TXP:CC - Touchstone Exploration Inc. Announces Full Year 2022 Results
ANNUAL 2022 FINANCIAL AND OPERATING RESULTS
CALGARY, AB / ACCESSWIRE / March 24, 2023 / Touchstone Exploration Inc. ("Touchstone", "we", "our", "us" or the "Company") (TSX:TXP)(LSE:TXP) reports its operating and financial results for the three months and year ended December 31, 2022. Selected information is outlined below and should be read in conjunction with our December 31, 2022 audited consolidated financial statements, the related Management's discussion and analysis and our December 31, 2022 Annual Information Form, all of which will be available under our profile on SEDAR (www.sedar.com) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts herein are rounded to thousands of United States dollars.
Fourth Quarter 2022 Financial and Operating Highlights
· Achieved initial natural gas production from our Coho-1 well, which produced average net volumes of 5,729 Mcf/d (955 boe/d) in the quarter and contributed $1,114,000 of net natural gas sales.
· Produced quarterly average volumes of 2,229 boe/d, a 67 percent increase relative to the 1,336 boe/d produced in the prior year equivalent quarter.
· Realized petroleum and natural gas sales of $9,919,000 compared to $8,212,000 in the prior year equivalent quarter, reflecting natural gas sales from Coho and a 12 percent increase in average crude oil pricing in the fourth quarter of 2022.
· Generated an operating netback of $4,319,000, representing a 17 percent increase from the prior year equivalent quarter. Operating netbacks were $21.05 per boe, a 30 percent decrease from the $29.96 per boe reported in the fourth quarter of 2021, attributed to natural gas volumes brought online in the quarter.
· Recognized current income tax expenses of $1,092,000 in the quarter compared to $208,000 in the fourth quarter of 2021, driven by $979,000 in supplemental petroleum tax expenses based on our average realized crude oil price exceeding the $75.00 per barrel threshold in the period.
· Reported funds flow from operations of $691,000 in the quarter compared to $1,309,000 in the prior year equivalent quarter, as a $637,000 increase in operating netbacks was offset by increased general and administration, term loan interest and current income tax expenses.
· Recognized a net loss of $1,921,000 ($0.01 per basic share) in the quarter compared to net earnings of $6,514,000 ($0.03 per basic and diluted share) reported in the same period of 2021, principally driven by $6,323,000 of impairment reversals (net of tax) recorded on December 31, 2021.
· Following the December Canadian and United Kingdom private placements that raised net proceeds of $12,269,000, we exited the quarter with a cash balance of $16,335,000, a working capital surplus of $4,992,000 and a principal balance of $27,000,000 remaining on our term credit facility, resulting in a net debt position of $16,008,000.
Annual 2022 Financial and Operating Highlights
· Commissioned and delivered natural gas from the Coho facility on October 10, 2022, representing the first onshore natural gas field to come onstream in Trinidad in 20 years.
· Reported average daily production volumes of 1,581 boe/d, reflecting an 18 percent increase from 2021. Relative to 2021, the 2022 annual increase was attributed to incremental natural gas production from the Coho-1 well, as average 2022 crude oil and liquids production were consistent with 2021 levels.
· Generated funds flow from operations of $3,540,000 (2021 - $4,172,000) and an annual operating netback of $19,281,000 or $33.42 per boe (2021 - $13,031,000 and $26.55 per boe).
· Recognized a net loss of $3,197,000 ($0.01 per basic share) compared to net earnings of $5,719,000 ($0.03 per basic and diluted share) in 2021, primarily attributed to $6,323,000 in impairment reversals (net of tax) recognized in the prior year based on increased forecasted crude oil pricing.
· We executed an incident-free $11,330,000 capital program, primarily focused on completing the Coho natural gas facility and progressing construction of the Cascadura natural gas and liquids facility. Cascadura facility construction operations commenced in October 2022 following receipt of all required regulatory approvals.
· Formally executed an extension of the exploration period of the Ortoire licence to July 31, 2026, allowing us to continue exploration activities on acreage that have not been deemed commercial. The gross 1,317-acre Coho area and the gross 2,377-acre Cascadura area were previously approved for commercial development in February 2021 and March 2022, respectively.
· Responsible operations remained a top priority throughout 2022, as Touchstone had no lost time injuries and released its second sustainability report encompassing the 2021 year. We proactively responded to the June 2022 vandalism incident that resulted in a crude oil spill and are pleased to report that all reclamation efforts were completed in September 2022.
Post Period-End Highlights
· Net average natural gas volumes from Coho-1 were 900 boe/d and 864 boe/d in January 2023 and February 2023, respectively.
· Daily crude oil sales averaged 1,286 bbls/d in January 2023 with a realized price of $66.48 per barrel and averaged 1,341 bbls/d in February 2023 with a realized price of $67.14 per barrel.
· The National Gas Company Of Trinidad and Tobago Limited ("NGC") notified us that they expect to be ready to receive first natural gas from the Cascadura facility on or about June 30, 2023. We remain on track to complete the Cascadura facility prior to this date to ensure production can commence as soon as NGC is in a position to receive first natural gas.
· We safely reached budgeted total depth of our Royston-1X sidetrack well on the Ortoire block on February 24, 2023. The well has been cased, and we expect to commence production testing in late March 2023.
· In January 2023, we entered into an asset exchange agreement for certain onshore Trinidad assets with a privately held Trinidadian entity. Pursuant to the agreement, we agreed to swap our operated 100 percent working interests in the Fyzabad, San Francique and Barrackpore producing blocks for the counterparty's working interest in the Rio Claro, Balata East and Balata East Deep Horizons blocks for no cash consideration with the asset exchange becoming effective upon closing. The agreement remains subject to certain closing conditions, including receipt of applicable regulatory approvals and an extension of the Rio Claro licence.
Financial and Operating Results Summar
Three months ended December 31, | % change | Year ended | % change | |||
---|---|---|---|---|---|---|
2022 | 2021 | 2022 | 2021 | |||
Production | ||||||
Light and medium crude oil (bbls) | ||||||
111,114 | ||||||
113,724 | ||||||
461,612 | ||||||
447,619 | ||||||
Heavy crude oil (bbls) | ||||||
6,126 | ||||||
9,193 | ||||||
27,524 | ||||||
42,280 | ||||||
Crude oil (bbls) | ||||||
117,240 | ||||||
122,917 | ||||||
489,136 | ||||||
489,899 | ||||||
NGLs - condensate (bbls) | ||||||
- | ||||||
- | ||||||
- | ||||||
842 | ||||||
Conventional natural gas (Mcf) | ||||||
527,105 | ||||||
- | ||||||
527,105 | ||||||
- | ||||||
Total production (boe) | ||||||
205,091 | ||||||
122,917 | ||||||
576,987 | ||||||
490,741 | ||||||
Average daily production | ||||||
Light and medium crude oil (bbls/d) | ||||||
1,207 | ||||||
1,236 | ||||||
1,265 | ||||||
1,226 | ||||||
Heavy crude oil (bbls/d) | ||||||
67 | ||||||
100 | ||||||
75 | ||||||
116 | ||||||
Crude oil (bbls/d) | ||||||
1,274 | ||||||
1,336 | ||||||
1,340 | ||||||
1,342 | ||||||
NGLs - condensate (bbls/d) | ||||||
- | ||||||
- | ||||||
- | ||||||
2 | ||||||
Conventional natural gas (Mcf/d) | ||||||
5,729 | ||||||
- | ||||||
1,444 | ||||||
- | ||||||
Average daily production (boe/d) | ||||||
2,229 | ||||||
1,336 | ||||||
1,581 | ||||||
1,344 |
Abbreviations
bbl(s) barrel(s)
bbls/d barrels per day
boe barrels of oil equivalent
boe/d barrels of oil equivalent per day
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
NGLs natural gas liquids
Touchstone Exploration Inc.
Consolidated Balance Sheets
Stated in thousands of United States dollars
As at |
December 31, 2022 |
December 31, 2021 |
Assets |
Current assets |
Cash |
16,335 |
17,936 |
Accounts receivable |
7,487 |
7,546 |
Inventory |
129 |
143 |
Prepaid expenses |
1,342 |
1,055 |
Assets held for sale |
1,122 |
1,176 |
26,415 |
27,856 |
Exploration and evaluation assets |
51,352 |
50,760 |
Property, plant and equipment |
67,162 |
61,275 |
Restricted cash |
1,021 |
1,178 |
Other assets |
481 |
673 |
Abandonment fund |
1,446 |
1,278 |
Total assets |
147,877 |
143,020 |
Liabilities |
Current liabilities |
Accounts payable and accrued liabilities |
12,737 |
16,000 |
Income taxes payable |
1,014 |
236 |
Current portion of term loan |
6,000 |
3,000 |
Liabilities associated with assets held for sale |
1,672 |
1,695 |
21,423 |
20,931 |
Lease liabilities |
1,373 |
2,265 |
Term loan |
20,962 |
26,896 |
Other liabilities |
- |
908 |
Decommissioning liabilities |
11,182 |
10,012 |
Deferred income taxes |
14,557 |
14,450 |
Total liabilities |
69,497 |
75,462 |
Shareholders' equity |
Shareholders' capital |
114,635 |
101,757 |
Contributed surplus |
4,905 |
3,466 |
Other comprehensive loss |
(13,517) |
(13,219) |
Deficit |
(27,643) |
(24,446) |
Total shareholders' equity |
78,380 |
67,558 |
Total liabilities and shareholders' equity |
147,877 |
143,020 |
Touchstone Exploration Inc.
Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
Stated in thousands of United States dollars (except per share amounts)
Year ended December 31, |
2022 |
2021 |
Revenue |
Petroleum and natural gas sales |
42,944 |
29,568 |
Less: royalties |
(14,641) |
(9,251) |
Petroleum and natural gas revenue, net of royalties |
28,303 |
20,317 |
Other revenue |
42 |
40 |
Total revenue |
28,345 |
20,357 |
Expenses |
Operating |
9,022 |
7,286 |
General and administration |
7,775 |
6,301 |
Net finance |
3,042 |
1,437 |
Net loss (gain) on asset dispositions |
726 |
(21) |
Foreign exchange (gain) loss |
(333) |
185 |
Equity-based compensation |
1,341 |
888 |
Depletion and depreciation |
4,333 |
3,415 |
Impairment (reversal) |
195 |
(13,674) |
Other |
794 |
- |
Total expenses |
26,895 |
5,817 |
Earnings before income taxes |
1,450 |
14,540 |
Provision for income taxes |
Current expense |
4,648 |
1,358 |
Deferred (recovery) expense |
(1) |
7,463 |
Total income tax expense |
4,647 |
8,821 |
Net (loss) earnings |
(3,197) |
5,719 |
Currency translation adjustments |
(298) |
112 |
Comprehensive (loss) income |
(3,495) |
5,831 |
Net (loss) earnings per common share |
Basic and diluted |
(0.01) |
0.03 |
Touchstone Exploration Inc.
Consolidated Statements of Changes in Shareholders' Equity
Stated in thousands of United States dollars
Year ended December 31, |
2022 |
2021 |
Shareholders' capital |
Balance, beginning of year |
101,757 |
101,385 |
Private placements, net of fees |
12,269 |
- |
Equity-based settlements |
609 |
372 |
Balance, end of year |
114,635 |
101,757 |
Contributed surplus |
Balance, beginning of year |
3,466 |
2,476 |
Equity-based settlements |
(215) |
(132) |
Equity-based compensation expense |
1,341 |
888 |
Equity-based compensation capitalized |
313 |
234 |
Balance, end of year |
4,905 |
3,466 |
Other comprehensive loss |
Balance, beginning of year |
(13,219) |
(13,331) |
Other comprehensive (loss) income |
(298) |
112 |
Balance, end of year |
(13,517) |
(13,219) |
Deficit |
Balance, beginning of year |
(24,446) |
(30,165) |
Net (loss) earnings |
(3,197) |
5,719 |
Balance, end of year |
(27,643) |
(24,446) |
Touchstone Exploration Inc.
Consolidated Statements of Cash Flows
Stated in thousands of United States dollars
Year ended December 31, |
2022 |
2021 |
Operating activities |
Net (loss) earnings |
(3,197) |
5,719 |
Items not involving cash from operations: |
Net loss (gain) on asset dispositions |
726 |
(21) |
Unrealized foreign exchange gain |
(288) |
(288) |
Equity-based compensation |
1,341 |
888 |
Depletion and depreciation |
4,333 |
3,415 |
Impairment (reversal) |
195 |
(13,674) |
Other |
561 |
679 |
Deferred income tax (recovery) expense |
(1) |
7,463 |
Decommissioning expenditures |
(130) |
(9) |
Funds flow from operations |
3,540 |
4,172 |
Net change in non-cash operating working capital |
2,212 |
(2,561) |
Cash from operating activities |
5,752 |
1,611 |
Investing activities |
Exploration and evaluation expenditures |
(9,788) |
(20,106) |
Property, plant and equipment expenditures |
(1,542) |
(7,757) |
Abandonment fund expenditures |
(160) |
(112) |
Proceeds from asset dispositions |
1,346 |
229 |
Net change in non-cash investing working capital |
(6,332) |
(1,645) |
Cash used in investing activities |
(16,476) |
(29,391) |
Financing activities |
Changes in restricted cash |
157 |
(884) |
(Repayment) advance of term loan |
(3,000) |
22,396 |
Other liability payments |
(573) |
(392) |
Net finance lease payments |
(206) |
(326) |
Issuance of common shares, net of fees |
12,663 |
240 |
Net change in non-cash financing working capital |
11 |
48 |
Cash from financing activities |
9,052 |
21,082 |
Decrease in cash |
(1,672) |
(6,698) |
Cash, beginning of year |
17,936 |
24,281 |
Impact of foreign exchange on foreign denominated cash balances |
71 |
353 |
Cash, end of year |
16,335 |
17,936 |
Supplementary information for cash flow from operating activities |
Interest paid in cash |
2,273 |
709 |
Income taxes paid in cash |
3,886 |
1,122 |
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SOURCE: Touchstone Exploration Inc
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