TIDMTXP
RNS Number : 5139Y
Touchstone Exploration Inc.
13 May 2021
FIRST QUARTER 2021 RESULTS
CALGARY, ALBERTA (May 13, 2021) - Touchstone Exploration Inc. (
" Touchstone ", "we", "our", "us" or the " Company " ) (TSX, LSE:
TXP) reports its operating and financial results for the three
months ended March 31, 2021. Selected information is outlined below
and should be read in conjunction with Touchstone's March 31, 2021
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, all financial amounts herein are stated in United
States dollars .
First Quarter 2021 Highlights
-- Achieved quarterly crude oil sales of 1,297 barrels per day
("bbls/d"), a 2 percent increase relative to the preceding quarter
and an 18 percent decrease relative to the 1,589 bbls/d produced in
the same period of 2020.
-- Executed an incident free $2,954,000 exploration program,
primarily focused on production testing the Chinook-1 and Cascadura
Deep-1 exploration wells drilled in the fourth quarter of 2020.
-- Realized crude oil prices averaged $52.43 per barrel,
representing a 39 percent increase from the fourth quarter of 2020
and a 14 percent increase from the first quarter of 2020.
-- Generated an operating netback of $21.98 per barrel from an
average Brent price of $61.04 per barrel, our highest operating
netback reported since the fourth quarter of 2019.
-- Despite limited petroleum asset capital investment of
$127,000, generated funds flow from operations of $538,000 compared
to $1,257,000 in the first quarter of 2020.
-- Recognized a net loss of $460,000 ($0.00 per share) compared
to a net loss of $9,240,000 ($0.05 per share) in the 2020
equivalent quarter.
-- Maintained financial flexibility, exiting the first quarter
with cash of $15,451,000, a working capital balance of $10,552,000
and $7,500,000 drawn on our $20 million term credit facility,
resulting in a net surplus of $3,052,000.
-- Business continuity plans remained effective across our
locations in response to COVID-19 with minimal health and safety
impacts or disruptions to production and exploration
operations.
Paul Baay, President and Chief Executive Officer, commented:
"Our financial and operational results reported in the first
quarter of 2021 were in line with our expectations, reflecting our
continued focus on the Ortoire exploration program. We proceeded
with many aspects of the Ortoire exploration program, highlighted
by testing the Chinook-1 and Cascadura Deep-1 prospects. While the
results at Chinook showed evidence of light oil rather than natural
gas, we were excited to identify a large distinct, separate sheet
of natural gas at Cascadura Deep-1 to sit alongside the already
significant find made at Cascadura-1ST1.
Our priority is to bring our Coho and two Cascadura wells onto
production as soon as possible while also drilling Royston-1, our
final Ortoire licence commitment well. We are excited to commence
our transition into a natural gas producer while continuing to
progress our exploration program in Trinidad. The Company is well
positioned financially, and we look forward to updating
shareholders in due course. "
First Quarter Financial and Operating Results Summary
Three months ended % change
March 31,
---------------------------------------- ---------
2021 2020
---------------------------------------- --------------------- ----------------------- ---------
Operational
Average daily crude oil production(1)
(bbls/d) 1,297 1,589 (18)
Brent benchmark price ($/bbl) 61.04 50.27 21
Operating netback(2) ($/bbl)
Realized sales price 52.43 46.10 14
Royalties (15.79) (13.90) 14
Operating expenses (14.66) (13.59) 8
---------------------------------------- --------------------- ----------------------- ---------
Operating netback 21.98 18.61 18
---------------------------------------- --------------------- ----------------------- ---------
Financial ($000's except as indicated)
Petroleum sales 6,120 6,698 (9)
Cash used in operating activities (1,234) (76) 100
Funds flow from operations(3) 538 1,257 (57)
Per share - basic and diluted(2)(3) 0.00 0.01 (100)
Net loss (460) (9,240) (95)
Per share - basic and diluted (0.00) (0.05) (100)
Exploration capital expenditures 2,954 1,823 62
Development capital expenditures 127 220 (42)
---------------------------------------- --------------------- ----------------------- ---------
Total capital expenditures 3,081 2,043 51
---------------------------------------- --------------------- ----------------------- ---------
Working capital surplus(2) (10,552) (8,094) 30
Principal non-current balance of term
loan 7,500 13,338 (44)
Net (surplus) debt(2) - end of period (3,052) 5,244 n/a
---------------------------------------- --------------------- ----------------------- ---------
Share Information (000's)
Weighted average shares outstanding
Basic and diluted 209,400 169,361 24
Outstanding shares - end of period 209,400 183,489 14
Notes:
(1) The Company's reported crude oil production is a mix of
light and medium crude oil and heavy crude oil for which there is
not a precise breakdown since the Company's oil sales volumes
typically represent blends of more than one type of crude oil.
(2) Non-GAAP financial measure that does not have a standardized
meaning prescribed by International Financial Reporting Standards
("IFRS" or "GAAP") and therefore may not be comparable with the
calculation of similar measures presented by other companies. See
"Advisories: Non-GAAP Measures" for further information.
(3) Additional GAAP term included in the Company's consolidated
statements of cash flows. Funds flow from operations represents net
loss excluding non-cash items. See "Advisories: Non-GAAP Measures"
for further information.
Operating results
Despite ongoing challenges surrounding the COVID-19 pandemic,
during the first quarter of 2021 we continued to progress with our
Ortoire exploration program and increased our base crude oil
production while continuing safe and reliable operations.
Our crude oil sales averaged 1,297 bbls/d in the first quarter
of 2021, representing a 2 percent increase from the fourth quarter
of 2020 and an 18 percent decrease from the first quarter of 2020.
Despite conducting limited developmental capital activity in the
quarter, production increased from the prior quarter based on
increased workover operations. In comparison to the prior year
equivalent quarter, our first quarter 2021 production decrease was
reflective of limited capital development and workover activities
performed throughout 2020 and the ongoing impact of natural
declines.
Our main focus in the first quarter of 2021 remained on Ortoire
exploration operations, as we invested $2,954,000 in exploration
assets activities. In the quarter we conducted production testing
operations on our Chinook-1 and Cascadura Deep-1 wells and
continued Coho-1 surface facility operations and our Royston area
seismic program. We remain on track to spud Royston-1 and
anticipate completing our seismic program obligation by the end of
the second quarter of 2021.
Financial results
We reported funds flow from operations of $538,000 in the first
quarter of 2021 compared to $1,257,000 generated in the same period
of 2020. In comparison to the first quarter of 2020, the 57 percent
decrease was predominately a result of a $368,000 increase in
general and administration costs, a $309,000 increase in current
income tax expenses and decreased operating netbacks of $138,000,
partially offset by reduced term loan interest expenses of
$153,000. Our first quarter 2021 operating netback decreased 5
percent relative to the 2020 equivalent quarter, reflective of a 19
percent decrease in crude oil production, which was partially
offset by the benefit of a 14 percent increase in realized crude
oil pricing and decreased royalty and operating expenses.
We recorded a net loss of $460,000 ($0.00 per basic share) in
the first quarter of 2021 compared to a net loss of $9,240,000
($0.05 per basic share) in the prior year equivalent quarter. The
decreased loss was primarily a result of $19,215,000 in non-cash
property and equipment impairment charges recorded in the first
quarter of 2020 based on decreases in forecasted commodity prices,
partially offset by deferred tax recoveries of $10,072,000.
Touchstone exited the first quarter with a cash balance of
$15,451,000, a working capital balance of $10,552,000 and
$7,500,000 drawn on our term credit facility resulting in a net
surplus position of $3,052,000. Our near-term liquidity is
augmented by $12.5 million of current undrawn credit capacity.
We believe that available credit facility capacity combined with
anticipated funds flow from operations will be sufficient to
satisfy our 2021 minimum exploration work commitments, which
include drilling the Royston-1 well and completing and interpreting
the Royston area seismic program. Our primary objective remains to
bring our Coho and Cascadura area natural gas exploration
discoveries at Ortoire onto production as soon as practicable. As
the current economic and health related challenges persist, we will
continue to adapt our business operations and capital programs to
ensure health and safety and enhance long-term shareholder value,
and we look forward to updating our shareholders on our progress
throughout the year.
Annual Meeting of Shareholders
We will be holding our 2021 Annual Meeting of Shareholders (the
"Meeting") on Wednesday, June 9, 2021 at 10:00 a.m. (Mountain
time). In light of limits on larger gatherings and our concern for
the health and safety of our communities, shareholders, employees
and other stakeholders, the Meeting will be held as a virtual-only
shareholder Meeting. Every shareholder and duly appointed
proxyholder, regardless of geographic location and ownership, will
have an equal opportunity to participate in the Meeting online and
vote on the matters to be considered at the Meeting. You cannot
attend the Meeting in person. Details on how to attend the
virtual-only Meeting are as follows:
-- Go to https://web.lumiagm.com/250272848 in your web browser.
-- If you have voting rights, select "Login" and enter your
username and the password "touchstone2021" (case sensitive).
-- If you do not have voting rights, select "Guest" and complete the online form.
Further details on how to attend the Meeting are included on our
website. The meeting materials, including our Notice of 2021 Annual
Meeting of Shareholders and Management Information Circular dated
April 29, 2021, are available on our website (
www.touchstoneexploration.com/investors/2021-shareholder-meeting )
and under our profile on SEDAR ( http://www.sedar.com/ ). The
meeting materials were mailed to shareholders on May 10, 2021.
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
Shore Capital (Nominated Advisor and Joint Broker)
Nominated Advisor: Edward Mansfield / Daniel Bush / Michael McGloin Tel: +44 (0) 207 408 4090
Corporate Broking: Jerry Keen
Canaccord Genuity (Joint Broker)
Adam James / Henry Fitzgerald O'Connor / Thomas Diehl Tel: +44
(0) 207 523 8000
Camarco (Financial PR)
Nick Hennis / Billy Clegg Tel: +44 (0) 203 781 8330
Advisories
Non-GAAP Measures
This announcement contains terms commonly used in the oil and
natural gas industry, including funds flow from operations, funds
flow from operations per share, operating netback, working capital
and net debt. These terms do not have a standardized meaning
prescribed under GAAP or IFRS 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 flow from operating activities, net earnings,
net earnings per share, total assets, total liabilities, or other
measures of financial performance as determined in accordance with
GAAP. 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.
Funds flow from operations is an additional GAAP measure
included in the Company's consolidated statements of cash flows.
Funds flow from operations represents net earnings (loss) excluding
non-cash items. Touchstone considers funds flow from operations to
be an important measure of the Company's ability to generate the
funds necessary to finance capital expenditures and repay debt. 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 a
total 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.
This measurement assists Management and investors with evaluating
operating results on a historical basis.
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 (surplus) debt as part of its
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
(surplus) debt is calculated by summing the Company's working
capital and the principal (undiscounted) non-current amount of
senior secured debt.
Please refer to the Company's March 31, 2021 Management's
discussion and analysis for reconciliations of Non-GAAP Measures
contained 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 the Company's
exploration plans and strategies, including anticipated drilling,
timing, production testing, development, tie-in, facilities
construction, and ultimate natural gas production from exploration
wells, the Company's current financial position and its
expectations of future funds flow and the sufficiency of resources
and available financing 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 2020 Annual
Information Form dated March 25, 2021 which is filed under the
Company's profile on SEDAR (www.sedar.com) and is 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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END
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