Touchstone Exploration Inc. Announces First Quarter 2017 Results and Commencement of Drilling Program
Touchstone Exploration Inc. ("Touchstone" or the "Company") (TSX:TXP) announces its financial and operating results for the three months ended March 31, 2017. Selected financial and operational information is outlined below and should be read in conjunction with Touchstone's March 31, 2017 unaudited 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, tabular amounts herein are in thousands of Canadian dollars, and amounts in text are rounded to thousands of Canadian dollars.
2017 First Quarter Highlights
2017 First Quarter Financial and Operating Results Summary
Touchstone's workover program continued into 2017 with a total of five wells recompleted in the first quarter. The recompletions targeted bypassed pay in wellbores that were either non-producing or producing below economic limits. The Company invested $734,000 in the first quarter of 2017 on exploration and development expenditures, of which $261,000 related to well recompletions. First quarter 2017 production was 1,280 barrels per day, representing an increase of 3% from the fourth quarter of 2016 and a decrease of 6% from the prior year comparative quarter. The 13 well recompletion program that commenced in November 2016 contributed an estimated 119 barrels of production per day in the first quarter of 2017.
Realized first quarter 2017 pricing for crude oil was $64.16 (US$48.40) per barrel versus $38.66 (US$28.08) per barrel received in the equivalent quarter of 2016. Total petroleum revenues increased 54% from the prior year comparative quarter primarily based on the significant year over year increase in realized crude oil prices. First quarter 2017 royalty expenses represented 35.8% of petroleum revenues compared to 30.0% in the prior year comparative period. The increase was a result of a one-time $353,000 adjustment recognized in the first quarter related to prior period impost levies that were invoiced in March 2017. As a result of various costs saving initiatives throughout 2016, first quarter 2017 per barrel operating expenses and general and administrative expenses decreased 29% and 26% from the same period in 2016, respectively. $493,000 of interest was accrued in relation to outstanding value added tax balances in the first quarter of 2017. The outstanding principal balances will be fully paid in the second quarter of 2017 and will accrue no further interest charges upon settlement.
Funds flow from operations for the three months ended March 31, 2017 was $393,000 ($0.01 per basic share) versus funds flow from operations of $919,000 ($0.01 per basic share) recognized in the first quarter of 2016.
First quarter funds flow from operations decreased 57% from the prior year comparative quarter largely due to $3,146,000 in realized derivative gains that were recorded in the previous year, offset by the royalty and value added tax interest charges noted above. The Company recorded a net loss of $1,549,000 ($0.02 per basic share) during the three months ended March 31, 2017.
Touchstone exited the quarter with a cash balance of $13,006,000, a working capital surplus of $5,584,000 and a $15,000,000 principal term loan balance. $8,006,000 of the Company's cash balance was available at March 31, 2017 as Touchstone must maintain a minimum cash reserves balance of $5,000,000 in accordance with its term loan. The covenant can be reduced to $2,500,000 if the Company meets certain financial thresholds or raises additional equity. In addition, the Company classified $3,262,000 in cash used to collateralize letters of credit that secured future work obligations on production and development contracts as long-term restricted cash.
2017 Drilling Program
Touchstone is pleased to announce that the first well of its four well drilling program was spud on May 12, 2017. The first two wells will be drilled on the Company's Coora 1 property from a single drilling pad. The Coora wells are targeting the forest and cruse sands and are planned to be drilled to total depths of approximately 5,300 feet. Following operations in Coora, Touchstone will move to the Grand Ravine WD-4 block for the drilling of two additional wells. These wells will be drilled from a single pad to total depths of approximately 7,500 feet and will be targeting the forest and cruse formations. Touchstone anticipates the four wells to be completed within the next 90 days and associated production volumes to be realized in the second half of 2017.
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.
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