Touchstone Exploration Inc. ("Touchstone" or the "Company") (TSX:TXP) announces its financial and operating results for the three months and year ended December 31, 2016. Selected financial and operational information are outlined below and should be read in conjunction with Touchstone's December 31, 2016 audited consolidated financial statements and 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 amounts in text are rounded to thousands of Canadian dollars unless otherwise stated.
2016 Annual Highlights
Throughout 2016 Touchstone continued to follow a strategy of deploying exploration and development capital with financial discipline and focused on operations directly related to maintaining production from the Company's core Trinidad developmental properties. The Company completed a balance sheet restructuring in November 2016, replacing the former reserve-based bank loan with a $15,000,000 five-year term loan that includes no mandatory repayments of principal until January 2019. With this improved financial flexibility, the Company immediately undertook an eight well recompletion program in December 2016 which increased production in excess of 100 barrels per day in January 2017.
Touchstone remained sensitive to the low commodity price environment, recompleting a total of nine wells, stimulating two wells, and deploying no drilling capital during the fiscal year. This prudent approach led to a 19% decrease in capital spending from 2015, with $3,881,000 invested in 2016 versus $4,817,000 in the prior year. Notwithstanding the Company's minimal capital and operational spending in 2016, annual crude oil production was 476,057 barrels, an average of 1,301 barrels per day. This represented a decrease of 19% from Trinidad average daily volumes delivered in 2015.
Trinidad realized 2016 pricing for crude oil was $50.49 (US$38.10) per barrel versus $58.45 (US$45.98) per barrel received in 2015. Total Trinidad based petroleum revenue decreased 30% based on decreases in production and realized prices. The Company generated $6,462,000 in realized derivative gains in 2016 versus $6,181,000 in 2015.
The Company executed on implementing various costs savings initiatives to reduce both operating costs and general administrative expenses. Touchstone undertook various operating cost efficiency projects in Trinidad which, combined with the Company's disposition of the cash flow negative Kerrobert property, resulted in annual operating expenses decreasing 40% from 2015. Through the reduction of staff and office space, as well as other cost-savings initiatives, general and administrative expenses decreased by 39% from 2015.
Funds flow from operations for the year ended December 31, 2016 was $6,117,000 ($0.07 per basic share) versus funds flow from operations of $2,908,000 ($0.04 per basic share) recognized in the prior year. Funds flow from operations increased from 2015 primarily from the cessation of Canadian based operating losses and a $4,118,000 reduction in annual general and administrative expenses. Primarily due to a net loss on derivative contracts of $1,970,000 and $5,337,000 in exploration asset impairment charges, the Company recorded a net loss of $12,853,000 ($0.15 per basic share) during the year ended December 31, 2016.
The Company is currently planning the commencement of its 2017 drilling program which will focus on development drilling on the Coora, WD-4 and WD-8 properties. These wells will be targeting the Forest and Cruse formations at depths ranging from 3,200 feet to 7,000 feet. In addition, the Company is continuing to execute two recompletions per month on existing wells located throughout its portfolio of onshore Trinidad properties. Any potential expansion of the capital program will primarily be determined on the future stability of commodity prices. The initial program will be funded by existing cash on hand and cash proceeds from the East Brighton letter of credit reduction.
The Company continues to focus on various operating cost reduction projects, including utilizing new pumping technology. The Company is also currently seeking approval for effluent disposal at certain facilities to minimize the environmental impact of its operations.
Touchstone is in the preliminary stages of considering a listing on the AIM Market of the London Stock Exchange ("AIM"). The Company's objective would be to enhance liquidity for the Company's shareholders and provide more direct access to the London capital markets. No decision has been made at this time as to whether or not the Company will apply for an AIM listing.
Appointment of Audit Committee Chair
The Company is pleased to announce that Mr. Corey C. Ruttan, a current member of the Company's Board of Directors, has accepted the position of Chair of the Board of Director's Audit Committee. Mr. Ruttan is currently President, Chief Executive Officer and a Director of Alvopetro Energy Ltd. and is a Chartered Professional Accountant.
Touchstone Exploration Inc. is a Calgary-based company engaged in the business of acquiring interests in petroleum and natural gas rights, and the exploration, development, production and sale of petroleum and natural gas. Touchstone is currently active in onshore properties located in the Republic of Trinidad and Tobago. The Company's common shares are traded on the Toronto Stock Exchange under the symbol "TXP".
SOURCE: Touchstone Exploration Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.