operating activities
Net loss (71) (262) (350) (498)
Items not involving cash
from operations:
Gain on asset dispositions (800) (85) (800) (120)
Unrealized foreign exchange
loss (gain) 52 (139) (67) (279)
Equity-based compensation
expense 252 399 613 643
Depletion and depreciation
expense 1,041 975 2,418 1,905
Impairment expense 14 35 29 171
Other (81) (24) (186) 285
Deferred income tax (recovery)
expense (383) 301 (830) 536
Decommissioning expenditures (18) (50) (18) (50)
Funds flow from operations 6 1,150 809 2,593
Change in non-cash working
capital 2,969 2,383 3,079 1,290
----------------------------------- -------- -------- --------- ---------
Cash from operating activities 2,975 3,533 3,888 3,883
----------------------------------- -------- -------- --------- ---------
Investing activities
Exploration and evaluation
expenditures (4,795) (2,932) (13,545) (4,806)
Property, plant and equipment
expenditures (340) (436) (609) (1,116)
Abandonment fund expenditures (56) (30) (122) (59)
Proceeds from asset dispositions 250 100 250 135
Change in non-cash working
capital (4,312) (1,186) 112 (6,806)
Cash used in investing
activities (9,253) (4,484) (13,914) (12,652)
----------------------------------- -------- -------- --------- ---------
Financing activities
Changes in restricted cash 59 35 118 40
Net advance of bank debt 5,500 - 4,000 -
Net finance lease receipts
(payments) 95 74 (200) 153
Issuance of common shares 69 142 69 217
Change in non-cash working
capital (122) (143) (252) (250)
----------------------------------- -------- -------- --------- ---------
Cash from financing activities 5,601 108 3,735 160
----------------------------------- -------- -------- --------- ---------
Change in cash (677) (843) (6,291) (8,609)
Cash, beginning of period 10,859 10,148 16,335 17,936
Impact of foreign exchange
on foreign denominated
cash balances (44) 120 94 98
----------------------------------- -------- -------- --------- ---------
Cash, end of period 10,138 9,425 10,138 9,425
----------------------------------- -------- -------- --------- ---------
Supplementary information
for cash flow from operating
activities:
Interest paid in cash 501 588 1,031 1,128
Income taxes paid in cash 86 520 1,099 556
----------------------------------- -------- -------- --------- ---------
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