TIDMTXP
RNS Number : 1482G
Touchstone Exploration Inc.
28 March 2022
YEAR- 2021 RESULTS
CALGARY, ALBERTA (March 28, 2022) - 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, 2021. Selected information is
outlined below and should be read in conjunction with our December
31, 2021 audited consolidated financial statements, the related
Management's discussion and analysis and Annual Information Form,
all 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 .
Fourth Quarter 2021 Highlights
-- Achieved quarterly average production volumes of 1,336
barrels per day ("bbls/d"), representing a 5 percent increase from
1,274 bbls/d produced in the fourth quarter of 2020.
-- Realized petroleum sales of $8,212,000 from an average crude
oil price of $66.81 per barrel compared to petroleum sales of
$7,650,000 from average realized pricing of $62.37 per barrel in
the third quarter of 2021.
-- Generated an operating netback of $29.96 per barrel, an 8
percent increase from the third quarter of 2021 and a 116 percent
increase from the $13.90 per barrel in the fourth quarter of
2020.
-- Our funds flow from operations improved to $1,291,000 in the
quarter compared to funds flow used in operations of $736,000 in
the fourth quarter of 2020.
-- Reported net earnings of $6,514,000 ($0.03 per basic and
diluted share) compared to net earnings of $1,655,000 ($0.01 per
basic and diluted share) in the same period of 2020. Net earnings
in the fourth quarter included net impairment reversals of
$13,716,000, partially offset by associated deferred income tax
expenses of $7,226,000.
-- Exploration and evaluation capital investments of $2,946,000
focused on completing and initiating production testing operations
on the Royston-1 well drilled in the third quarter of 2021 and
submitting the required regulatory application for the Cascadura
surface facility.
-- Drilled three gross and net commitment wells on our legacy
crude oil properties in the quarter, representing our first infill
development drilling since 2019.
-- Expanded our Trinidad-based term loan facility from $20
million to $30 million to fund our budgeted Ortoire facility
projects in 2022. We exited the year with cash of $17,936,000,
working capital surplus of $6,925,000 and $30,000,000 drawn on our
term credit facility, resulting in a net debt position of
$20,075,000.
Annual 2021 Highlights
-- Reported average daily crude oil sales of 1,342 bbls/d in
2021, a nominal 4 percent decrease relative to the 1,392 bbls/d
produced in 2020 due to natural declines, reflecting strategic
capital allocation on our Ortoire exploration program. Production
from our three development wells drilled in the fourth quarter of
2021 came online in the first quarter of 2022.
-- Generated funds flow from operations of $4,107,000 (2020 -
$263,000) and an annual operating netback of $26.55 per barrel
(2020 - $14.49 per barrel).
-- Recognized net earnings of $5,719,000 ($0.03 per basic and
diluted share) compared to a net loss of $11,030,000 ($0.06 per
basic share) in 2020, driven by $13,674,000 in net impairment
reversals recognized in the year predominantly based on increased
forecasted crude oil pricing and partially offset by the deferred
income tax expense impact of $7,463,000.
-- Despite COVID-19 challenges in Trinidad, we executed an
incident-free $20,106,000 exploration program, primarily focused on
drilling one gross (0.8 net) well, acquiring 22-line kilometres of
2D seismic and testing two exploration wells drilled in 2020. We
fulfilled all required minimum work obligations in the initial
exploration period of our Ortoire exploration and production
licence.
-- Development capital expenditures of $7,757,000 focused on
exporting a third-party drilling rig to Trinidad, which was used to
drill three development wells in the fourth quarter of 2021.
-- Entered into revised ten-year lease operating agreements for
our Coora-1, Coora-2, WD-4 and WD-8 blocks through December 31,
2030.
Post Period-end Highlights
-- Daily crude oil sales averaged 1,382 bbls/d in January 2022
with a realized price of $71.68 per barrel and averaged 1,384
bbls/d in February 2022 with a realized price of $81.30 per
barrel.
-- In February 2022, we executed the relevant agreements with
our third-party partners to allow for the final tie-in of the Coho
gas field, with pipeline tie-in operations proceeding towards
anticipated initial production in May 2022.
-- In March 2022, we were notified that the Trinidad government
approved a five-year extension to the exploration period of our
Ortoire licence to July 31, 2026 for an additional three
exploration well commitment.
Paul Baay, President and Chief Executive Officer, commented:
"Building on our operational and financial momentum generated in
2021, our near-term priority is to bring our Coho and Cascadura
exploration discoveries onto production. With the extension of the
operating agreements on our legacy assets and the five year
extension of the exploration period of our Ortoire licence, we are
able to prioritize and allocate future capital expenditures on
projects that provide the best economic return. Our assets,
including natural gas development at Cascadura and Coho, along with
oil development at Royston and our legacy properties, complemented
by internally identified exploration targets, advances Touchstone
to a level of portfolio balance. Barring any significant delays, we
forecast that our year-end 2021 liquidity position provides the
funding required to meet our near-term focus of commencing
production at Coho and Cascadura. By the end of the year, we expect
to develop into a sustainable cash flow generating production-based
company with strong exploration prospects."
Financial and Operating Results Summary
Three months ended % change Year ended December % change
December 31, 31,
--------- ---------
2021 2020 2021 2020
------------------------- ---------- --------- --------- ---------- ---------- ---------
Operational
Average daily oil
production(1) (bbls/d) 1,336 1,274 5 1,342 1,392 (4)
Net wells drilled 3.0 1.6 88 3.8 1.6 138
Brent benchmark price
($/bbl) 79.61 44.32 80 70.86 41.96 69
Operating netback
($/bbl)
Realized sales price(2) 66.81 37.66 77 60.25 38.34 57
Royalties(2) (22.15) (10.48) 111 (18.85) (10.74) 76
Operating expenses(2) (14.70) (13.28) 11 (14.85) (13.11) 13
------------------------- ---------- --------- --------- ---------- ---------- ---------
Operating netback(2) 29.96 13.90 116 26.55 14.49 83
------------------------- ---------- --------- --------- ---------- ---------- ---------
Notes:
(1) References to crude oil in the above table and elsewhere in
this announcement is a mix of light and medium crude oil and heavy
crude oil for which there is not a precise breakdown since our oil
sales volumes typically represent blends of more than one type of
crude oil.
(2) Non-GAAP financial measure. See "Advisories: Non-GAAP
Financial Measures" for further information.
Three months ended % change Year ended December % change
December 31, 31,
--------- ---------
2021 2020 2021 2020
---------------------------- ---------- --------- --------- ---------- ---------- ---------
Financial
($000's except per
share amounts)
Petroleum sales 8,212 4,414 86 29,568 19,592 51
Cash from operating
activities 1,388 167 731 1,546 2,296 (33)
Funds flow from (used
in) operations 1,291 (736) n/a 4,107 263 1,462
Per share - basic
and diluted(1) 0.01 (0.00) n/a 0.02 0.00 n/a
Net earnings (loss) 6,514 1,655 294 5,719 (11,030) n/a
Per share - basic
and diluted 0.03 0.01 200 0.03 (0.06) n/a
Exploration capital
expenditures 2,946 9,031 (67) 20,106 17,861 13
Development capital
expenditures 5,190 186 2,690 7,757 709 994
---------------------------- ---------- --------- --------- ---------- ---------- ---------
Total capital expenditures 8,136 9,217 (12) 27,863 18,570 50
---------------------------- ---------- --------- --------- ---------- ---------- ---------
Working capital surplus(1) (6,925) (12,933) (46)
Principal long-term
balance of term loan 27,000 7,500 260
Net debt (surplus)(1)
- end of period 20,075 (5,433) n/a
---------------------------- ---------- --------- --------- ---------- ---------- ---------
Share Information
(000's)
Weighted average -
basic 210,732 197,686 7 210,160 183,781 14
Weighted average -
diluted 218,102 206,072 6 217,678 183,781 18
Outstanding shares
- end of period 210,732 209,400 1
Note:
(1) Non-GAAP financial measure. See "Advisories: Non-GAAP
Financial Measures" for further information.
Touchstone Exploration Inc.
Touchstone Exploration Inc. is a Calgary, Alberta based company
engaged in the business of acquiring interests in petroleum and
natural gas rights and the exploration, development, production and
sale of petroleum and natural gas. Touchstone is currently active
in onshore properties located in the Republic of Trinidad and
Tobago. The Company's common shares are traded on the Toronto Stock
Exchange and the AIM market of the London Stock Exchange under the
symbol " TXP " .
For further information about Touchstone, please visit our
website at www.touchstoneexploration.com or contact:
Touchstone Exploration Inc.
Mr. Paul Baay, President and Chief Executive Officer Tel: +1
(403) 750-4487
Mr. Scott Budau, Chief Financial Officer
Mr. James Shipka, Chief Operating Officer
Shore Capital (Nominated Advisor and Joint Broker)
Daniel Bush / Toby Gibbs / Michael McGloin Tel: +44 (0) 207 408
4090
Canaccord Genuity (Joint Broker)
Adam James / Henry Fitzgerald O'Connor / Thomas Diehl Tel: +44
(0) 207 523 8000
Camarco (Financial PR)
Billy Clegg / Emily Hall / Lily Pettifar Tel: +44 (0) 203 781
8330
Advisories
Non-GAAP Financial Measures
Certain financial measures in this announcement do not have a
standardized meaning as prescribed by International Financial
Reporting Standards ("IFRS" or "GAAP") and therefore are considered
non-GAAP financial measures. These financial measures may not be
comparable to similar financial measures disclosed by other
issuers. Readers are cautioned that any non-GAAP financial measures
referred to herein should not be construed as alternatives to, or
more meaningful than measures prescribed by IFRS and they are not
meant to enhance the Company's reported financial performance or
position. These are complementary measures that are commonly used
in the oil and natural gas industry and by the Company to provide
shareholders and potential investors with additional information
regarding the Company's performance, liquidity and ability to
generate funds to finance its operations. Below is a description of
the non-GAAP financial measures, non-GAAP ratios, capital
management measures and supplementary financial measures disclosed
herein.
Funds flow from operations and funds flow from operations per
share
Funds flow from operations is included in the Company's
consolidated statements of cash flows. Touchstone considers funds
flow from operations to be a key measure of operating performance
as it demonstrates the Company's ability to generate the funds
necessary to finance capital expenditures and repay debt.
Management believes that by excluding the temporary impact of
changes in non-cash operating working capital, funds flow from
operations provides a useful measure of the Company's ability to
generate cash that is not subject to short-term movements in
non-cash operating working capital.
Funds flow from operations per share is a non-GAAP ratio
calculated by dividing funds flow from operations by the weighted
average number of common shares outstanding during the applicable
period on a basic and dilutive basis.
Operating netback
The Company uses operating netback as a key performance
indicator of field results. The Company considers operating netback
to be a key measure as it demonstrates Touchstone's profitability
relative to current commodity prices and assists Management and
investors with evaluating operating results on a historical basis.
Operating netback is a non-GAAP financial measure calculated by
deducting royalties and operating expenses from petroleum sales.
Operating netback per barrel is a non-GAAP ratio calculated by
dividing the operating netback by production volumes for the
period.
Working capital and net debt
Touchstone closely monitors its capital structure with a goal of
maintaining a strong financial position to fund current operations
and future growth. These are capital management measures used by
Management to steward the Company's overall debt position and as
measures of overall financial strength.
Management monitors working capital and net debt as part of the
Company's capital structure to assess its true debt and liquidity
position and to manage capital and liquidity risk. Working capital
is calculated as current assets minus current liabilities as they
appear on the consolidated statements of financial position. Net
debt (surplus) is calculated by summing the Company's working
capital and the principal (undiscounted) long-term amount of senior
secured debt.
Supplementary Financial Measures
The following supplementary financial measures are disclosed
herein.
Realized sales price per barrel - is comprised of petroleum
sales as determined in accordance with IFRS, divided by the
Company's total crude oil and natural gas liquid ("NGL") sales
volumes.
Royalties per barrel - is comprised of royalties as determined
in accordance with IFRS, divided by the Company's total crude oil
and NGL sales volumes.
Operating expenses per barrel - is comprised of operating
expenses as determined in accordance with IFRS, divided by the
Company's total crude oil and NGL sales volumes.
Refer to the "Non-GAAP Financial Measures " advisory section on
page 43 of the Company's December 31, 2021 Management's discussion
and analysis for reconciliations of non-GAAP financial measures
included herein to applicable GAAP measures.
Forward-Looking Statements
Certain information provided in this announcement may constitute
forward-looking statements and information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. Such forward-looking statements include, without
limitation, forecasts, estimates, expectations and objectives for
future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of the Company.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or
"should" occur or be achieved.
Forward-looking statements in this announcement may include, but
are not limited to, statements relating to Touchstone's near-term
priorities, the Company's development and exploration plans and
strategies including anticipated production timelines, Touchstone's
exploration prospects, the Company's future allocation of capital ,
the Company's expectations of becoming a cash flow generating
business, and Touchstone's current and future financial position
including the sufficiency of resources to fund future capital
expenditures and maintain financial liquidity. Although the Company
believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because the
Company can give no assurance that they will prove to be correct.
Since forward-looking statements address future events and
conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. Certain
of these risks are set out in more detail in the Company's 2021
Annual Information Form dated March 25, 2022 which will be filed
under the Company's profile on SEDAR ( www.sedar.com ) and will be
available on the Company's website ( www.touchstoneexploration.com
). The forward-looking statements contained in this announcement
are made as of the date hereof, and except as may be required by
applicable securities laws, the Company assumes no obligation to
update publicly or revise any forward-looking statements made
herein or otherwise, whether as a result of new information, future
events or otherwise.
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