As a result of the business combination discussed below, second quarter 2014 results includes the
Financial and Operational Highlights
-- Closed the business combination of Petrobank Energy and Resources Ltd. and Touchstone Exploration Inc. on
May 13, 2014; -- Achieved average second quarter oil production of 1,220 barrels per day as Trinidadproduction averaged 1,574 barrels per day over the 48 day post acquisition period within the quarter; -- Generated second quarter net income of $2,751,000( $0.05per basic and diluted share) versus a loss of $3,967,000recorded in the first quarter of 2014 and a loss of $4,151,000in the comparative 2013 period; -- Commenced the 2014 Trinidad drilling program and participated in drilling four (3.16 net) wells; -- Realized positive Q2 2014 operating netbacks at our Kerrobert, Saskatchewanoperations for the first time in Company history; -- Repaid a combined $23,863,000in convertible debenture and long-term debt amounts acquired in the business combination; -- Generated Trinidadadjusted funds flow from operations of $1,744,000or $23.08per barrel in the quarter as adjusted for non-recurring operating costs of $1,276,000(unadjusted - $468,000or $6.19per barrel); and -- Achieved July production of 2,340 average barrels per day of which 1,795 barrels per day was Trinidadbased and 545 barrels per day was from Canadian operations.
Pursuant to the Arrangement, the Company acquired all of the outstanding common shares of Old Touchstone in exchange for the issuance of 65,519,212 pre-consolidation (32,759,606 post consolidation) Company common shares. Following the arrangement, the Company consolidated its shares on a two for one basis, Petrobank Energy and Resources Ltd. changed its name to
Old Touchstone was engaged in the exploration, development and production of oil in
Second Quarter Financial Summary
Three months ended Six months ended June 30 June 30 2014 2013 2014 2013 ---------------------------------------------------------------------------- Operational Corporate average daily oil production 1,220 191 807 217 (bbls/day) Trinidad operating netback(1) ($/bbl) Reference price - Brent 119.55 105.63 119.27 109.48 Petroleum sales 104.02 - 104.02 - Royalties (36.53) - (36.53) - ---------------------------------------------------------------------------- Net sales 67.49 - 67.49 - Adjusted operating expenses(3) (26.98) - (26.98) - ---------------------------------------------------------------------------- Adjusted operating netback 40.51 - 40.51 - Financial (
$000's except per share amounts) Trinidad petroleum sales 7,861 - 7,861 - Corporate net income (loss) 2,751 (4,151) (1,216) (7,159) Per share - basic and diluted(2) 0.05 (0.09) (0.02) (0.15) Corporate funds flow from operations(1) (4,007) (1,777) (6,121) (4,469) Per share - basic and diluted(1,2) (0.07) (0.04) (0.11) (0.09) Exploration asset expenditures 3,189 3,050 9,000 11,472 Property and equipment expenditures 7,797 73 7,816 124 Total assets (end of period) 182,984 147,249 182,984 147,249 Working capital (end of period) 9,728 71,020 9,728 71,020 Total debt(1) (end of period) 1,338 2,004 1,338 2,004 Weighted average shares outstanding(2) Basic 60,773,547 48,795,069 54,794,161 48,796,682 Diluted 61,029,289 48,795,069 54,970,733 48,796,682 Outstanding shares (end of period)(2) 81,738,643 48,718,912 81,738,643 48,718,912 ---------------------------------------------------------------------------- (1) See "Non-GAAP Measures" (2) All current and comparative share amounts have been adjusted to reflect the two for one common share consolidation completed on May 13, 2014. (3) Adjusted for a $1,276one-time non-cash operating expense to reflect the value of crude oil inventory that was accounted for at its fair value in the business combination.
Production for the three months ended
Negative funds flow from operations in the second quarter of 2014 was
Canadian exploration asset expenditures were
Working capital surplus at period end was
Of the three
Mechanical inefficiencies were experienced with the two third party drilling rigs in July and as a result, both rigs were taken out of service for mechanical upgrades. The first rig came back in service on
Touchstone announces that Mr.
Touchstone Exploration Inc. is a
This press release contains terms commonly used in the oil and gas industry, such as funds flow from operations, funds flow from operations per share, operating netback, funds flow netback and total debt. These terms do not have a standardized meaning under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other companies.
Funds flow from operations represents cash flow from operating activities before changes in non-cash working capital. Management believes that in addition to net earnings and cash flows from operating activities, funds flow from operations is a useful financial measurement which assists in demonstrating the Company's ability to fund capital expenditures necessary for future growth or to repay debt. The Company calculates funds flow from operations per share by dividing funds flow from operations by the weighted average number of basic and dilutive common shares outstanding during the period.
The Company uses funds flow netbacks as a key performance indicator of results. Funds flow netbacks do not have a standardized meaning under IFRS and therefore may not be comparable with the calculation of similar measures by other companies. Funds flow netbacks are presented on a per barrel basis and are calculated by deducting royalties, operating expenses, general and administrative expenses, transaction costs, finance and other expenses and current income tax expenses from petroleum sales. Funds flow netbacks are a useful measure to compare the Company's operations with those of its peers.
The Company also uses operating netbacks as a key performance indicator of field results. Operating netbacks do not have a standardized meaning under IFRS and therefore may not be comparable with the calculation of similar measures by other companies. Operating netbacks are presented on a per barrel basis and are calculated by deducting royalties and operating expenses from petroleum sales. Operating netbacks are a useful measure to compare the Company's operations with those of its peers.
Total debt is calculated by summing the Company's current and long-term portions of interest bearing instruments. The Company uses this information to assess its true debt position and manage capital risk. This measure does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures reported by other companies.
Advisory on Forward-looking Statements
Certain information regarding Touchstone set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "plan", "expect", "prospective", "project", "intend", "believe", "should", "anticipate", "estimate" or other similar words, or statements that certain events or conditions "may" or "will" occur are intended to identify forward-looking statements. Such statements represent Touchstone's internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. In addition, statements relating to "reserves" or "resources" are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be profitably produced in the future. These statements are only predictions and actual events or results may differ materially. Although the Company's management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Touchstone's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of the Company.
In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties; supply and demand for oil; financial and business prospects and financial outlook; results of drilling and testing, results of operations; drilling plans; activities to be undertaken in various areas; timing of drilling and completion; and planned capital expenditures and the timing thereof.
These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in
Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and as such, undue reliance should not be placed on forward-looking statements. Readers are also cautioned that the foregoing list of factors and assumptions is not exhaustive. The Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT: Touchstone Exploration Inc. Mr.
Scott BudauChief Financial Officer (403) 750-4400 Touchstone Exploration Inc. Mr. Paul R. BaayChief Executive Officer (403) 750-4400 Touchstone Exploration Inc. Mr. Cameron MacDonaldInvestor Relations (403) 750-4400 www.touchstoneexploration.com Source: Touchstone Exploration Inc.