Touchstone Exploration reports its financial and operating results for the three and nine months ended September 30, 2025. Unless otherwise stated, all financial amounts presented herein are in United States dollars.
Third Quarter 2025 Highlights
- Production: Averaged 5,141 boe/d in the third quarter of 2025 (71 percent natural gas), compared to 4,399 boe/d (69 percent natural gas) in the second quarter of 2025 and 5,211 boe/d (75 percent natural gas) in the third quarter of 2024. Central volumes contributed approximately 2,217 boe/d during the third quarter.
- Petroleum and Natural Gas Sales: Totaled $12.70 million, a 4 percent decrease from $13.25 million recorded in the comparative prior year quarter.
- Crude oil sales: $5.84 million from average production of 1,051 bbls/d at an average realized price of $60.30 per barrel.
- NGL sales: $1.34 million from average production volumes of 436 bbls/d at an average realized price of $33.41 per barrel.
- Natural gas sales: $5.52 million from average production of 21.9 MMcf/d (3,654 boe/d) at an average realized price of $2.74 per Mcf.
- Operating Netback: Generated $5.86 million in operating netback, a 21 percent decrease from the third quarter of 2024, primarily due to decreased petroleum and natural gas sales and related royalties and increased natural gas operating expenses.
- Funds Flow from Operations: Declined to $0.74 million from $3.02 million in the prior year equivalent quarter, largely driven by lower operating netbacks, higher cash finance expenses, and increased current income taxes, partially offset by lower transaction costs.
- Net Loss: Recorded a net loss of $2.06 million ($0.01 per share) compared to net earnings of $1.85 million ($0.01 per share) in the third quarter of 2024. The variance was primarily driven by the decrease in year-over-year funds flow from operations, $1.50 million in additional depletion and depreciation expense, and the absence of a $0.78 million gain on asset disposition recognized in the prior year.
- Capital Investments: Invested $9.60 million with the majority of expenditures focused on Cascadura drilling operations and the procurement of compression equipment for the Cascadura natural gas processing facility.
- Convertible Debt Financing: Issued a three-year secured convertible debenture (the "Debenture") on August 8, 2025, bearing interest at 5 percent per annum to a private investor. The Debenture is convertible at approximately US$0.22 (C$0.30) per share and the investor received 6,250,000 warrants exercisable at C$0.40 per share for two years. Proceeds from the financing supported the completion of the Company's Cascadura development drilling activities.
- Financial Position: Net debt increased to $77.75 million at September 30, 2025, reflecting the issuance of the Debenture.
- Strategic Disposition: Entered into an agreement to divest the non-core Fyzabad property to a Trinidad-based third party for consideration of three turnkey drilling wells on the Company's WD-8 and WD-4 blocks. The property contributed average production of 49 bbls/d during the third quarter of 2025, with $2.59 million in net liabilities classified as held for sale at September 30, 2025. The transaction remains subject to customary regulatory approvals.
Post Period-end Highlights
- Private Placement: On October 30, 2025, Touchstone raised gross proceeds of approximately $9.1 million (£7 million) from the issuance of 63,636,363 common shares at 11 pence sterling (approximately C$0.205) per share.
- Bank Waiver Obtained: Following completion of the October private placement, Touchstone received a waiver from its lender, which waives the testing of the debt service coverage financial covenant under its loan agreement for the year ended December 31, 2025.
- Production Update: Field-estimated production for October 2025 averaged 4,691 boe/d, a 3.3 percent decrease from 4,852 boe/d in September. The decline primarily reflected approximately two days of planned maintenance at the Central facility. Estimated October production volumes comprised 19.7 MMcf/d of net natural gas production (3,289 boe/d) and 1,402 bbls/d of net crude oil and liquids production.
- Drilling Update: The drilling rig is currently being mobilized to the newly constructed Central block location to drill a well targeting a previously identified natural gas zone with bypassed pay potential. Any successful results are expected to be tied into the Company's existing natural gas processing facility in the first quarter of 2026.
Paul Baay, Chief Executive Officer, commented:
'Third quarter production reflected strong performance from the Central field and the stabilization of existing wells at both Cascadura and Coho, with legacy oil production continuing to underpin our low decline rates.
The Cascadura-5 well commenced production on November 1, 2025, as planned; however, initial rates did not exhibit the high flush production observed in previous wells. Notably, for the first time, we encountered 26-degree API gravity crude oil from Cascadura. This represents an important new data point, adding further complexity to our understanding of the field's structure.
While oil produced at Cascadura is approximately four times more valuable than natural gas on a per-boe basis at current pricing, initial production rates were below expectations. However, based on newly acquired data, we have identified additional reservoir intervals for perforation in both the Cascadura-2ST1 and Cascadura-5 wells. Encouragingly, these zones are capable of producing water-free oil and can be accessed at minimal cost without the use of a service rig.
We now have an opportunity to re-evaluate and refine our reservoir model at Cascadura as we advance drilling at the Central block and proceed with the compression installation at Cascadura, which remains on schedule to commence operations in the second quarter of 2026. All Cascadura wells, including Cascadura-2ST1 and Cascadura-5, are expected to benefit from compression. In addition, we have completed reprocessing of the three-dimensional seismic data, which will be integral to ongoing field evaluation.
The Central asset continues to outperform the estimates established at the time of acquisition. As we enter the next phase of development, we plan to drill up to four additional development wells and may conduct fracture stimulations on two existing wells. The drilling rig is currently mobilizing from Cascadura to the Central field, where it is expected to remain for the next year as we optimize production and prepare for the anticipated natural gas price increase stipulated in our marketing contract in May 2027.
We also continue to work constructively with the National Gas Company of Trinidad and Tobago on revising gas pricing at Cascadura, as current pricing does not adequately reflect the capital intensity of development or align with that received by other producers in the country.'
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Source: Touchstone Exploration
