14:42:08 EDT Thu 28 Mar 2024
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Touchstone Exploration Inc (2)
Symbol TXP
Shares Issued 233,037,226
Close 2023-01-09 C$ 1.10
Market Cap C$ 256,340,949
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Touchstone to exchange Trinidad assets with Lease

2023-01-09 09:50 ET - News Release

Mr. Paul Baay reports

TOUCHSTONE ANNOUNCES EXECUTION OF ASSET EXCHANGE AGREEMENT

Touchstone Exploration Inc.'s indirect wholly owned Trinidadian subsidiary, Primera Oil and Gas Ltd., has entered into an asset exchange agreement for the exchange of certain on-shore Trinidad assets with Lease Operators Ltd., a privately held Trinidadian entity.

Pursuant to the agreement, the company has agreed to transfer its Fyzabad, San Francique and Barrackpore blocks, which currently produce aggregate crude oil volumes of approximately 130 barrels per day (bbl/d), in exchange for the Rio Claro, Balata East and Balata East Deep Horizons blocks, which offset its Ortoire block and currently produce aggregate crude oil volumes of approximately 35 bbl/d.

Transaction highlights:

  • The transaction contemplates swapping producing legacy crude oil fields which the company considers non-core due to limited scalability in exchange for highly prospective exploration and development acreage contiguous to its Ortoire block.
  • The acquisition of approximately 28,000 working interest acres directly offsets its Ortoire block, allowing it to significantly expand development prospects adjacent to its Cascadura and Royston discoveries.
  • The Balata East block has a liquids facility which may potentially be used as a delivery point for future liquids volumes produced at Cascadura and Royston.
  • The transaction also provides Touchstone access to an 18-kilometre oil pipeline that transects its Ortoire block.
  • Future potential production from the Rio Claro block is not subject to its current Ortoire block natural gas sales agreement with The National Gas Company of Trinidad and Tobago Ltd., with any potential discoveries subject to separate product marketing arrangements.

Transaction details

Under the agreement, Touchstone has agreed to swap its operated 100-per-cent working interests in the Fyzabad, San Francique and Barrackpore producing blocks for the counterparty's working interest in the Rio Claro, Balata East and Balata Deep blocks for no cash consideration with the swap becoming effective upon closing. The agreement remains subject to certain closing conditions, including receipt of applicable regulatory approvals and an extension of the Rio Claro exploration and production (public petroleum rights) licence, and is expected to close prior to the end of 2023.

The 100-per-cent working interest Balata East block is governed by an enhanced production service contract with Heritage Petroleum Company Ltd. in the shallow horizon that is effective through June 30, 2030. The Balata Deep asset is a 100-per-cent working interest in the area identified in the Balata East block from a depth of 5,000 feet downward with no limit. The Balata Deep block is governed by an exploration and production (public petroleum rights) licence with the Trinidad and Tobago Ministry of Energy and Energy Industries (MEEI), where the initial exploration period expires Aug. 13, 2025. The Rio Claro licence with the MEEI is currently expired and an extension through August, 2025, is a condition precedent for closing. The Rio Claro licence is for an 80-per-cent-operated working interest, with Heritage holding the remaining 20-per-cent working interest.

Paul Baay, president and chief executive officer, commented:

"The proposed exchange of assets further high grades our portfolio as we focus on the Herrera turbidite fairway directly offsetting our Ortoire block in close proximity to our Cascadura discovery. With the technical data that we have reviewed on the three licences, we have identified numerous drilling opportunities that can be incorporated into our infrastructure currently being constructed. A revised map reflecting the proposed transaction can be found in our updated corporate presentation available on our website."

About Touchstone Exploration Inc.

Touchstone Exploration 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 on-shore properties located in the Republic of Trinidad and Tobago.

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