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Touchstone announces first quarter 2020 results and operational update

14 May 2020

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Touchstone Exploration has reported its operating and financial results for the three months ended March 31, 2020. Unless otherwise stated, all financial amounts herein are rounded to thousands ofUnited States dollars.   

Operational Highlights

  • In response to the coronavirus ('COVID-19') pandemic, we have made numerous adjustments to our operating practices to provide ongoing safety and business continuity. Aside from delaying timing of our capital projects, the Company has had no material operational impacts from the pandemic at present.
  • First quarter 2020 crude oil sales averaged 1,589 barrels per day ('bbls/d'), compared to 1,690 bbls/d in the fourth quarter of 2019 and 2,121bbls/d in the first quarter of 2019. Our mature field production has declined as a result of our increased focus of capital directed towardsOrtoire exploration activities since January 2019.
  • In the first quarter we invested $1,823,000 in exploration activities, completing two successful production tests on our Cascadura-1ST1 exploration well and completing lease preparations on our Chinook-1 exploration well site.
  • We continue to prepare to drill an exploration well at our Chinook prospect and currently anticipate drilling the well in July 2020.
  • We have negotiated a contract with a local construction firm to tie in the Coho-1 well, with operations expected to commence once government-imposed restrictions are lifted.
  • Subsequent to quarter end, Touchstone entered into a framework agreement with the National Gas Company of Trinidad and Tobago and Heritage Petroleum Company Limited for the development, sale and purchase of natural gas and natural gas liquids produced from theOrtoire block.
  • On May 13, 2020 we retrieved the downhole pressure recorder from the Cascadura-1ST1 well. The reservoir data will be interpreted internally and by our independent reserves evaluator, and we expect to release the results prior to the end of May 2020.
  • Subsequent to the drilling of Chinook-1, we are currently reviewing the option of drilling a second deeper exploration well on the Cascadura field ahead of the previously planned Royston location in order to mitigate possible delays in the construction of the access road and fulfill our drilling obligations under the Ortoire licence.

Financial Highlights

  • Touchstone exited the quarter with cash of $12,219,000 and net debt of $5,244,000. Net debt decreased by 68% from year end as a result of the previously announced February 2020 private placement that raised net proceeds of $10,850,000.
  • Realized crude oil prices averaged $46.10 per barrel, decreasing 20% from both $57.38 per barrel in the prior quarter and $57.71 per barrel in the first quarter of 2019. A 44% decline in realized pricing from February to March 2020 led us to immediately restrict certain field operations and discretionary operational spending.
  • We generated $1,257,000 in funds flow from operations ($0.01 per share), a decrease of 48% relative to $2,430,000 ($0.02 per share) in the first quarter of 2019. The decline was primarily attributable to lower production and significantly lower crude oil prices received in March 2020. 
  • Non-cash impairments charges of $19,215,000 were recognized, triggered by the impact of materially lower forward crude oil forecasts, offset by a deferred income tax recovery of $10,072,000. As a result, a net loss of $9,240,000 ($0.05 per share) was recognized in the first quarter of 2020 compared to a net loss of $185,000 reported in the prior year equivalent quarter.

Paul R. Baay, President and Chief Executive Officer, commented:

'The first quarter of 2020 has been unprecedented for the oil and gas industry given the collapse of oil prices and the global economic uncertainty of COVID-19. The safety of our employees continues to be of paramount importance to the Board and management team, and I would like to thank our employees for their dedication and flexibility during this challenging period as we adjusted to a new working environment.

While there have been major sector challenges, I am pleased to report that Touchstone has continued to take several positive steps during the quarter. In addition to the successful production tests at Cascadura, we have made progress on tying in the Coho-1 gas well, and the $10.85 million fundraising completed in February allows us to continue to prepare for drilling at our Chinook location, the third exploration well on the Ortoire block. With clear exploration targets, weremain confident about the long-term strategy of the Company, especially given our increasing focus on natural gas, and the increased stability that this will give us from a financial perspective amidst a volatile crude oil market.'  

Click here for full announcement

Source: Touchstone Exploration

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