CALGARY, ALBERTA–(Marketwired – March 9, 2016) – Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TSX:TXP) announces the results of the independent December 31, 2015 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”). Additional reserves information as required under NI 51-101 will be included in the Company’s Annual Information Form which will be filed on SEDAR on or before March 30, 2016. The reserves estimates set forth below are based upon GLJ’s Reserve Report dated March 8, 2016. All values in this press release are based on GLJ’s forecast prices and estimates of future operating and capital costs as at December 31, 2015.
2015 Reserve Report Highlights
- Total consolidated (Trinidad and Canada) proved plus probable reserves of 15,465 Mboe (gross) and 11,111 Mboe net after royalties (100% oil). Total proved reserves were 8,815 Mboe (gross) and 6,141 Mboe net after royalties (100% oil).
- Total consolidated proved plus probable net present value of future net revenues before tax (10 percent discount rate) of $304.7 million ($141.9 million on a total proved basis).
- Total consolidated proved plus probable net present value of future net revenues after tax (10 percent discount rate) of $124.8 million, which excluding net debt, equates to $1.50 per basic share ($67.4 million or $0.81 per basic share on a total proved basis).
- Total consolidated proved plus probable future development costs (“FDC”) of $70.7 million, a decrease of $39.5 million from the Company’s 2014 reserve evaluation mainly as a result of Canadian asset dispositions in 2015.
- Trinidad reserve life index of approximately 22.9 years for proved plus probable reserves.
At the effective date of the reserves evaluation, Touchstone has divested all non-core Canadian developed and undeveloped assets with associated reserves as reported in the December 31, 2014 reserves evaluation. As a result, total proved plus probable reserves decreased by 2,989 Mboe, total proved reserves decreased by 1,479 Mboe, total proved plus probable undiscounted FDC decreased $42.4 million and total proved undiscounted FDC decreased $24.8 million.
As of December 31, 2015, Touchstone had no proved or probable reserves associated with the Company’s remaining Canadian assets which represent 31,611 acres of undeveloped land in Saskatchewan focusing mainly on the Viking formation. The reserves associated with the Company’s Canadian assets are included for reference, but the majority of the discussion and analysis in this press release will be focused on the Company’s core business in Trinidad and Tobago.
Summary of Trinidad Operations and Reserves
In 2015 the Company focused on operations directly related to maintaining production from our core assets in Trinidad with minimal exploration or development capital being spent. Operating in a challenging commodity price environment, Touchstone completed or recompleted a total of 28 wells with no drilling capital being deployed following the rig release of PS-583 on January 3, 2015. Notwithstanding the Company’s minimal capital investment in 2015:
- Annual 2015 Trinidad production was 573.2 Mbbls, an average of 1,570 barrels per day. Trinidad oil sales averaged 1,600 barrels per day during the 2015 fiscal year.
- Total proved plus probable reserves in Trinidad increased by 679 Mbbls or 4.6% after production to 15,465 Mbbls (100% oil).
- Replaced 219% of 2015 Trinidad production with 1,252 Mbbls of proved plus probable reserve additions.
- Total Trinidad proved reserves represented 57% of total proved plus probable reserves.
- Achieved estimated Trinidad total proved plus probable finding and development costs of $5.83 per barrel, including changes in FDC.
The following tables provides a summary of information based upon the Reserve Report:
| December 31, 2015 Gross Reserves1 | |||||||
| Light and Medium Oil (Mbbls) | Heavy Oil (Mbbls) | Total Oil Equivalent (Mboe) | |||||
| Proved | |||||||
| Proved producing | 4,188 | 702 | 4,890 | ||||
| Proved non-producing | 413 | 90 | 503 | ||||
| Proved undeveloped | 2,889 | 533 | 3,422 | ||||
| Total proved | 7,490 | 1,325 | 8,815 | ||||
| Probable | 5,705 | 946 | 6,650 | ||||
| Total proved plus probable | 13,195 | 2,271 | 15,465 | ||||
| 1Amounts may not add due to rounding. | |||||||
| Reserves Reconciliation1 | |||||||||||||
| Trinidad | Canada | ||||||||||||
| Proved (Mboe) | Proved Plus Probable (Mboe) | Proved (Mboe) | Proved Plus Probable (Mboe) | ||||||||||
| December 31, 2014 | 8,962 | 14,786 | 1,536 | 3,046 | |||||||||
| Extensions and improved recovery | 396 | 1,593 | – | – | |||||||||
| Technical revisions | 215 | (104 | ) | – | – | ||||||||
| Dispositions | – | – | (1,479 | ) | (2,989 | ) | |||||||
| Economic factors | (184 | ) | (237 | ) | – | – | |||||||
| Production | (573 | ) | (573 | ) | (57 | ) | (57 | ) | |||||
| December 31, 2015 | 8,815 | 15,465 | – | – | |||||||||
| Reserves replacement ratio (%) | 75 | 219 | n/a | n/a | |||||||||
| 1Amounts may not add due to rounding. | |||||||||||||
| Net Present Values of Future Trinidad Net Revenue1,2 | |||||||||||
| Net Present Values of Future Net Revenues Before Income Taxes Discounted at (% per year) ($000’s) | |||||||||||
| 0% | 5% | 10% | 15% | 20% | |||||||
| Proved | |||||||||||
| Proved producing | 126,450 | 75,391 | 55,398 | 44,575 | 37,625 | ||||||
| Proved non-producing | 23,179 | 19,441 | 16,605 | 14,401 | 12,651 | ||||||
| Proved undeveloped | 131,341 | 93,334 | 69,909 | 54,104 | 42,880 | ||||||
| Total proved | 280,970 | 188,166 | 141,912 | 113,079 | 93,157 | ||||||
| Probable | 333,124 | 220,816 | 162,805 | 126,719 | 102,099 | ||||||
| Total proved plus probable | 614,094 | 408,982 | 304,717 | 239,798 | 195,256 | ||||||
| Net Present Values of Future Net Revenues After Income Taxes Discounted at (% per year) ($000’s) | |||||||||||
| 0% | 5% | 10% | 15% | 20% | |||||||
| Proved | |||||||||||
| Proved producing | 64,546 | 45,462 | 36,647 | 31,282 | 27,547 | ||||||
| Proved non-producing | 9,729 | 9,151 | 8,573 | 8,018 | 7,497 | ||||||
| Proved undeveloped | 44,101 | 30,514 | 22,203 | 16,645 | 12,738 | ||||||
| Total proved | 118,376 | 85,127 | 67,423 | 55,945 | 47,782 | ||||||
| Probable | 115,719 | 77,411 | 57,391 | 44,790 | 36,137 | ||||||
| Total proved plus probable | 234,095 | 162,538 | 124,814 | 100,735 | 83,919 | ||||||
| 1Amounts may not add due to rounding. | |||||||||||
| 2Estimated values of future net revenue disclosed herein do not represent fair market values. | |||||||||||
Forecasted Prices and Foreign Exchange
| Year | Brent Blend Crude Oil FOB North Sea (US$/bbl) | C$/US$ Exchange rate | ||
| 2016 | 45.00 | 0.73 | ||
| 2017 | 54.00 | 0.75 | ||
| 2018 | 61.00 | 0.78 | ||
| 2019 | 67.00 | 0.80 | ||
| 2020 | 73.00 | 0.83 | ||
| 2021 | 78.00 | 0.85 | ||
| 2022 | 83.00 | 0.85 | ||
| 2023 | 88.00 | 0.85 | ||
| 2024 | 91.39 | 0.85 | ||
| 2025 | 93.22 | 0.85 | ||
| Thereafter % change per year | 2.0% | Nil | ||
The Reserves Report was presented in Canadian dollars and translated from United States dollars (“US$”) on an annual basis using the applicable exchange rates noted above.
Future Development Costs
| Year Incurred | For Proved Reserves ($000’s) | For Proved Plus Probable Reserves ($000’s) | ||
| 2016 | 5,975 | 6,825 | ||
| 2017 | 9,828 | 16,310 | ||
| 2018 | 18,472 | 27,695 | ||
| 2019 | 12,402 | 19,879 | ||
| Thereafter | – | – | ||
| Total undiscounted | 46,677 | 70,709 | ||
| Total discounted at 10% per year | 37,656 | 56,708 |
Estimated Trinidad Finding and Development Costs
| Proved | Proved Plus Probable | ||||
| Unaudited capital expenditures ($000’s)1 | |||||
| Unaudited exploration capital expenditures | 938 | 938 | |||
| Unaudited development capital expenditures | 3,511 | 3,511 | |||
| 4,449 | 4,449 | ||||
| Change in future development costs ($000’s)2 | 2,290 | 2,852 | |||
| Total capital | 6,739 | 7,301 | |||
| Net reserve additions (Mbbls) | 426 | 1,252 | |||
| Estimated finding and development costs ($/Bbl) | 15.81 | 5.83 | |||
| 1The Company’s annual audit of its December 31, 2015 consolidated financial statements is not complete. Accordingly, unaudited capital expenditure amounts used in the calculation of finding and development costs are management’s estimate and are subject to change. | |||||
| 2Calculation includes changes in future development capital. | |||||