Touchstone Exploration Inc. (LON:TXP) has reported its operating and condensed financial results for the three months ended March 31, 2026 and provides an operational update.
Selected financial information is outlined below and should be read in conjunction with Touchstone’s March 31, 2026 unaudited interim condensed consolidated financial statements and related Management’s discussion and analysis, both of which are available on the Company’s profile on SEDAR+ (www.sedarplus.ca) and website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.
First Quarter 2026 Financial and Operating Highlights
· Production growth: Average daily production increased 8% year-over-year to 4,657 boe/d, as production from the Central field (2,131 boe/d) successfully mitigated natural declines in legacy assets. Relative to the preceding quarter, average quarterly production decreased from 4,877 boe/d, primarily due to natural declines in mature crude oil and Ortoire natural gas volumes.
· Revenue and realized pricing: Petroleum and natural gas sales totaled $12.5 million, a 14% increase from the $11.0 million recorded in the previous quarter. This was driven by an 18% increase in realized natural gas prices and a 25% recovery in realized crude oil pricing, with March 2026 crude oil volumes averaging $86.58 per barrel.
– Crude oil sales: $5.68 million from average production of 929 bbls/d at a realized price of $67.94 per barrel.
– NGL sales: $1.50 million from average production of 422 bbls/d at a realized price of $39.38 per barrel.
– Natural gas sales: $5.36 million from average production of 19.84 MMcf/d (3,306 boe/d) at a realized price of $3.00 per Mcf.
· Operating netback: Realized an operating netback of $13.73 per boe, a 46% improvement over the $9.41 per boe recorded in the preceding quarter. This expansion reflected higher commodity pricing and stable royalty structures, which more than offset the increased operating cost base.
· Funds flow from operations: Increased to $1.85 million from $0.62 million in the previous quarter, primarily driven by a $1.54 million increase in operating netbacks.
· Net income: Recorded a net loss of $2.38 million ($0.01 per basic share), a normalization from $13.62 million in net income reported in the fourth quarter of 2025, which was skewed by $14.53 million in one-time non-cash gains.
· Capital investments: Expenditures were focused on high-impact projects, including the FR-1835 crude oil development well, tie-in of the CR-3 natural gas development well, and the Cascadura compression project, totalling $3.22 million for the quarter.
· Financial position: Ended the period with a net debt position of $76.07 million.
Post Period-end Highlights
· Strategic infrastructure: Successfully delivered the Cascadura compressor to the facility in April, with commissioning expected in June 2026 to unlock further production capacity.
· WD-8 block drilling: Completed drilling the FR-1836 well ahead of schedule, with the well encountering an estimated 227 feet of net hydrocarbon pay.
· Production Update: In April 2026, the Company produced estimated average net production volumes of 4,677 boe/d, including average net natural gas sales volumes of 19.3 MMcf/d (3,221 boe/d) and average net crude oil and natural gas liquid sales volumes of 1,456 bbls/d.
Q1 2026 Financial and Operating Results Overview
| Three months ended | |||
| March 31,2026 | December 31, 2025 | March 31,2025 | |
| Operational | |||
| Average daily production | |||
| Crude oil(1) (bbls/d) | 929 | 996 | 1,162 |
| NGLs(1) (bbls/d) | 422 | 413 | 39 |
| Crude oil and liquids(1) (bbls/d) | 1,351 | 1,409 | 1,201 |
| Natural gas(1) (Mcf/d) | 19,838 | 20,805 | 18,698 |
| Average daily production (boe/d)(2) | 4,657 | 4,877 | 4,317 |
| Production mix (% of production) | |||
| Crude oil and liquids(1) | 29 | 29 | 28 |
| Natural gas(1) | 71 | 71 | 72 |
| Average realized prices(3) | |||
| Crude oil(1) ($/bbl) | 67.94 | 54.57 | 63.86 |
| NGLs(1) ($/bbl) | 39.38 | 30.30 | 64.05 |
| Crude oil and liquids(1) ($/bbl) | 59.02 | 47.46 | 63.87 |
| Natural gas(1) ($/Mcf) | 3.00 | 2.54 | 2.50 |
| Realized commodity price ($/boe)(2) | 29.92 | 24.53 | 28.60 |
| Operating netback ($/boe)(2) | |||
| Realized commodity price(3) | 29.92 | 24.53 | 28.60 |
| Royalty expense(3) | (7.31) | (7.15) | (7.25) |
| Operating expense(3) | (8.88) | (7.97) | (5.52) |
| Operating netback(3) | 13.73 | 9.41 | 15.83 |
| Financial | |||
| ($000’s except per share amounts) | |||
| Petroleum and natural gas sales | 12,543 | 11,001 | 11,113 |
| Cash from operating activities | 4,787 | 9,903 | 5,611 |
| Funds flow from operations | 1,848 | 623 | 2,580 |
| Net (loss) income | (2,376) | 13,621 | 41 |
| Per share – basic and diluted | (0.01) | 0.04 | 0.00 |
| Capital expenditures(3) | 3,224 | 7,443 | 6,673 |
| Principal balance of bank debt | 55,625 | 57,750 | 33,500 |
| Principal balance of convertible debenture | 12,500 | 12,500 | – |
| Net debt(3) | 76,072 | 72,890 | 33,330 |
| Share Information (000’s) | |||
| Weighted average shares outstanding | |||
| Basic and diluted | 324,734 | 304,674 | 236,461 |
| Outstanding shares – end of period | 324,734 | 324,734 | 236,461 |
Notes:
(1) Refer to “Advisories – Product Type Disclosures” for further information.
(2) In the table above and elsewhere in this announcement, references to “boe” mean barrels of oil equivalent that are calculated using the energy equivalent conversion method. Refer to “Advisories – Oil and Natural Gas Measures” for further information.
(3) Specified or supplementary financial measure. Refer to “Advisories – Non-GAAP and Other Financial Measures” for further information.
Operational Update
Carapal Ridge 3 (CR-3)
Since commencing production, the CR-3 well has delivered stable gross production rates of approximately 2.2 MMcf/d of natural gas and 14 bbls/d of condensate. Based on current well performance and flowing parameters, the well appears to be experiencing an inflow restriction. To optimize performance, the Company is awaiting the availability of equipment to complete a coiled tubing cleanout and acid stimulation aimed at enhancing reservoir inflow and well productivity.
Cascadura Infrastructure
The Cascadura compressor arrived in Trinidad on April 23, 2026. Installation is progressing, with commissioning targeted to commence in June 2026. The compressor is intended to alleviate production constraints associated with elevated sales pipeline pressures and is expected to enhance production rates and improve operational stability at the facility.
Oil Block Drilling
Following the successful drilling of FR-1835 on the WD-8 block in March 2026, drilling operations on FR-1836 commenced on March 26, 2026, with total depth reached on April 7, 2026. Wireline log analysis indicates approximately 227 feet of net hydrocarbon pay. Both wells were drilled ahead of schedule with turnkey drilling costs funded by the drilling operator. Completion operations are currently underway, and both wells are expected to be brought onstream imminently.
Liquidity and Recapitalization
As at March 31, 2026, Touchstone Exploration had a working capital deficit of $22.2 million (excluding the convertible debenture maturing in 2028). Due to the current debt structure and projected 2026 covenant levels, the Company’s March 31, 2026 unaudited interim condensed financial statements include a note regarding the existence of material uncertainties over its ability to continue as a going concern.
In the absence of mitigating actions, the Company’s current cash resources and forecast cash flows from operations may not be sufficient to fund expected operating and development expenditures and scheduled bank debt repayments over the next twelve months.
Touchstone is actively executing a strategic recapitalization plan to address near-term liquidity and ensure the Company is funded for its high-growth development program, which includes:
· Debt restructuring: Constructive and ongoing discussions with our lender regarding loan amendments and waivers for the currently projected annual 2026 covenant breaches. The Company has a history of proactive engagement and receiving covenant waivers from its lender.
· Value-added tax recovery: Continuing engagement with the Trinidad and Tobago Government to collect outstanding value-added tax receivables (approximately $10.1 million outstanding as at March 31, 2026).
· Operational cash-flow: Anticipated production growth as new wells and the compression project come online in 2026 and benefitting from strengthening commodity pricing.
· Equity initiatives: Evaluating strategic opportunities to strengthen the balance sheet and support future work commitments.
