TIDMTXP
RNS Number : 2608H
Touchstone Exploration Inc.
14 November 2018
THIRD QUARTER 2018 RESULTS
Calgary, Alberta - November 14, 2018 - Touchstone Exploration
Inc. ("Touchstone" or the "Company") (TSX / LSE: TXP) announces its
financial and operating results for the three and nine months ended
September 30, 2018. Selected financial and operational information
is outlined below and should be read in conjunction with
Touchstone's September 30, 2018 unaudited interim consolidated
financial statements and the 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.
Third Quarter Highlights
-- Achieved average crude oil production of 1,758 barrels per
day ("bbls/d"), representing an increase of 22% from the third
quarter of 2017.
-- Continued our 2018 development program with total drilling
and development capital expenditures of $4,543,000, drilling three
wells and performing 12 well recompletions.
-- Realized $12,890,000 in petroleum sales, a 63% increase from the prior year third quarter.
-- Generated an operating netback of $37.13 per barrel, a 52%
increase relative to the $24.46 per barrel generated in the prior
year comparative quarter.
-- Delivered funds flow from operations of $3,260,000 ($0.03 per
basic share) compared to $1,387,000 ($0.01 per basic share) in the
third quarter of 2017.
-- Recognized net earnings of $267,000 compared to a net loss of
$1,203,000 reported in the equivalent quarter of 2017.
-- Exited the quarter with net debt of $12,975,000, representing
1.0 times net debt to third quarter 2018 annualized funds flow from
operations.
Financial and Operating Results Summary
Three months ended % change Nine months ended % change
September 30, September 30,
--------- ---------
2018 2017 2018 2017
----------------------------- ---------- --------- --------- ------------- ---------- ---------
Operating
Average daily oil
production (bbls/d) 1,758 1,437 22 1,674 1,351 24
Net wells drilled 3 1 200 8 4 100
Net wells recompleted 12 3 300 21 13 62
Brent benchmark price
(US$/bbl) 75.10 52.10 44 72.15 51.75 39
Operating netback(1)
($/bbl)
Realized sales price 79.71 59.64 34 78.32 61.58 27
Royalties (20.52) (14.59) 41 (21.46) (17.07) 26
Operating expenses (22.06) (20.59) 7 (20.46) (21.81) (6)
----------------------------- ---------- --------- --------- ------------- ---------- ---------
37.13 24.46 52 36.40 22.70 60
----------------------------- ---------- --------- --------- ------------- ---------- ---------
Financial ($000's except share and
per share amounts)
Petroleum sales 12,890 7,885 63 35,782 22,712 58
Funds flow from operations 3,260 1,387 135 9,119 2,218 311
Per share - basic(1) 0.03 0.01 200 0.07 0.02 250
Per share - diluted(1) 0.02 0.01 100 0.07 0.02 250
----------------------------- ---------- --------- --------- ------------- ---------- ---------
Net earnings (loss) 267 (1,203) n/a (300) (4,600) n/a
Per share - basic
and diluted 0.00 (0.01) n/a (0.00) (0.05) n/a
Capital expenditures
Exploration 578 202 186 1,240 910 36
Development 4,543 1,889 140 12,684 7,375 72
----------------------------- ---------- --------- --------- ------------- ---------- ---------
5,121 2,091 145 13,924 8,285 68
----------------------------- ---------- --------- --------- ------------- ---------- ---------
Net debt(1) - end
of period
Working capital surplus (2,025) (402)
Principal long-term
balance of loan 15,000 15,000
12,975 14,598 (11)
----------------------------- ---------- --------- --------- ------------- ---------- ---------
Weighted average shares outstanding
(000's)
Basic 129,021 103,137 25 129,021 90,243 43
Diluted 130,728 103,137 27 129,021 90,243 43
Outstanding shares - end of
period (000's) 129,021 103,137 25
Note:
(1) See "Advisories: Non-GAAP Measures".
Operating Results
In the third quarter we continued with our expanded 2018
drilling campaign by successfully drilling three wells, bringing
the total to eight development wells drilled through September 30,
2018. Capital expenditures totaled $5,121,000, of which $4,543,000
related to drilling and development activities. We recompleted 12
wells in the quarter, with an aggregate 21 wells recompleted
through September 30, 2018.
Third quarter 2018 crude oil production averaged 1,758 bbls/d, a
22% increase relative to the 1,437 bbls/d produced in the third
quarter of 2017. Third quarter average daily production increased
2% from the second quarter of 2018, with growth slowed by weather
based electrical supply disruptions and higher than normal crude
oil inventory held at September 30, 2018.
The eight wells drilled in 2018 combined to add approximately
249 bbls/d of incremental production in the third quarter, despite
two new wells beginning to produce in mid-August and one well
initiating production at the end of September. The four wells
drilled in 2017 continued to perform above internal expectations,
contributing approximately 351 bbls/d of production in the
quarter.
Financial Results
Our third quarter operating netback was $6,004,000 ($37.13 per
barrel), an improvement of 86% compared to $3,234,000 ($24.46 per
barrel) recorded in the third quarter of 2017. Higher realized
prices and production resulted in a $5,005,000 increase in
petroleum sales relative to the third quarter of 2017. This was
offset by higher royalties of $1,390,000 from increased production
and the sliding scale effect of increased commodity pricing to
royalty rates. Operating costs increased by $845,000 from the prior
year comparative quarter based on variable costs from increased
production and increased well site security and monitoring
costs.
We generated funds flow from operations of $3,260,000 in the
third quarter of 2018 versus $1,387,000 in the equivalent quarter
of 2017. The increase in funds flow was largely attributed to
stronger realized crude oil pricing and operating netback combined
with a 22% increase in production. As a result, we generated net
earnings of $267,000 in the quarter, compared to a net loss of
$1,203,000 reported in the prior year comparative quarter.
We maintained stable financial liquidity, exiting the quarter
with positive working capital of $2,025,000 and a $15,000,000
principal term loan balance. Our September 30, 2018 net debt of
$12,975,000 represented net debt to trailing twelve-month funds
flow from operations of 1.3 times and net debt to third quarter
2018 annualized funds flow from operation of 1.0 times.
Operations
Touchstone delivered October 2018 crude oil average sales
volumes of 1,964 bbls/d at an average realized price of $89.13
(US$68.48) per barrel. After achieving field estimated peak
production of 2,088 bbls/d buoyed by flush production from the new
WD-8 completed in early October, production volumes decreased as
the wells were converted from flowing to pumping production.
We spud the ninth well of our 2018 drilling program on November
1, 2018, and we expect the well to reach total depth within the
next two days. The well is located on our WD-8 property and will be
followed by the drilling of two additional wells in WD-8 from a
common surface location. The Company has contracted a second third
party rig to drill an additional WD-4 location, with spudding
expected by the end of the month. Touchstone anticipates that the
four wells will be drilled and completed by the end of the
year.
We previously planned on utilizing a separate rig to drill two
shallow work commitment wells on our South Palo Seco property prior
to the end of the year. However, Petrotrin identified internal
surface lease issues with the two previously approved locations.
This will result in the Company drilling a total of 12 wells by
year-end, with the two Palo Seco wells likely being pushed into the
2019 drilling program.
The Petroleum Company of Trinidad and Tobago Limited
("Petrotrin") Restructuring
On August 28, 2018, Petrotrin announced its intention to
discontinue refining operations and focus on upstream production
and exploration activities. This restructuring is expected to be
completed prior to the end of the year. The Company subleases
various petroleum production and exploration rights from Petrotrin
and the national oil company is currently the Company's sole
purchaser of crude oil.
The Company has been officially informed that Petrotrin will
continue to meet its contractual operations and commitments
throughout the transition process. Petrotrin has indicated that it
will be meeting with all pertinent stakeholders following
completion of the restructuring to discuss future changes and
opportunities.
We do not expect the restructuring to impact our current crude
oil production and marketing arrangements and future operations. We
believe our crude oil will continue to be purchased by Petrotrin
and consolidated with all Trinidad production for export.
Touchstone is looking forward to working with the restructured
national oil company to grow crude oil production in Trinidad.
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 Advisor: Edward Mansfield / Mark Percy / Daniel Bush
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, including 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. Shareholders and investors are cautioned that
these measures should not be construed as alternatives to cash
provided by operating activities, net income, total liabilities, or
other measures of financial performance as determined in accordance
with Generally Accepted Accounting Principles. 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.
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 an
absolute 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.
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 debt as part of its capital
structure to assess its true debt and liquidity position and to
manage capital and liquidity risk. Net debt is calculated by
summing the Company's working capital and the principal
(undiscounted) amount of long-term debt. Working capital is
calculated as current assets less current liabilities as they
appear on the statements of financial position.
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 relating to field
estimated production, Petrotrin's restructuring plans, timing
thereof, and the effect on the Company's operating and marketing
agreements and future operations, the potential undertaking,
timing, locations and costs of future well drilling and completion
activities, and the sufficiency of resources to fund future well
drilling operations. 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 December 31, 2017
Annual Information Form dated March 26, 2018 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 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.
END
QRTLXLLFVFFZFBZ
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