TIDMTXP
RNS Number : 3824W
Touchstone Exploration Inc.
14 November 2017
TOUCHSTONE ANNOUNCES THIRD QUARTER 2017 FINANCIAL RESULTS
Touchstone Exploration Inc. ("Touchstone" or the "Company") (TSX
/ LSE: TXP) announces its financial and operating results for the
three months ended September 30, 2017 (the "third quarter").
Selected financial and operational information is outlined below
and should be read in conjunction with Touchstone's September 30,
2017 unaudited interim consolidated financial statements and
related management's discussion and analysis, both 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, tabular amounts herein are in thousands of
Canadian dollars, and amounts in text are rounded to thousands of
Canadian dollars.
2017 Third Quarter Highlights
-- Generated quarterly funds flow from operations of $1,387,000
($0.01 per basic share) compared to $438,000 ($0.01 per basic
share) in the second quarter of 2017 and $1,567,000 ($0.02 per
basic share) in the prior year comparative period.
-- Realized an operating netback of $24.46 per barrel,
representing increases of 25% from the second quarter of 2017 and
29% from the third quarter of 2016.
-- Achieved quarterly average crude oil sales of 1,437 barrels
per day ("bbls/d"), representing increases of 8% from the second
quarter of 2017 and 13% from the prior year comparative period.
-- Successfully drilled one well and recompleted three wells.
-- Subsequent to quarter-end, the Company secured bonding to
support its cash collateralized US$2,150,000 letter of credit
relating to East Brighton exploration work commitments.
-- The Company's Board of Directors approved the drilling of
four additional wells on its Coora 2 and WD-8 properties;
Touchstone expects to commence operations in December 2017.
2017 Third Quarter and Year-to-Date Financial and Operating
Results Summary
Three months Nine months ended
ended September September 30,
30,
2017 2016 2017 2016
------------------------- ------------ ----------- ------------ -----------
Operating
Average daily oil
production (bbls/d) 1,437 1,276 1,351 1,319
Operating netback(1)
($/bbl)
Brent benchmark
price 65.28 59.75 67.61 55.07
Discount (5.64) (7.19) (6.03) (8.18)
------------------------- ------------ ----------- ------------ -----------
Realized sales price 59.64 52.56 61.58 46.89
Royalties (16.41) (13.89) (18.93) (12.98)
Operating expenses (18.77) (19.65) (19.95) (21.48)
------------------------- ------------ ----------- ------------ -----------
Operating netback
prior to derivatives 24.46 19.02 22.70 12.43
Realized gain on
derivatives - - - 17.87
------------------------- ------------ ----------- ------------ -----------
Operating netback
after derivatives 24.46 19.02 22.70 30.30
------------------------- ------------ ----------- ------------ -----------
Financial ($000's except
share and per share amounts)
Funds flow from
operations 1,387 1,567 2,218 5,764
Per share - basic
and diluted(1) 0.01 0.02 0.02 0.07
Net loss (1,203) (702) (4,600) (5,699)
Per share - basic
and diluted (0.01) (0.01) (0.05) (0.07)
------------------------- ------------ ----------- ------------ -----------
(1) Refer to advisory
regarding non-GAAP
measures.
Capital expenditures
Exploration 202 847 910 1,476
Property and equipment 1,889 327 7,375 1,033
------------------------- ------------ ----------- ------------ -----------
Total 2,091 1,174 8,285 2,509
------------------------- ------------ ----------- ------------ -----------
Total assets - end
of period 80,137 72,550
Net debt(1) - end
of period 14,598 4,135
Weighted average
shares outstanding
Basic and diluted 103,137,143 83,137,143 90,243,370 83,116,705
Outstanding shares
- end of period 103,137,143 83,137,143
(1) Refer to advisory regarding non-GAAP measures.
Touchstone drilled and completed the fourth and final well of
its initial 2017 drilling program in the third quarter of 2017. Two
of the wells were on production for the duration of the quarter,
while the remaining two wells commenced production during the
quarter. The four wells contributed a combined field estimated 273
bbls/d of incremental production. Touchstone's workover program
continued in the quarter with three well recompletions; the Company
performed 13 well recompletions in the calendar year of 2017. The
Company invested $2,091,000 in the third quarter of 2017 on
exploration and development expenditures, of which $1,576,000
related to drilling and well recompletions. As a result, third
quarter 2017 production increased to 1,437 bbls/d, representing an
increase of 8% from the second quarter of 2017 and 13% from the
third quarter of 2016. The Company experienced weather delays in
the third quarter due to unseasonable heavy rains that affected
both swabbing operations and the ability to sell all produced
volumes at quarter-end.
Realized third quarter 2017 pricing for crude oil was $59.64
(US$47.53) per barrel versus $52.56 (US$40.24) per barrel received
in the equivalent quarter of 2016. Petroleum revenues increased 28%
from the prior year comparative quarter based on a 13%
year-over-year increase in realized crude oil prices and a 13%
increase in production. Third quarter 2017 royalty expenses
represented 27.5% of petroleum revenues compared to 26.4% in the
third quarter of 2016. The increase reflected the sliding scale
effect of increased commodity prices on royalty rates, slightly
offset by increased new drilling production which qualified for
reduced royalties. Third quarter 2017 per barrel operating expenses
decreased 4% from the prior year comparable quarter. General and
administrative costs increased 45% from the prior year third
quarter, primarily based on additional fees associated with the
Company's AIM listing, a $179,000 onerous lease reversal recorded
in 2016, and less capitalized costs in 2017. Third quarter 2017 net
finance expenses remained consistent with the prior quarter. In the
third quarter of 2016, the Company reversed a $1,169,000 interest
expense balance that was waived in relation to a tax amnesty.
Funds flow from operations for the three months ended September
30, 2017 was $1,387,000 ($0.01 per basic share) versus funds flow
from operations of $1,567,000 ($0.02 per basic share) recognized in
the third quarter of 2016. Funds flow from operations decreased in
comparison to the prior year comparative quarter largely due to the
material income tax reversal recorded in 2016. The Company recorded
a net loss of $1,203,000 ($0.01 per basic share) during the three
months ended September 30, 2017, versus a net loss of $702,000
($0.01 per basic share) recognized in the prior year comparative
period.
Touchstone exited the quarter with a working capital surplus of
$402,000 and a $15,000,000 principal term loan balance. In
addition, the Company classified $3,069,000 in cash used to
collateralize letters of credit that secured future work
obligations on production and development contracts as long-term
restricted cash.
The Company must continue to maintain a minimum cash reserves
balance of $5,000,000 on a quarterly basis in accordance with its
term loan arrangement.
In the third quarter, Touchstone traded a total of 22,797,299
common shares, 76% of which were traded on the AIM exchange.
Subsequent to September 30, 2017, Export Development Canada
provided the Company's bank with a performance security guarantee
to support the Company's US$2,150,000 letter of credit related to
the exploration work commitments on its East Brighton property.
Prior to the guarantee, the letter of credit was collateralized
with cash and classified as long-term restricted cash.
Paul Baay, President and Chief Executive Officer, commented:
"I am very pleased with the results of the 2017 drilling
program, with the four wells drilled thus far exceeding our
expectations. We are excited to take the proven geological concept
to our Coora 2 and WD-8 properties. These wells will also satisfy
our 2016 and 2017 work commitments. With the further increase in
operating netback achieved during this quarter, we are in position
to continue to strengthen and grow our business."
For further information, please 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
www.touchstoneexploration.com
Shore Capital (Nominated Advisor and Joint Broker)
Nominated Adviser: Edward Mansfield / Mark Percy / James Wolfe Tel: +44 (0) 20 7408 4090
Corporate Broking: Jerry Keen
GMP FirstEnergy (Joint Broker)
Jonathan Wright / Hugh Sanderson Tel: +44 (0) 207448 0200
Camarco (Financial PR)
Nick Hennis / Jane Glover / Billy Clegg Tel: +44 (0) 203 757
4980
About Touchstone
Touchstone Exploration Inc. is a Calgary 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".
Advisories
Non-GAAP Measures: This announcement contains terms commonly
used in the oil and natural gas industry, such as funds flow from
operations per share, operating netback and net debt. These terms
do not have a standardized meaning under International Financial
Reporting Standards and may not be comparable to similar measures
presented by other companies. 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. Operating netback is presented on a per barrel
basis and is calculated by deducting royalties and operating
expenses from petroleum revenue. The Company 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 uses operating netback as a key
performance indicator of field results, and considers it to be a
key measure as it demonstrates Touchstone's profitability relative
to current commodity prices. Net debt is calculated by summing the
Company's working capital and non-current undiscounted interest
bearing liabilities. Working capital is defined as current assets
less current liabilities as they appear on the statements of
financial position. The Company uses this information to assess its
true debt and liquidity position and to manage capital and
liquidity risk. 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.
Forward-Looking Statements: Certain information provided in this
announcement may constitute forward-looking statements within the
meaning of applicable securities laws. Forward-looking information
in this announcement may include, but is not limited to, statements
regarding the Company's future recompletion and drilling plans,
including the anticipated timing thereof. 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 Annual
Information Form dated March 21, 2017 which has been 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 company news service from the London Stock Exchange
END
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