Touchstone Announces Total Proved Plus Probable Reserves of 17.8 Million Boe
CALGARY, ALBERTA, Mar 24, 2015 (Marketwired via COMTEX) — Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TXP) announces the results of the independent December 31, 2014 reserve evaluation (the “Reserves Report”) with respect to the Company’s crude oil and natural gas reserves in Canada and the Republic of Trinidad and Tobago (“Trinidad”). Amounts herein are in Canadian dollars unless otherwise stated.
Touchstone’s year-end reserves were evaluated by independent reserves evaluator GLJ Petroleum Consultants Ltd. (“GLJ”) in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). The reserves estimates set forth below are based upon GLJ’s reserve report dated March 11th, 2014.
Reserve Report Highlights
-- Total proved plus probable reserves of 17,831 Mboe (gross) and 13,267
Mboe net after royalties (99.5% oil). Total proved reserves were 10,497
Mboe (gross) and 7,671 Mboe net after royalties (99.6% oil).
-- Total proved plus probable net present value before tax (10 percent
discount rate) of $395 million ($208 million on a total proved basis).
-- Total proved plus probable net present value after tax (8 percent
discount rate) of $191 million ($103 million for the total proved case).
-- Total proved plus probable future development capital is estimated to be
$110 million, an increase of $97 million over 2013 mainly due to the
increased development capital associated with Trinidad assets acquired
in 2014.
-- Reserve life index of approximately 17.9 years for proved plus probable
reserves.
Summary of Canadian Operations and Reserves
In Canada, Touchstone has successfully focused on transitioning the Company’s operations from a research program using in situ combustion technology to a true exploration and production operation capable of yielding positive economic returns. The Company continues to review all Canadian operations to ensure that they are able to provide commercially reasonable returns during times of depressed commodity prices.
Touchstone has also established a significant working interest position in Saskatchewan’s highly economic Viking play and, in total, the Company now has a working interest in 19.5 prospective sections within the Viking oil fairway near Beadle, Saskatchewan. Given the high levels of industry activity in the Beadle area, the Company was able to book both proved and probable reserves on the recently acquired Viking acreage based upon the results of offset production. These lands remain highly prospective and the Company is looking forward to an active drilling program when commodity prices rebound. In the interim, the Company is obtaining the necessary permits and establishing programs required to execute a future Viking program in a timely and efficient manner. As a result of these Canadian based initiatives, the Company has:
-- Increased total proved plus probable reserves in Canada by 107% to 3,046
Mboe (97% oil weighted).
-- Increased total proved reserves by 64% to 1,536 Mboe (98% oil weighted).
-- Replaced 1,169% of 2014 Canadian production with 1,718 Mboe of proved
plus probable reserve additions.
-- Replaced 506% of 2014 production with total proved reserves additions of
744 Mboe.
-- Total proved reserves represents 50% of total proved plus probable
reserves.
Summary of Trinidad Operations and Reserves
In Trinidad, the Company acquired total proved plus probable reserves of 11,697 Mboe and total proved reserves of 7,520 Mboe through the May 13, 2014 business combination between Petrobank Energy and Resources Ltd. and Touchstone Energy Inc. (formerly Touchstone Exploration Inc.). Subsequent to the acquisition, the Company drilled 11.16 net wells in Trinidad and, as a result, the Company has:
-- Increased total proved plus probable reserves in Trinidad by 26% to
14,786 Mboe (100% oil).
-- Increased total proved reserves by 19% to 8,962 Mboe (100% oil).
-- Replaced 883% of 2014 Trinidad production with 3,483 Mboe of proved plus
probable reserve additions.
-- Replaced 465% of 2014 production with total proved reserves additions of
1,836 Mboe.
-- Total proved reserves represents 61% of total proved plus probable
reserves.
-- Achieved estimated total proved plus probable finding, development and
acquisition costs of $8.23 per barrel ($10.85 for total proved
reserves), including changes in future development capital.
The following tables provides a summary of information based upon the Reserve Report:
December 31, 2014 Reserves(1)
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Gas Oil Total
(MMcf) (Mbbl) (Mboe)
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Canada
Proved
Proved producing - 413 413
Proved non-producing - 64 64
Proved undeveloped 222 1,022 1,059
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Total proved 222 1,499 1,536
Probable 265 1,466 1,510
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Total Proved Plus Probable 486 2,964 3,046
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Trinidad
Proved
Proved producing - 5,475 5,475
Proved non-producing - 46 46
Proved undeveloped - 3,441 3,441
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Total proved - 8,962 8,962
Probable - 5,824 5,824
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Total Proved Plus Probable - 14,786 14,786
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(1) Amounts may not add due to rounding.
Reserves Reconciliation(1)
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Canada Trinidad
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Proved Proved
Plus Plus
Proved Probable Proved Probable
(Mboe) (Mboe) (Mboe) (Mboe)
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December 31, 2013 939 1,474 - -
Acquisition(2) - - 7,520 11,697
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Opening balance plus acquisitions 939 1,474 7,520 11,697
Drilling extensions 629 1,404 1,349 2,404
Infill drilling - - 170 230
Technical revisions 115 315 317 649
Improved recovery - - - 200
Production (147) (147) (395) (395)
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December 31, 2014 1,536 3,046 8,962 14,786
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(1) Amounts may not add due to rounding.
(2) Represents May 13, 2014 acquisition of Touchstone Energy Inc. (formerly
Touchstone Exploration Inc.) by Petrobank Energy and Resources Ltd.
Net Present Value Before Tax(1,2,3)
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Net Present Values of Future Net Revenues Before
Income Taxes Discounted at (% per year) ($000's)
0% 5% 10% 15% 20%
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Canada
Proved
Proved producing 7,146 6,583 6,105 5,696 5,341
Proved non-producing 522 478 438 402 371
Proved undeveloped 18,699 13,262 9,431 6,673 4,650
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Total proved 26,367 20,323 15,974 12,771 10,362
Probable 42,367 31,483 24,118 18,938 15,172
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Total Proved Plus Probable 68,734 51,806 40,092 31,709 25,534
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Trinidad
Proved
Proved producing 171,820 118,683 95,906 82,077 72,351
Proved non-producing 2,302 2,074 1,889 1,736 1,608
Proved undeveloped 161,276 121,256 94,287 75,237 61,279
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Total proved 335,398 242,013 192,082 159,050 135,238
Probable 319,578 217,390 162,358 127,711 103,935
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Total Proved Plus Probable 654,976 459,403 354,440 286,761 239,173
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(1) Amounts may not add due to rounding.
(2) Unit values are based on Company net reserves.
(3) Estimated values of future net revenue disclosed in this press release
do not represent fair market values.
Net Present Value After Tax(1,2,3)
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Net Present Values of Future Net Revenues After
Income Taxes Discounted at (% per year) ($000's)
0% 5% 8% 15% 20%
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Canada
Proved
Proved producing 7,146 6,583 6,287 5,696 5,341
Proved non-producing 522 478 453 402 371
Proved undeveloped 18,699 13,262 10,811 6,673 4,650
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Total proved 26,367 20,323 17,551 12,771 10,362
Probable 39,266 29,331 24,988 17,805 14,322
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Total Proved Plus Probable 65,633 49,654 42,539 30,576 24,684
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Trinidad
Proved
Proved producing 66,783 53,673 49,106 41,785 38,074
Proved non-producing 770 712 683 625 592
Proved undeveloped 55,538 41,839 35,750 25,484 20,399
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Total proved 123,091 96,224 85,539 67,894 59,065
Probable 104,875 74,166 62,533 44,711 36,505
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Total Proved Plus Probable 227,966 170,390 148,072 112,605 95,570
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(1) Amounts may not add due to rounding.
(2) Unit values are based on Company net reserves.
(3) Estimated values of future net revenue disclosed in this press release
do not represent fair market values.
Future Development Costs
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Canada Trinidad
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For For
Proved Proved
For Plus For Plus
Proved Probable Proved Probable
Year Incurred Reserves Reserves Reserves Reserves
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($000's)
2015 2,250 3,600 2,620 3,395
2016 9,945 14,178 21,910 27,795
2017 8,739 18,415 12,313 22,447
2018 3,820 6,208 7,545 14,220
Thereafter - - - -
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Total Undiscounted 24,754 42,401 44,388 67,857
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Total Discounted at 10% per Year 20,389 34,680 36,597 55,204
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Estimated Trinidad Finding, Development and Acquisition Costs(1)
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Proved Plus
Proved Probable
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Estimated capital expenditures ($000's)
Estimated exploration capital expenditures(2) 1,298 1,298
Estimated development capital expenditures(2) 22,336 22,336
Estimated acquisition costs(2, 3) 33,448 33,448
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57,082 57,082
Change in future development capital
($000's)(4) 44,388 67,857
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Total capital 101,470 124,939
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Reserve additions (Mbbls)
Acquisitions 7,520 11,697
Development 1,836 3,483
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Total reserve additions 9,356 15,180
Estimated finding, development and acquisition
costs ($/Bbl) 10.85 8.23
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(1) For the period of May 14, 2014 through December 31, 2014.
(2) The Company's annual audit of its December 31, 2014 consolidated
financial statements is not complete. Accordingly, unaudited capital
expenditure amounts used in the calculation of finding and development
costs is management's estimate and is subject to change.
(3) Acquisition costs reflect the consideration paid for producing assets
and does not reflect the fair market value allocated to acquire the
assets under International Financial Reporting Standards.
(4) Calculation includes changes in future development costs.
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 and Western Canada. The Company’s common shares are traded on the Toronto Stock Exchange under the symbol “TXP”. As at December 31, 2014, the Company had 83,059,643 shares outstanding.
ADVISORIES
Oil and Natural Gas Reserves: The disclosure in this press release summarizes certain information contained in the Reserves Report but represents only a portion of the disclosure required under NI 51-101. Full disclosure with respect to the Company’s reserves as at December 31, 2014 will be contained in the Company’s annual information form for the year ended December 31, 2014 which will be filed on SEDAR (www.sedar.com) on or about March 31, 2014. All net present values in this press release are based on GLJ’s forecast prices and estimates of future operating and capital costs as of December 31, 2014.
Estimated Trinidad Finding, Development and Acquisition (“FD&A”) Costs: Trinidad based finding and development costs including acquisitions have been presented herein. While NI 51-101 requires that the effects of acquisitions and dispositions be excluded, FD&A costs have been presented because acquisitions and dispositions can have a significant impact on the Company’s ongoing reserve replacement costs and excluding these amounts could result in an inaccurate portrayal of the Company’s cost structure. The Company’s estimated finding and development costs, excluding the effects of acquisitions and dispositions, for 2014 were $35.99/Boe on a proved basis and $24.68/Boe on a proved plus probable basis. Trinidad estimated finding and development costs were $37.05/Bbl and $26.27/Bbl on a proved and proved plus probable basis, respectively. The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. The Company’s annual audit of its December 31, 2014 consolidated financial statements is not complete. Accordingly, unaudited capital expenditure amounts used in the calculation of finding and development costs is management’s estimate and is subject to change.
Barrels of oil Equivalent: Oil and natural gas reserves are converted to common units of measure on a basis of six thousand cubic feet of natural gas to one barrel of oil. Boes may be misleading, particularly if used in isolation. The forgoing conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current market price of oil as compared to natural gas is significantly different than the energy equivalency of six to one, utilizing a conversion on a six to one basis may be misleading as an indication of value.
Forward-Looking Statements: Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements regarding the Company’s drilling prospect inventory, projected capital expenditures, sufficiency of resources to fund operations and plans related to and the timing of certain projects. Forward-looking statements are necessarily based on a number of assumptions and judgments, including but not limited to, assumptions relating to the outlook for commodity and capital markets, the success of future resource evaluation and development activities, the performance of producing wells and reservoirs, well development and operating performance, general economic conditions, weather, and the regulatory and legal environment. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in the Company’s Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; weather conditions and access to properties; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability; outcome of exploration contract negotiations; fluctuation in foreign currency exchange rates; the uncertainty of reserve estimates; changes in environmental and other regulations; uncertainties associated with the regulatory review and approval process in respect to projects; risks associated with the application of early stage technology; risks associated with oil and gas operations and other factors, many of which are beyond the control of Touchstone. There is no representation by Touchstone that actual results achieved during the forecast period will be the same in whole or in part as those forecasted. Except as may be required by applicable securities laws, Touchstone assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
