CALGARY, AB, May 13, 2021 /CNW/ - Touchstone Exploration Inc. ("Touchstone", "we", "our", "us" or the "Company") (TSX: TXP) (LSE: TXP) reports its operating and financial results for the three months ended March 31, 2021. Selected information is outlined below and should be read in conjunction with Touchstone's March 31, 2021unaudited interim consolidated financial statements and 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). Unless otherwise stated, all financial amounts herein are stated in United States dollars.
First Quarter 2021 Highlights
Achieved quarterly crude oil sales of 1,297 barrels per day ("bbls/d"), a 2 percent increase relative to the preceding quarter and an 18 percent decrease relative to the 1,589 bbls/d produced in the same period of 2020.
Executed an incident free $2,954,000 exploration program, primarily focused on production testing the Chinook-1 and Cascadura Deep-1 exploration wells drilled in the fourth quarter of 2020.
Realized crude oil prices averaged $52.43 per barrel, representing a 39 percent increase from the fourth quarter of 2020 and a 14 percent increase from the first quarter of 2020.
Generated an operating netback of $21.98 per barrel from an average Brent price of $61.04 per barrel, our highest operating netback reported since the fourth quarter of 2019.
Despite limited petroleum asset capital investment of $127,000, generated funds flow from operations of $538,000compared to $1,257,000 in the first quarter of 2020.
Recognized a net loss of $460,000 ($0.00 per share) compared to a net loss of $9,240,000 ($0.05 per share) in the 2020 equivalent quarter.
Maintained financial flexibility, exiting the first quarter with cash of $15,451,000, a working capital balance of $10,552,000and $7,500,000 drawn on our $20 million term credit facility, resulting in a net surplus of $3,052,000.
Business continuity plans remained effective across our locations in response to COVID-19 with minimal health and safety impacts or disruptions to production and exploration operations.
Paul Baay, President and Chief Executive Officer, commented:
"Our financial and operational results reported in the first quarter of 2021 were in line with our expectations, reflecting our continued focus on the Ortoire exploration program. We proceeded with many aspects of the Ortoire exploration program, highlighted by testing the Chinook-1 and Cascadura Deep-1 prospects. While the results at Chinook showed evidence of light oil rather than natural gas, we were excited to identify a large distinct, separate sheet of natural gas at Cascadura Deep-1 to sit alongside the already significant find made at Cascadura-1ST1.
Our priority is to bring our Coho and two Cascadura wells onto production as soon as possible while also drilling Royston-1, our final Ortoire licence commitment well. We are excited to commence our transition into a natural gas producer while continuing to progress our exploration program in Trinidad. The Company is well positioned financially, and we look forward to updating shareholders in due course."
First Quarter Financial and Operating Results Summary
Three months ended March 31,
Average daily crude oil production(1)(bbls/d)
Brent benchmark price ($/bbl)
Operating netback(2) ($/bbl)
Realized sales price
Financial ($000's except as indicated)
Cash used in operating activities
Funds flow from operations(3)
Per share – basic and diluted(2)(3)
Per share – basic and diluted
Exploration capital expenditures
Development capital expenditures
Total capital expenditures
Working capital surplus(2)
Principal non-current balance of term loan
Net (surplus) debt(2) – end of period
Share Information (000's)
Weighted average shares outstanding
Basic and diluted
Outstanding shares – end of period
The Company's reported crude oil production is a mix of light and medium crude oil and heavy crude oil for which there is not a precise breakdown since the Company's oil sales volumes typically represent blends of more than one type of crude oil.
Non-GAAP financial measure that does not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS" or "GAAP") and therefore may not be comparable with the calculation of similar measures presented by other companies. See "Advisories: Non-GAAP Measures" for further information.
Additional GAAP term included in the Company's consolidated statements of cash flows. Funds flow from operations represents net loss excluding non-cash items. See "Advisories: Non-GAAP Measures" for further information.
Despite ongoing challenges surrounding the COVID-19 pandemic, during the first quarter of 2021 we continued to progress with our Ortoire exploration program and increased our base crude oil production while continuing safe and reliable operations.
Our crude oil sales averaged 1,297 bbls/d in the first quarter of 2021, representing a 2 percent increase from the fourth quarter of 2020 and an 18 percent decrease from the first quarter of 2020. Despite conducting limited developmental capital activity in the quarter, production increased from the prior quarter based on increased workover operations. In comparison to the prior year equivalent quarter, our first quarter 2021 production decrease was reflective of limited capital development and workover activities performed throughout 2020 and the ongoing impact of natural declines.
Our main focus in the first quarter of 2021 remained on Ortoire exploration operations, as we invested $2,954,000 in exploration assets activities. In the quarter we conducted production testing operations on our Chinook-1 and Cascadura Deep-1 wells and continued Coho-1 surface facility operations and our Royston area seismic program. We remain on track to spud Royston-1 and anticipate completing our seismic program obligation by the end of the second quarter of 2021.
We reported funds flow from operations of $538,000 in the first quarter of 2021 compared to $1,257,000 generated in the same period of 2020. In comparison to the first quarter of 2020, the 57 percent decrease was predominately a result of a $368,000 increase in general and administration costs, a $309,000 increase in current income tax expenses and decreased operating netbacks of $138,000, partially offset by reduced term loan interest expenses of $153,000. Our first quarter 2021 operating netback decreased 5 percent relative to the 2020 equivalent quarter, reflective of a 19 percent decrease in crude oil production, which was partially offset by the benefit of a 14 percent increase in realized crude oil pricing and decreased royalty and operating expenses.
We recorded a net loss of $460,000 ($0.00 per basic share) in the first quarter of 2021 compared to a net loss of $9,240,000 ($0.05 per basic share) in the prior year equivalent quarter. The decreased loss was primarily a result of $19,215,000 in non-cash property and equipment impairment charges recorded in the first quarter of 2020 based on decreases in forecasted commodity prices, partially offset by deferred tax recoveries of $10,072,000.
Touchstone exited the first quarter with a cash balance of $15,451,000, a working capital balance of $10,552,000 and $7,500,000 drawn on our term credit facility resulting in a net surplus position of $3,052,000. Our near-term liquidity is augmented by $12.5 million of current undrawn credit capacity.
We believe that available credit facility capacity combined with anticipated funds flow from operations will be sufficient to satisfy our 2021 minimum exploration work commitments, which include drilling the Royston-1 well and completing and interpreting the Royston area seismic program. Our primary objective remains to bring our Coho and Cascadura area natural gas exploration discoveries at Ortoire onto production as soon as practicable. As the current economic and health related challenges persist, we will continue to adapt our business operations and capital programs to ensure health and safety and enhance long-term shareholder value, and we look forward to updating our shareholders on our progress throughout the year.