Touchstone Exploration Inc (LON:TXP) has announced 2024 year-end reserves.
Touchstone’s independent reserves evaluation was prepared by GLJ Ltd. (GLJ) with an effective date of December 31, 2024. Highlights of our total proved developed producing (PDP), total proved (1P), and total proved plus probable (2P) reserves from the Reserves Report are provided below. Unless otherwise stated, all financial amounts referenced herein are stated in United States dollars. Readers are further cautioned to read the applicable advisories contained herein.
Paul Baay, Touchstone Exploration President and Chief Executive Officer, commented:
“Our year-end 2024 reserves report highlights the substantial potential of our asset base in Trinidad with the NPV10 of future net revenues of 2P reserves valued at approximately $671 million and $309 million on a before tax and after-tax basis, respectively. The combination of our base crude oil production and the early-stage development of our natural gas properties supports our ongoing transition from an exploration-driven company to one focused on predictable production growth.
The reserve estimates for this year reflect a material balance assessment approach based on the data collected at Cascadura. This revised methodology, compared to the previous volumetric interpretation, aligns reserve estimates with our forecasted production curves.
The addition of light oil reserves from the Cascadura-3ST1 discovery underscores the significant potential of this emerging play. While the current reserves include a limited number of future crude oil drilling locations, we plan to expand this potential through further delineation and development in the Rio Claro block.
A key highlight of the year is the previously announced acquisition of Shell Trinidad Central Block Limited, which provides access to the lucrative Trinidad liquefied natural gas market. Notably, our year-end 2024 reserves report does not reflect any additional reserves from the proposed acquisition. An independent evaluation of the acquired reserves will be provided following the expected completion of the proposed transaction.“
2024 Operational Highlights
· Successfully completed the Cascadura C pipeline and facility expansion, increasing processing capacity and supporting future production growth.
· Drilled and brought onstream the Cascadura-2ST1 and Cascadura-3ST1 wells.
· Advanced the development of the CO-1 crude oil block with the drilling and production commencement of the CO-374 and CO-375 wells.
· Delivered strong performance from our CO-1, WD-4 and WD-8 blocks through targeted infill drilling, optimization programs, and recompletion activities, resulting in notable increases in light and medium crude oil reserves.
· Fourth quarter production was strengthened by the successful startup of the Cascadura-2ST1 and Cascadura-3ST1 development wells, resulting in average quarterly net production of 5,287 boe/d and 2024 annual average net production of 5,734 boe/d.
Year-end 2024 Reserves Overview and Highlights
Touchstone’s year-end reserves highlight the successful addition of crude oil reserves from the Cascadura-3ST1 discovery, located east of Fault-C, alongside a revision to the natural gas and NGL reserves west of Fault-C at Cascadura. Comprehensive data from the Cascadura field underscores the need for further development drilling to fully realize the natural gas potential. With an established pipeline network and infrastructure in place, the Company is positioned for efficient and cost-effective future development.
· The net present value of future net revenues discounted at 10 percent (“NPV10”) on a before tax 1P basis decreased by 5 percent to $354.4 million and declined by 8 percent to $671 million on a 2P basis from the prior year.
· Realized after tax 1P NPV10 of $178.8 million represented a decrease of 7 percent from the prior year and after tax 2P NPV10 declined by 10 percent from year-end 2023 to $308.5 million.
· Relative to year-end 2023 and after 2024 production, gross 1P reserves declined by 14 percent to 29,070 Mboe and gross 2P reserves decreased by 26 percent to 50,063 Mboe in 2024.
· Reductions in our year-end reserves balances from 2023 reflected technical revisions to the natural gas reserves and NGL yields at Cascadura, reserve discoveries at Cascadura-3ST1, positive technical revisions at our crude oil blocks, acquisition and development activities, and increased annual production volumes in 2024.
· We continue to maintain an extensive producing reserve life index of 8.7 years 1P and 12.9 years 2P, reflecting the long producing life of our asset base.
2024 Year-end Reserves Report Summary
Touchstone’s year-end light and medium crude oil, heavy crude oil, conventional natural gas and natural gas liquid reserves in Trinidad were evaluated by an independent reserves evaluator, GLJ, in accordance with definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”).
The reserve estimates set forth below are based upon GLJ’s Reserves Report dated March 5, 2025, with an effective date of December 31, 2024. The Reserves Report uses the average price forecasts of the three leading Canadian oil and gas evaluation consultants (GLJ, McDaniel & Associates Consultants Ltd., and Sproule Associates Ltd. (collectively, the “Consultants”)). All values in this announcement are based on the three Consultants’ average forecast pricing and GLJ’s estimates of future operating and capital costs as of December 31, 2024.
Additional reserves information as required under NI 51-101 will be included in the Company’s Annual Information Form, which will be filed on SEDAR+ (www.sedarplus.ca) on or before March 31, 2025. Please refer to “Advisories: Reserves Disclosure” for further information. In certain tables set forth below, the columns may not add due to rounding.
2024 Reserves Summary by Category
| PDP | 1P | 2P | |
| Total gross reserves(1) (Mboe) | 6,836 | 29,070 | 50,063 |
| Reserve reductions(2) (Mboe) | 4,614 | 2,529 | 15,219 |
| NPV10 before income tax(3) ($000’s) | 79,380 | 354,425 | 670,965 |
| NPV10 after income tax(3) ($000’s) | 66,444 | 178,841 | 308,536 |
Notes:
(1) Gross reserves are the Company’s working interest share before deduction of royalty obligations.
(2) Reserve reductions exclude 2024 annual production. See “Advisories: Oil and Gas Metrics“.
(3) Based on the Consultants’ average December 31, 2024 forecast prices and costs. See “Forecast Prices and Costs” herein.
Summary of Crude Oil and Natural Gas Reserves by Product Type
| Company Gross(1) Reserves | Light and Medium Crude Oil (Mbbl) | Heavy Crude Oil(Mbbl) | Conventional Natural Gas (MMcf) | Natural Gas Liquids (Mbbl)(2) | Total Oil Equivalent (Mboe) |
| Proved | |||||
| Developed producing | 3,661 | 276 | 17,158 | 40 | 6,836 |
| Developed non-producing | 1,232 | – | – | – | 1,232 |
| Undeveloped | 4,468 | – | 96,219 | 498 | 21,002 |
| Total Proved | 9,360 | 276 | 113,377 | 537 | 29,070 |
| Probable | 8,889 | 56 | 70,750 | 257 | 20,993 |
| Total Proved plus Probable | 18,249 | 332 | 184,127 | 794 | 50,063 |
| Company Net(3) Reserves | Light and Medium Crude Oil (Mbbl) | Heavy Crude Oil(Mbbl) | Conventional Natural Gas (MMcf) | Natural Gas Liquids (Mbbl)(2) | Total Oil Equivalent (Mboe) |
| Proved | |||||
| Developed producing | 2,206 | 246 | 15,013 | 35 | 4,989 |
| Developed non-producing | 847 | – | – | – | 847 |
| Undeveloped | 3,318 | – | 84,192 | 435 | 17,785 |
| Total Proved | 6,371 | 246 | 99,205 | 470 | 23,621 |
| Probable | 6,762 | 50 | 61,906 | 225 | 17,354 |
| Total Proved plus Probable | 13,133 | 295 | 161,111 | 695 | 40,975 |
Notes:
(1) Gross reserves are the Company’s working interest share before deduction of royalty obligations.
(2) NGLs are comprised of 100% condensate.
(3) Net reserves are the Company’s working interest share after the deduction of royalty obligations.
Summary of Net Present Values of Future Net Revenues
| Net Present Values Before Income Taxes(1) ($000’s) | Undiscounted | Discounted at 5% | Discounted at 10% | Discounted at 15% | Discounted at 20% |
| Proved | |||||
| Developed producing | 107,621 | 91,031 | 79,380 | 70,773 | 64,166 |
| Developed non-producing | 35,598 | 27,992 | 23,371 | 20,155 | 17,733 |
| Undeveloped | 399,971 | 313,410 | 251,674 | 206,219 | 171,844 |
| Total Proved | 543,190 | 432,432 | 354,425 | 297,147 | 253,743 |
| 586,975 | 420,133 | 316,540 | 247,058 | 197,997 | |
| Probable | 586,975 | 420,133 | 316,540 | 247,058 | 197,997 |
| Total Proved plus Probable | 1,130,164 | 852,565 | 670,965 | 544,204 | 451,739 |
| Net Present Values After Income Taxes(1)(2) ($000’s) | Undiscounted | Discounted at 5% | Discounted at 10% | Discounted at 15% | Discounted at 20% |
| Proved | |||||
| Developed producing | 76,254 | 72,452 | 66,444 | 60,866 | 56,103 |
| Developed non-producing | 12,725 | 11,918 | 11,115 | 10,407 | 9,762 |
| Undeveloped | 169,089 | 129,627 | 101,282 | 80,492 | 64,930 |
| Total Proved | 258,068 | 213,997 | 178,841 | 151,765 | 130,794 |
| Probable | 237,847 | 173,085 | 129,696 | 99,906 | 78,732 |
| Total Proved plus Probable | 495,915 | 387,081 | 308,536 | 251,671 | 209,526 |
Notes:
(1) Based on the three Consultants’ average December 31, 2024 forecast prices and costs. See “Forecast Prices and Costs” herein.
(2) The after-tax net present values prepared by GLJ in the evaluation of the Company’s petroleum and natural gas assets presented herein are calculated by considering current Trinidad tax regulations and are based on the Company’s estimated tax pools and non-capital losses as of December 31, 2024. The values reflect the expected income tax burden on the assets on a consolidated basis. Values do not represent an estimate of the value at the business entity level or consider tax planning, which may be significantly different. See “Advisories: Unaudited Financial Information“.
Reconciliation of Gross Reserves by Product Type
The following table sets forth a reconciliation of the Company’s total gross proved, gross probable, and gross proved plus probable reserves as of December 31, 2024, by product type against such reserves as at December 31, 2023, based on forecast prices and cost assumptions.
| Reserves Category and Factors | Light and Medium Crude Oil (Mbbl) | Heavy Crude Oil(Mbbl) | Conventional Natural Gas (MMcf) | Natural Gas Liquids (Mbbl)(1) | Total Oil Equivalent (Mboe) |
| Total Proved | |||||
| December 31, 2023(2) | 8,538 | 234 | 140,743 | 1,467 | 33,696 |
| Discoveries(3) | 375 | – | 15 | – | 378 |
| Extensions and improved recovery(4) | 763 | – | – | – | 763 |
| Technical revisions(5) | 552 | 63 | (17,758) | (882) | (3,227) |
| Acquisitions(6) | 162 | – | – | – | 162 |
| Dispositions(6) | (619) | – | – | – | (619) |
| Economic factors(7) | 15 | – | (7) | – | 14 |
| Production | (425) | (21) | (9,616) | (48) | (2,097) |
| December 31, 2024 | 9,360 | 276 | 113,377 | 537 | 29,070 |
| Total Probable | |||||
| December 31, 2023(2) | 8,084 | 58 | 145,180 | 1,344 | 33,683 |
| Discoveries(3) | 609 | – | – | – | 609 |
| Extensions and improved recovery(4) | 365 | – | – | – | 365 |
| Technical revisions(5) | (108) | (10) | (74,422) | (1,088) | (13,609) |
| Acquisitions(6) | 45 | – | – | – | 45 |
| Dispositions(6) | (115) | – | – | – | (115) |
| Economic factors(7) | 8 | 8 | (8) | – | 15 |
| December 31, 2024 | 8,889 | 56 | 70,750 | 257 | 20,993 |
| Total Proved plus Probable | |||||
| December 31, 2023(2) | 16,622 | 292 | 285,923 | 2,811 | 67,379 |
| Discoveries(3) | 984 | – | 15 | – | 986 |
| Extensions and improved recovery(4) | 1,129 | – | – | – | 1,129 |
| Technical revisions(5) | 444 | 53 | (92,180) | (1,969) | (16,836) |
| Acquisitions(6) | 207 | – | – | – | 207 |
| Dispositions(6) | (734) | – | – | – | (734) |
| Economic factors(7) | 23 | 8 | (15) | – | 28 |
| Production | (425) | (21) | (9,616) | (48) | (2,097) |
| December 31, 2024 | 18,249 | 332 | 184,127 | 794 | 50,063 |
Notes:
(1) NGLs are comprised of 100 percent condensate.
(2) Prior year reserve estimates per GLJ’s independent reserves evaluation dated February 29, 2024 with an effective date of December 31, 2023.
(3) Discoveries are associated with the positive evaluation of Cascadura-3ST1.
(4) Reserve amounts for Infill Drilling, Extensions and Improved Recovery are combined and reported as “Extensions and Improved Recovery”.
(5) Technical revisions factor includes all changes in reserves due to well performance and previously booked wells which were drilled in the year.
(6) Touchstone Exploration completed an asset swap with a third party, exchanging the Company’s interest in the San Francique field for the counterparty’s interest in the Balata East EPSC effective June 1, 2024. Touchstone disposed its working interest in the CO-2 block effective August 1, 2024.
(7) Economic factors are the change in reserves exclusively due to changes in pricing.
As of December 31, 2024, gross proved plus probable reserves were 50,063 Mboe, reflecting a decrease of 17,316 Mboe (26 percent) from the 67,379 Mboe reported the previous year.
Compared to December 31, 2023, proved plus probable light and medium crude oil reserves increased by 1,627 Mbbl, driven primarily by oil discoveries at Cascadura, positive technical revisions, enhanced recovery, and drilling extensions at the WD-4, WD-8, CO-1, and Balata East blocks. These gains were partially offset by 2024 annual production and net acquisition and disposition activities at the San Francique, CO-2, and Balata East blocks. Proved plus probable heavy crude oil reserves rose by 40 Mbbl year-over-year, reflecting positive technical revisions at our Fyzabad property, partially offset by 2024 production.
Conversely, proved plus probable conventional natural gas reserves declined by 101,796 MMcf, primarily due to technical revisions at Cascadura and annual production from the Cascadura and Coho fields.
In addition, proved plus probable NGL reserves fell by 2,017 Mbbl, attributed to lower forecasted NGL yields at Cascadura and 2024 production.
Future Development Costs
The following table provides information regarding the development costs deducted in the estimation of the Company’s future net revenue using forecast prices and costs as included in the Reserves Report.
| Year ($000’s) | 1P | 2P | |
| 2025 | 20,570 | 25,875 | |
| 2026 | 29,691 | 46,745 | |
| 2027 | 33,462 | 40,116 | |
| 2028 | 22,569 | 62,905 | |
| 2029 | 17,967 | 27,404 | |
| Thereafter | – | – | |
| Total undiscounted | 124,259 | 203,045 | |
| Total discounted at 10% per year | 99,373 | 159,561 |
The following table sets forth the changes in undiscounted future development costs (“FDC”) included in the Reserves Report against such costs in our December 31, 2023, reserves report prepared by GLJ dated February 29, 2024.
| ($000’s unless otherwise stated) | 1P | 2P | |
| Decrease in forecasted well costs | (1,660) | (2,460) | |
| Increase in forecasted well locations | 47,953 | 64,266 | |
| Increase in forecasted facility and pipeline costs | 560 | 563 | |
| Total increase in FDC from 2023 | 46,853 | 62,369 | |
| Total increase in FDC from 2023 (%) | 61 | 44 |
Forecast Pricing and Costs
Forecast pricing and costs are prices and costs that are generally acceptable, in the opinion of GLJ, as being a reasonable outlook of the future as of the evaluation effective date. The forecast cost assumptions consider inflation with respect to future operating and capital costs. The following table sets forth the benchmark reference commodity prices and inflation rates reflected in the Reserves Data as of December 31, 2024. These price assumptions were provided to the Company by GLJ and represented the average price forecast of the three Consultants as of the date of the Reserves Report.
| Consultants Average Price Forecast | |||
| Forecast Year | Brent Spot Crude Oil(1)($/bbl) | Henry Hub Natural Gas(1)($/MMBtu) | Inflation Rate(% per year) |
| 2025 | 75.58 | 3.31 | 0.0 |
| 2026 | 78.51 | 3.73 | 2.0 |
| 2027 | 79.89 | 3.85 | 2.0 |
| 2028 | 81.82 | 3.93 | 2.0 |
| 2029 | 83.46 | 4.01 | 2.0 |
| 2030 | 85.13 | 4.09 | 2.0 |
| 2031 | 86.83 | 4.17 | 2.0 |
| 2032 | 88.57 | 4.26 | 2.0 |
| 2033 | 90.31 | 4.34 | 2.0 |
| 2034 | 92.08 | 4.43 | 2.0 |
| Thereafter | +2.0% / year | +2.0% / year | 2.0 |
Note:
(1) This summary table identifies benchmark reference pricing schedules that might apply to a reporting issuer. Product sales prices will reflect these reference prices with further adjustments for specific marketing arrangements, quality differentials and transportation to point of sale.
January 2025 Production Volumes
In January 2025, we attained average net sales volumes of 4,800 boe/d, as the Cascadura-3ST1 well was shut in for 13 days to accommodate the drilling rig move to the Cascadura B pad. January 2025 net sales volumes were comprised of:
· average net natural gas sales volumes of 21.3 MMcf/d (3,550 boe/d); and
· average net crude oil and natural gas liquid sales volumes of 1,250 bbls/d.
Drilling Update
Drilling operations at Cascadura-4 have been temporarily suspended to facilitate critical repairs on the drilling rig. During drilling operations, one of the three mud pumps experienced a mechanical failure, necessitating an operational pause to ensure safety and efficiency. The well, spudded on January 19, 2025, had reached a depth of 4,500 feet, and has now been plugged back to the base of the surface casing at 1,135 feet.
A replacement pump is expected to arrive in Trinidad by mid-March 2025, after which installation will take place. Drilling will resume once the new pump is in place, allowing operations to continue as planned.
