Press

Touchstone Exploration - Interim Results & Increased 2018 Capital Program

Posted by OilVoice Press - OilVoice

14-Aug-2018


Calgary, Alberta – August 14, 2018 – Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TSX / LSE: TXP) announces its financial and operating results for the three and six months ended June 30, 2018. Selected financial and operational information is outlined below and should be read in conjunction with Touchstone's June 30, 2018 unaudited interim consolidated financial statements and the related Management's discussion and analysis, both of which will be available under the Company's profile on SEDAR (www.sedar.com) and the Company's website (www.touchstoneexploration.com). Tabular amounts herein are in thousands of Canadian dollars, and the amounts in text are rounded to thousands of Canadian dollars unless otherwise stated.    

Highlights

  • Achieved quarterly average crude oil production of 1,717 barrels per day (“bbls/d”), representing increases of 11% and 29% from the first quarter of 2018 and the second quarter of 2017, respectively.
  • Continued our 2018 development program with total drilling and development capital expenditures of $4,520,000, drilling three wells and performing four well recompletions.
  • Realized $12,508,000 in petroleum sales, a 68% increase from the prior year second quarter.
  • Generated an operating netback of $38.19 per barrel, a 92% increase relative to the $19.88 per barrel generated in the prior year comparative quarter.
  • Delivered funds flow from operations of $3,258,000 ($0.03 per basic share) compared to $438,000 ($0.01 per basic share) in the second quarter of 2017.
  • Recognized a reduced net loss of $692,000 ($0.01 per basic share) compared to a net loss of $1,848,000 ($0.02 per basic share) realized in the equivalent quarter of 2017.
  • Extended our $15 million term loan maturity date and initial principal repayments by one year.
  • Maintained balance sheet strength with second quarter cash of $10,556,000 and net debt of $11,266,000, representing 1.0 times net debt to first half 2018 annualized funds flow from operations.
  • Expanded our 2018 drilling program from ten to fourteen wells.

Financial and Operating Results Summary

 

 

       Three months ended

 

      Six months ended

 

 

 

June 30, 2018

 

March 31, 2018

 

June 30, 2017

 

June 30, 2018

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average daily oil production(bbls/d)

 

          1,717

 

          1,543

 

          1,334

 

          1,631

 

          1,307

 

 

 

 

 

 

 

 

 

 

 

 

 

Net wells drilled

 

                  3

 

                  2

 

                  3

 

                  5

 

                  3

 

Net wells recompleted

 

                  4

 

                  5

 

                  5

 

                  9

 

                10

 

 

 

 

 

 

 

 

 

 

 

 

 

Brent benchmark price (US$/bbl)

 

                74.53

 

                66.86

 

                49.55

 

                70.67

 

                51.57

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating netback(1) ($/bbl)

 

 

 

 

 

 

 

 

 

 

 

Realized sales price

 

                80.04

 

                74.76

 

                61.26

 

                77.55

 

                62.67

 

Royalties

 

              (22.59)

 

              (21.27)

 

              (16.03)

 

              (21.97)

 

              (18.46)

 

Operating expenses

 

              (19.26)

 

              (19.96)

 

              (25.35)

 

              (19.59)

 

              (22.49)

 

 

 

                38.19

 

                33.53

 

                19.88

 

                35.99

 

                21.72

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial ($000's except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Petroleum sales

 

12,508

 

10,384

 

7,436

 

22,892

 

14,827

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds flow from operations

 

          3,258

 

          2,601

 

              438

 

          5,859

 

              831

 

Per share – basic and diluted(1)

 

                  0.03

 

                  0.02

 

                  0.01

 

                  0.05

 

                  0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

 

            (692)

 

              125

 

         (1,848)

 

            (567)

 

         (3,397)

 

Per share – basic and diluted

 

                 (0.01)

 

                  0.01

 

                 (0.02)

 

                 (0.01)

 

                 (0.04)

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

 

 

 

 

 

 

 

 

 

Exploration

 

              434

 

              228

 

              520

 

              662

 

              708

 

Development

 

          4,520

 

          3,621

 

          4,940

 

          8,141

 

          5,486

 

 

 

          4,954

 

          3,849

 

          5,460

 

          8,803

 

          6,194

 

 

 

 

 

 

 

 

 

 

 

 

 

Net debt(1) – end of period

 

 

 

 

 

 

 

 

 

 

 

Working capital surplus

 

         (3,734)

 

(4,922)

 

         (1,186)

 

         (3,734)

 

         (1,186)

 

Principal long-term balance of loan

 

        15,000

 

14,190

 

        15,000

 

        15,000

 

        15,000

 

 

 

        11,266

 

9,268

 

        13,814

 

        11,266

 

        13,814

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

129,021,428

 

129,021,428

 

84,236,044

 

129,021,428

 

83,689,629

 

Diluted

 

130,022,267

 

129,691,693

 

84,236,044

 

129,841,928

 

83,689,629

 

Outstanding shares – end of period

 

129,021,428

 

129,021,428

 

103,137,143

 

129,021,428

 

103,137,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

(1)     See “Advisories: Non-GAAP Measures”.

 

Operating Results

Our operating results in the second quarter were consistent with our expectations, as we continued with our ten well drilling campaign by successfully drilling three development wells and spudding the sixth well of the program on June 15, 2018. Capital expenditures totaled $4,954,000, of which $4,520,000 related to drilling and development activities. We recompleted four wells in the quarter, with an aggregate nine wells recompleted in the first half of 2018.

Second quarter 2018 crude oil production averaged 1,717 bbls/d, a 29% increase relative to the 1,334 bbls/d produced in the second quarter of 2017 and a 11% increase relative to the 1,543 bbls/d produced in the first quarter of 2018. The five wells drilled to date in 2018 combined to add 183 bbls/d of incremental production in the second quarter. Our four well 2017 program continued to perform above internal expectations, contributing approximately 351 bbls/day of production in the quarter.

Financial Results

Our second quarter operating netback improved 92% to $38.19 per barrel, as compared to $19.88 per barrel in the second quarter of 2017. Realized second quarter 2018 crude oil pricing was $80.04 (US$61.79) per barrel, 31% greater than the $61.26 (US$45.51) per barrel received in the equivalent quarter of 2017. In comparison to the second quarter of 2017, royalty expenses per barrel increased 41% based on the rising scale effect of increased commodity prices to royalty rates. Second quarter 2018 operating costs per barrel decreased 24% from the corresponding quarter of 2017, predominantly from increased production over a fixed operating cost base and increased operating efficiencies.

We generated funds flow from operations of $3,258,000 ($0.03 per basic share) in the second quarter of 2018 versus $438,000 ($0.01 per basic share) in the second quarter of 2017. The increase in funds flow was largely attributed to stronger oil price realizations and operating netbacks. Excluding realized financial derivative gains, our second quarter 2018 funds flow was the highest since the third quarter of 2014. As a result, the Company decreased its net loss by 63% from the prior year second quarter, recording a net loss of $692,000 ($0.01 per basic share) during the three months ended June 30, 2018.

We maintained strong financial liquidity, exiting the quarter with a cash balance of $10,556,000, a working capital surplus of $3,734,000 and a $15,000,000 principal term loan balance. Our June 30, 2018 net debt of $11,266,000 represented net debt to trailing twelve-month funds flow from operations of 1.4 times and net debt to year to date second quarter 2018 annualized funds flow from operations of 1.0 times. We expect our liquidity position to be stable going forward as the new wells drilled in the quarter are placed onto production and optimized.

On June 13, 2018, we extended the maturity of our $15 million term loan by one year to November 23, 2022, with no mandatory principal payments until January 1, 2020. In addition, the amended agreement removed the minimum $5 million quarterly cash reserves financial covenant. The credit facility is covenant based and does not require annual or semi-annual reviews. We were well within the financial covenants as at June 30, 2018. The one-year deferral of principal payments will allow us to continue our near-term development strategy into 2019.

On June 21, 2018, we entered an agreement to dispose of our 50% operating working interest in our non-core Icacos block to our third-party partner for minimum consideration of US$500,000. Consideration will be paid based on the Company's working interest net revenue it would have received had it retained such interest through December 2021. The property averaged 10 bbls/d of net crude oil production in the second quarter of 2018. The agreement was effective April 1, 2018 and remains subject to local regulatory approvals.

Increase in 2018 Drilling Program

We are increasing our 2018 capital program by US$4.8 million, which will result in four additional wells drilled prior to year-end. The Company expects to drill the four additional wells on our WD-4 and WD-8 properties. The additional fourth quarter capital is expected to add incremental production volumes in early 2019 and further improve the Company's growth plans.

Touchstone ExplorationCapital ProgramTSXTouchstoneResultsEarningsDrilling

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