Touchstone Exploration Inc (TSX, LON:TXP) has reported its financial and operating results for the three and six months ended June 30, 2025. Selected financial information is outlined below and should be read in conjunction with Touchstone’s June 30, 2025 unaudited interim condensed consolidated financial statements and related Management’s discussion and analysis, both of which are available online on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars.
Second Quarter 2025 Highlights
· Strategic Acquisition: Completed the acquisition of Shell Trinidad Central Block Limited, adding approximately 1,910 boe/d of liquids-rich natural gas production and providing access to global LNG pricing.
· Production: Averaged 4,399 boe/d in the second quarter of 2025 (69 percent natural gas), compared to 4,317 boe/d (72 percent natural gas) in the first quarter of 2025 and 5,432 boe/d (77 percent natural gas) in the second quarter of 2024. Second quarter 2025 volumes include approximately 1.5 months of production from the Central block acquisition, which contributed approximately 1,910 boe/d over the post-acquisition period.
· Petroleum and Natural Gas Sales: Totaled $11.01 million, a 22 percent decrease from $14.1 million recorded in the comparative prior year quarter.
– Crude oil sales: $6.08 million from average production of 1,142 bbls/d at an average realized price of $58.52 per barrel.
– NGL sales: $0.68 million from average production volumes of 210 bbls/d at an average realized price of $35.40 per barrel.
– Natural gas sales: $4.25 million from average production of 18.3 MMcf/d (3,047 boe/d) at an average realized price of $2.55 per Mcf.
· Operating Netback: Generated $5.04 million in operating netback, a 38 percent decrease from the second quarter of 2024, primarily due to decreased petroleum and natural gas sales and related royalties and increased natural gas related operating expenses.
· Funds Flow from Operations: Declined to $1.43 million from $3.97 million in the prior year equivalent quarter, largely driven by lower operating netbacks and increased cash finance expenses, partially offset by lower current income tax.
· Net Loss: Recorded a net loss of $0.71 million ($0.00 per share) compared to net earnings of $3.34 million ($0.01 per share) in the second quarter of 2024. The variance was primarily driven by the decrease in year-over-year funds flow from operations and a $1.5 million gain on asset disposition recorded in the prior year.
· Capital Investments: Invested $4.66 million, primarily directed toward the drilling of the Cascadura-5 development well.
· Private Placement: Raised net proceeds of $5.22 million in the quarter from the issuance of 24,636,585 common shares at 20.5 pence sterling (approximately C$0.38) per share.
· Financial Position: Net debt increased to $63.89 million at June 30, 2025, reflecting the close of the Central block acquisition which was funded by an additional $30 million term loan facility.
Post Period-end Highlights
· Convertible Debenture Offering: On August 13, 2025, the Company closed a $12.5 million private placement of convertible debentures and common share purchase warrants (the “Offering”) with a Canadian private investor. Net proceeds will fund the remaining 2025 Cascadura development drilling program and reduce outstanding accounts payable. The Company has received written confirmation from its lender that the Offering proceeds satisfy an equivalent portion of the equity raise requirement under its Fourth Amended and Restated Loan Agreement (the “Loan Agreement”).
· Production Update: July 2025 field-estimated production averaged 5,281 boe/d, up 3.8 percent from 5,088 boe/d in June. Estimated volumes included 22.3 MMcf/d of net natural gas production (3,717 boe/d) and 1,564 bbls/d of net crude oil and liquids production.
Second Quarter 2025 Financial and Operating Results Overview
| Operational | ||||||
| Average daily production | ||||||
| Crude oil(1) (bbls/d) | 1,142 | 1,158 | (1) | 1,152 | 1,162 | (1) |
| NGLs(1) (bbls/d) | 210 | 101 | 100 | 125 | 181 | (31) |
| Crude oil and liquids(1) (bbls/d) | 1,352 | 1,259 | 7 | 1,277 | 1,343 | (5) |
| Natural gas(1) (Mcf/d) | 18,282 | 25,036 | (27) | 18,489 | 29,279 | (37) |
| Average daily production (boe/d)(2) | 4,399 | 5,432 | (19) | 4,359 | 6,223 | (30) |
| Production mix (% of production) | ||||||
| Crude oil and liquids(1) | 31 | 23 | 29 | 22 | ||
| Natural gas(1) | 69 | 77 | 71 | 78 | ||
| Average realized prices(3) | ||||||
| Crude oil(1) ($/bbl) | 58.52 | 73.62 | (21) | 61.20 | 71.78 | (15) |
| NGLs(1) ($/bbl) | 35.40 | 73.86 | (52) | 39.80 | 70.78 | (44) |
| Crude oil and liquids(1) ($/bbl) | 54.93 | 73.64 | (25) | 59.11 | 71.64 | (17) |
| Natural gas(1) ($/Mcf) | 2.55 | 2.48 | 3 | 2.53 | 2.47 | 2 |
| Realized commodity price ($/boe)(2) | 27.50 | 28.50 | (4) | 28.04 | 27.08 | 4 |
| Operating netback ($/boe)(2) | ||||||
| Realized commodity price(3) | 27.50 | 28.50 | (4) | 28.04 | 27.08 | 4 |
| Royalty expense(3) | (6.63) | (7.25) | (9) | (6.94) | (6.41) | 8 |
| Operating expense(3) | (8.28) | (4.81) | 72 | (6.92) | (4.26) | 62 |
| Operating netback(3) | 12.59 | 16.44 | (23) | 14.18 | 16.41 | (14) |
| Financial | ||||||
| ($000’s except per share amounts) | ||||||
| Petroleum and natural gas sales | 11,007 | 14,090 | (22) | 22,120 | 30,674 | (28) |
| Cash (used in) from operating activities | (234) | 3,383 | n/a | 5,377 | 8,752 | (39) |
| Funds flow from operations | 1,433 | 3,968 | (64) | 4,013 | 10,110 | (60) |
| Net (loss) earnings | (710) | 3,339 | n/a | (669) | 6,967 | n/a |
| Per share – basic and diluted | (0.00) | 0.01 | n/a | (0.00) | 0.03 | n/a |
| Capital expenditures(3) | 4,659 | 5,543 | (16) | 11,332 | 17,505 | (35) |
| Acquisition expenditure | 28,400 | – | n/a | 28,400 | – | n/a |
| Working capital deficit(3) | 11,816 | 2,674 | 100 | |||
| Principal long-term bank debt | 52,071 | 26,000 | 100 | |||
| Net debt(3) – end of period | 63,887 | 28,674 | 100 | |||
| Share Information (000’s) | ||||||
| Weighted avg. shares outstanding: | ||||||
| Basic | 248,644 | 234,959 | 6 | 242,586 | 234,586 | 3 |
| Diluted | 248,644 | 236,364 | 5 | 242,586 | 236,451 | 3 |
| Outstanding shares – end of period | 261,097 | 236,307 | 10 | |||
Notes:
(1) Refer to “Advisories – Product Type Disclosures” for further information.
(2) Refer to “Advisories – Oil and Natural Gas Measures” for further information.
(3) Specified or supplementary financial measure. Refer to “Advisories – Non-GAAP Financial Measures” for further information.
2025 Outlook and Guidance
On December 9, 2024, Touchstone Exploration released its preliminary 2025 operational and financial guidance. Following the closing of the Central block acquisition in May 2025, Touchstone has updated its 2025 guidance as summarized in the following table.
| Annual Guidance Summary(1) | Updated Guidance | Original Guidance(2) | Variance | |
| Amount | % | |||
| Capital expenditures(3) ($000’s) | 28,000 | 23,000 | 5,000 | 22 |
| Average daily production (boe/d) | 5,300 to 5,900 | 6,700 to 7,300 | (1,400) | (20) |
| % natural gas | 74% | 77% | (3) | |
| % crude oil and liquids | 26% | 23% | 3 | |
| Funds flow from operations(4) ($000’s) | 11,000 | 22,000 | (11,000) | (50) |
| Net debt – end of year(3)(4) ($000’s) | 64,000 | 30,000 | 34,000 | 113 |
Notes:
(1) Forward-looking statement and financial outlook information based on Management’s current estimates. Refer to “Advisories – Forward-looking Statements“.
(2) As previously announced on December 9, 2024.
(3) Specified or supplementary Non-GAAP financial measure. Refer to “Advisories – Non-GAAP Financial Measures“.
(4) Based on the midpoint of the average production forecast: updated – 5,600 boe/d; original – 7,000 boe/d.
The Company remains focused on capital discipline and maximizing value from its core development and exploration assets. The near-term strategy prioritizes enhancing operating cash flows through disciplined development drilling and the execution of targeted projects.
The Company now plans to fund its 2025 capital program primarily through proceeds from the May private placement and the $12.5 million Offering, supplemented by an additional equity financing of approximately $7.3 million, expected to close before the end of 2025, to satisfy obligations under the Loan Agreement. This approach replaces the original plan to fund the program through expanded credit facilities, which were utilized to finance the Acquisition.
The preliminary 2025 capital program contemplated four Cascadura development wells at Cascadura. The updated program replaces two of these wells with one development well on the Central block and two development wells at the WD-8 property. In addition, approximately $2.6 million in capital expenditures are expected in the second half of 2025 for a Cascadura facility compression project, scheduled for completion in the second quarter of 2026.
As a result of the Acquisition and the deferral of the initial Cascadura wells, the midpoint of the 2025 production forecast has been reduced by approximately 20 percent, and expected funds flow from operations has decreased by 50 percent. Forecast year-end net debt is expected to increase by 113 percent, primarily reflecting the $30 million term loan facility used to finance the Acquisition and proceeds from the Offering to support development activities.
