Touchstone Exploration Inc (LON:TXP) has reported its operating and condensed financial results for the three months and year ended December 31, 2024. Selected financial information is outlined below and should be read in conjunction with our December 31, 2024 audited consolidated financial statements and related Management’s discussion and analysis, both of which are 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 in United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.
Paul Baay, President and Chief Executive Officer, commented:
“In 2024, Touchstone maintained its growth trajectory, achieving record annual production and delivering net earnings, driven by a full year of Cascadura production. We successfully drilled, completed, and brought online two wells at the Cascadura C pad, alongside the installation of a new natural gas separator. With most infrastructure now in place, we are well-positioned to accelerate the transition from drilling to production for future wells.
We continued expanding our Trinidad onshore acreage and announced a strategic acquisition, which we are actively working to finalize. The amended loan agreement and related security documents are in progress, with completion expected in the second quarter of 2025. Looking ahead, we will strategically evaluate growth opportunities, factoring in natural gas pricing dynamics while leveraging our extensive land portfolio and infrastructure to enhance efficiency and reduce costs. Above all, safety remains our top priority, ensuring the well-being of our people and the integrity of our operations.“
Annual 2024 Financial and Operating Highlights
· Record Production: Achieved annual average production volumes of 5,734 boe/d, a 44 percent increase from 3,981 boe/d in 2023. Production consisted of 1,220 bbls/d of crude oil, 132 bbls/d of NGLs, and 26.3 MMcf/d of natural gas.
· Revenue: Petroleum and natural gas sales totaled $57.47 million, up 19 percent from $48.10 million in 2023. The increase was driven by a full year of Cascadura production, with natural gas sales rising 77 percent, partially offset by a 3 percent decline in crude oil and NGL sales.
· Financial Performance:
– Funds flow from operations: $16.75 million, representing a year-over-year increase of 22 percent from $13.73 million recorded in 2023.
– Operating netback: $32.89 million or $15.68 per boe (2023 – $26.22 million or $18.04 per boe).
– Net earnings: $8.27 million ($0.04 per basic share, $0.03 per diluted share), compared to a net loss of $20.60 million ($0.09 per basic share) in 2023, which included $21.39 million in net non-financial asset impairment expenses.
· Capital Program: Invested $23.68 million in development and infrastructure, including four gross (3.6 net) development wells and key upgrades to the Cascadura natural gas processing facility.
· Financial Position: Ended the year with cash of $6.7 million and net debt of $29.11 million, resulting in a net debt-to-funds flow from operations ratio of 1.74 times.
· Strategic Portfolio Optimization:
– Divested three non-core properties and acquired the Balata East block, which supports Cascadura NGL marketing.
– Expanded onshore Trinidad acreage by approximately 103,000 working interest acres, securing exploration and production licences within the Herra Formation fairway.
· Safety: Maintained a strong focus on responsible operations, with one lost-time injury recorded in 2024.
· Proposed Acquisition: In December 2024, we signed an agreement to acquire full ownership of a Trinidad-based private entity (the “Proposed Acquisition”), which holds a 65 percent operating working interest in the onshore Central Block exploration and production licence, along with four producing natural gas wells and an 80 MMcf/d gas processing plant in Trinidad.
Fourth Quarter 2024 Financial and Operating Highlights
· Production: Average quarterly production increased to 5,287 boe/d (73 percent natural gas), compared to 5,211 boe/d (75 percent natural gas) in the third quarter of 2024. The increase reflected incremental output from the Cascadura-2ST1 and Cascadura-3ST1 wells brought online in November 2024, partially offset by natural declines in Cascadura field production.
· Revenue: Petroleum and natural gas sales totaled $13.54 million, consistent with the $13.25 million recorded in the previous quarter.
– Crude oil sales: $7.53 million from average production of 1,310 bbls/d at a realized price of $62.50 per barrel.
– NGL sales: $0.7 million from average production of 121 bbls/d at a realized price of $62.05 per barrel.
– Natural gas sales: $5.32 million from average production of 23.1 MMcf/d (3,856 boe/d) at a realized price of $2.50 per Mcf.
· Operating Netback: Generated $6.89 million in operating netback, down 7 percent from the third quarter of 2024. Quarterly operating netbacks averaged $14.17 per boe, an 8 percent decline from $15.46 per boe in the prior quarter, primarily due to a 41 percent increase in operating expenses driven by revised crude oil field historical head licence expenses.
· Funds Flow from Operations: Increased to $3.61 million from $3.02 million in the previous quarter, as lower operating netbacks were offset by reductions in general and administrative and transaction expenses.
· Net Loss: Recorded a net loss of $542,000 ($0.00 per basic share), primarily due to $2.31 million in pre-tax Ortoire exploration asset impairment expenses and higher depletion expenses following Cascadura reserves reductions.
· Capital Investments: Invested $3.11 million in the quarter, primarily focused on the completion of the flowline from the Cascadura C site to the Cascadura natural gas processing facility and pre-drill expenditures relating to the Cascadura-4 well spudded in January 2025.
· Land Expansion: Continued to expand our Trinidad onshore acreage with the execution of an exploration and production licence for the Rio Claro block.
Post Period-end Operating Highlights
· Drilling Update: Drilling at the Cascadura-4 development location resumed on March 12, 2025. We are currently preparing to run intermediate casing.
· Production Update: In February 2025, we delivered average net sales volumes of 4,274 boe/d, comprising:
– average net natural gas sales volumes of 18.5 MMcf/d (3,083 boe/d); and
– average net crude oil and natural gas liquid sales volumes of 1,191 bbls/d.
· Cascadura-3ST1 Optimization: Since coming onstream in November 2024, the well has been flowing through 3.5-inch tubing at various wellhead choke sizes. In February 2025, Cascadura-3ST1 produced approximately 90 gross bbls/d of total fluid with a 47 percent oil cut. A workover is planned to install a bottom-hole pump and optimize production in the second quarter of 2025. As of February 2025, the well has produced approximately 11,900 gross barrels of crude oil.
· Acquisition Debt Financing: Touchstone and its lender are in advanced negotiations to secure funding to finance the acquisition and development of the Proposed Acquisition through two additional six-year term loan facilities totaling $38.2 million. An amended loan agreement and related security documents are currently being drafted.
2025 Outlook and Guidance
We remain focused on financial discipline and maximizing value from our development and exploration assets. Our near-term strategy is to increase cash flow through the development of the Cascadura field, leveraging the processing capacity established in 2024.
On December 9, 2024, Touchstone Exploration issued a news release announcing the approval of our preliminary financial and operating guidance for 2025. Given the material nature of the Proposed Acquisition, we intend to provide updated guidance following its expected closing, which the Company continues to anticipate occurring in the second quarter of 2025.
2024 Financial and Operating Results Overview
| Three months ended December 31, | % change(4) | Year ended December 31, | % change(4) | |||
| 2024 | 2023 | 2024 | 2023 | |||
| Operational | ||||||
| Average daily production | ||||||
| Crude oil(1) (bbls/d) | 1,310 | 1,133 | 16 | 1,220 | 1,181 | 3 |
| NGLs(1) (bbls/d) | 121 | 622 | (81) | 132 | 201 | (34) |
| Crude oil and liquids(1) (bbls/d) | 1,431 | 1,755 | (18) | 1,352 | 1,382 | (2) |
| Natural gas(1) (Mcf/d) | 23,136 | 40,491 | (43) | 26,290 | 15,593 | 69 |
| Average daily production (boe/d)(2) | 5,287 | 8,504 | (38) | 5,734 | 3,981 | 44 |
| Average realized prices(3) | ||||||
| Crude oil(1) ($/bbl) | 62.50 | 72.26 | (14) | 67.91 | 67.80 | – |
| NGLs(1) ($/bbl) | 62.05 | 72.92 | (15) | 69.10 | 74.07 | (7) |
| Crude oil and liquids(1) ($/bbl) | 62.47 | 72.49 | (14) | 68.03 | 68.72 | (1) |
| Natural gas(1) ($/Mcf) | 2.50 | 2.43 | 3 | 2.48 | 2.36 | 5 |
| Realized commodity price ($/boe)(2) | 27.85 | 26.53 | 5 | 27.39 | 33.10 | (17) |
| Production mix (% of production) | ||||||
| Crude oil and liquids(1) | 27 | 21 | 24 | 35 | ||
| Natural gas(1) | 73 | 79 | 76 | 65 | ||
| Operating netback ($/boe)(2) | ||||||
| Realized commodity price(3) | 27.85 | 26.53 | 5 | 27.39 | 33.10 | (17) |
| Royalty expense(3) | (6.59) | (5.53) | 19 | (6.61) | (8.38) | (21) |
| Operating expense(3) | (7.09) | (3.46) | 100 | (5.10) | (6.68) | (24) |
| Operating netback(3) | 14.17 | 17.54 | (19) | 15.68 | 18.04 | (13) |
Notes:
(1) Refer “Advisories – Product Type Disclosures” for further information.
(2) In the table above and elsewhere in this announcement, references to “boe” mean barrels of oil equivalent that are calculated using the energy equivalent conversion method. Refer to “Advisories – Oil and Natural Gas Measures” for further information.
(3) Specified financial measure. Refer to “Advisories – Non-GAAP Financial Measures” for further information.
(4) Percentages have been rounded to the nearest whole number and limited to increases or decreases of 100 percent.
| Three months ended December 31, | % change(2) | Year ended December 31, | % change(2) | |||
| 2024 | 2023 | 2024 | 2023 | |||
| Financial | ||||||
| ($000’s except per share amounts) | ||||||
| Petroleum and natural gas sales | 13,543 | 20,759 | (35) | 57,470 | 48,098 | 19 |
| Cash from operating activities | 822 | 8,512 | (90) | 13,181 | 12,743 | 3 |
| Funds flow from operations | 3,614 | 10,489 | (66) | 16,748 | 13,730 | 22 |
| Net (loss) earnings | (542) | (21,236) | (97) | 8,272 | (20,598) | n/a |
| Per share – basic | (0.00) | (0.09) | n/a | 0.04 | (0.09) | n/a |
| Per share – diluted | (0.00) | (0.09) | n/a | 0.03 | (0.09) | n/a |
| Exploration capital expenditures | 426 | 595 | (28) | 1,046 | 17,638 | (94) |
| Development capital expenditures | 2,680 | 591 | 100 | 22,633 | 1,311 | 100 |
| Capital expenditures(1) | 3,106 | 1,186 | 100 | 23,679 | 18,949 | 25 |
| Working capital deficit(1) | 1,359 | 7,581 | (82) | |||
| Principal long-term bank debt | 27,750 | 15,000 | 85 | |||
| Net debt(1) – end of period | 29,109 | 22,581 | 29 | |||
| Share Information (000’s) | ||||||
| Weighted avg. shares outstanding: | ||||||
| Basic | 236,461 | 234,213 | 1 | 235,509 | 233,487 | 1 |
| Diluted | 236,461 | 234,213 | 1 | 236,492 | 233,487 | 1 |
| Outstanding shares – end of period | 236,461 | 234,213 | 1 | |||
Notes:
(1) Specified financial measure. Refer to “Advisories – Non-GAAP Financial Measures” for further information.
(2) Percentages have been rounded to the nearest whole number and limited to increases or decreases of 100 percent.
2024 Annual Filings
Touchstone Exploration ahas filed its annual audited financial statements, along with the related Management’s discussion and analysis and annual information form (“AIF”) for the financial year ended December 31, 2024. The AIF includes reserves data and other oil and gas disclosures in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities. The reserves information presented in the AIF is consistent with the details disclosed in Touchstone’s announcement issued March 6, 2025. These documents are available online under our profile on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com).
