CALGARY, ALBERTA–(Marketwired – Oct. 21, 2015) – Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TSX:TXP) announces that it has entered into an agreement to purchase certain onshore producing assets from Trinity Exploration and Production Plc (“Trinity”) for cash consideration of US$20.8 million prior to adjustments (the “Acquisition”). The Acquisition is consistent with Touchstone’s strategy of acquiring operated low decline oil production with large volumes of original oil in place.
Pursuant to the Acquisition, the Company will be acquiring a 100% working interest in five blocks located in the Southern Basin of the Republic of Trinidad and Tobago (“Trinidad”) with a current estimated average field production of approximately 1,490 barrels of oil per day. Touchstone is expecting to fund the Acquisition through cash on hand and its existing bank facility. In addition, Touchstone is negotiating terms of the expansion of its bank facility and, depending on the outcome of those discussions, will complete the funding of the Acquisition with additional debt and/or equity. In conjunction with the signing of the agreement, Touchstone has paid a US$2.08 million deposit to Trinity which is not refundable if the Acquisition fails to close due to a breach of the agreement by Touchstone. The Acquisition is conditional upon the approval of Trinity shareholders and is further subject to the receipt of all necessary regulatory approvals and the satisfaction of closing conditions customary in transactions of this nature. The Acquisition is expected to close by January 2016 and will be effective as at the completion date.
The five producing properties – Fyzabad-2, WD-2, WD-5/6, WD-13, and WD-14 – cover an aggregate 4,141 net working interest acres. The properties are governed by Lease Operating Agreements with the Petroleum Company of Trinidad and Tobago, a structure under which Touchstone currently operates four producing blocks in Trinidad. Fyzabad-2, WD-13, and WD-14 adjoin the Company’s Fyzabad block while WD-5/6 and WD-2 are contiguous with Touchstone’s WD-4 block. The increased production base and physical synergies of the combined assets are expected to yield immediate and material improvements to Touchstone’s existing cost structure. The Acquisition will immediately add three years of development drilling inventory to the Company’s portfolio as well as adding several low risk exploration locations offsetting recent drilling successes. FirstEnergy Capital Corp. acted as financial advisor to Touchstone with respect to the Acquisition.