Touchstone Reports Second Quarter 2024 Results

CALGARY, AB / ACCESSWIRE / August 13, 2024 / Touchstone Exploration Inc. ("Touchstone", "we", "our" or the "Company") (TSX:TXP)(LSE:TXP) reports financial and operating results for the three and six months ended June 30, 2024 and updated 2024 guidance.

Selected financial information is outlined below and should be read in conjunction with our June 30, 2024 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.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are rounded to thousands of United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

Paul R. Baay, President and Chief Executive Officer, commented:

"Our results for the first half of 2024 highlight Touchstone's remarkable transformation over the past year, with notable improvements in both financial and production performance compared to the previous year. The second quarter has been particularly productive, marked by our efforts to optimize production, enhance processing capacity, and tie in our new wells to the Cascadura natural gas facility. We were excited to increase average sales volumes to 5,816 boe/d in July 2024, following the successful recompletion of the Cascadura Deep-1 well, representing an 18 percent increase from June 2024.

Since we began production at Cascadura in September 2023, we have gained valuable insights into the reservoir that will benefit our future drilling initiatives. However, we have observed that field declines have been steeper than anticipated, leading us to adjust our midpoint forecasted 2024 average production to 8,000 boe/d. Consequently, we now project an approximate annual funds flow from operations of $28 million for 2024.

Following our drilling program in the first half of the year, we remain on track to achieve initial production from the two Cascadura wells by the end of September. In line with our commitment to capital discipline and operational efficiency, we have decided to leverage the current drilling rig location and the installation of the Cascadura field flowline to drill two additional development wells from our Cascadura B site in the fourth quarter of 2024. This strategic shift will replace the previously planned two Coho wells. We look forward to sharing further updates with our shareholders in due course."

Year to Date Second Quarter 2024 Financial and Operating Highlights

• Attained average production volumes of 6,223 boe/d (78 percent natural gas), representing a 214 percent increase relative to the 1,982 boe/d (39 percent natural gas) produced in the six months ended June 30, 2023, mainly attributed from Cascadura natural gas and associated liquids volumes that were brought online in September 2023.

• Achieved funds flow from operations of $10,110,000 versus $809,000 reported in the prior year comparative period, driven by an increase in operating netback of $12,112,000 primarily from increased production volumes and realized commodity pricing.

• Recognized net earnings of $6,967,000 ($0.03 per basic and diluted share) during the six months ended June 30, 2024 compared to a net loss of $350,000 ($0.00 per basic share) reported in the equivalent 2023 period.

Second Quarter 2024 Financial and Operating Highlights

• Achieved average quarterly production of 5,432 boe/d (77 percent natural gas), a 23 percent decrease relative to 7,015 boe/d produced in the first quarter of 2024 (80 percent natural gas), mainly reflecting natural declines from our Cascadura field.

• Realized petroleum and natural gas sales of $14,090,000 compared to $16,584,000 in the first quarter of 2024, primarily attributed to a decrease in natural gas and NGL sales volumes.

  • Cascadura field production volumes in the quarter contributed $5,168,000 of natural gas sales at an average realized price of $2.52 per Mcf and $680,000 of petroleum sales at an average realized price of $73.86 per barrel.

  • Natural gas production from the Coho-1 well contributed $483,000 of natural gas sales in the quarter at an average realized price of $2.16 per Mcf.

  • Crude oil production contributed $7,759,000 of petroleum sales at an average realized price of $73.62 per barrel.

• Generated an operating netback of $8,127,000, a 22 percent decrease from the first quarter of 2024, primarily due to decreased natural gas and NGL sales volumes.

• Achieved quarterly funds flow from operations of $3,968,000 in the second quarter of 2024 compared to $6,142,000 in the preceding quarter.

• Delivered net earnings of $3,339,000 ($0.01 per basic and diluted share) versus $3,628,000 ($0.02 per basic and diluted share) recognized in the first quarter of 2024.

• $5,543,000 in quarterly capital investments primarily focused on expenditures directed towards one CO-1 well and progressing construction on the flowline from the Cascadura C site to the Cascadura natural gas processing facility.

• In April 2024 we entered into a third amended and restated loan agreement with our existing lender providing for an additional $13 million of bank debt capacity.

• Effective June 1, 2024 we closed an asset swap where we exchanged private San Francique leases for the Balata East block, which resulted in a $1,535,000 gain on asset disposition.

• Exited the second quarter of 2024 with a cash balance of $6,990,000 and a net debt position of $28,674,000, resulting in a net debt to annual funds flow from operations ratio of 1.25 times.

Post Period-end Highlights

• Effective July 1, 2024 we entered into exploration and production licences for the Charuma and Cipero onshore blocks awarded pursuant to the 2022 onshore competitive bid round, where we have an 80 percent operating interest in each licence.

• Following a recompletion of Cascadura Deep-1, in July 2024 we attained average net sales volumes of 5,816 boe/d representing an increase of 18 percent from June 2024 average net sales, comprised of:

  • average natural gas sales volumes of 27.5 MMcf/d (4,578 boe/d); and

  • average crude oil and natural gas liquid sales volumes of 1,238 bbls/d.

• Cascadura facility infrastructure and tie-in operations are progressing as scheduled, and we continue to target initial production from our Cascadura-2ST1 and Cascadura-3ST1 wells prior to the end of September 2024.

Financial and Operating Results Summary