Mr. Paul Baay reports

TOUCHSTONE EXPLORATION REPORTS FIRST QUARTER 2026 RESULTS AND OPERATIONAL UPDATE

Touchstone Exploration Inc. has released its operating and condensed financial results for the three months ended March 31, 2026, and provides an operational update.

Selected financial information is outlined below and should be read in conjunction with Touchstone's March 31, 2026, unaudited interim condensed consolidated financial statements and related management discussion and analysis, both of which are available on the company's profile on SEDAR+ and Touchstone's website. Unless otherwise stated, all financial amounts presented herein are in U.S. dollars, and all production volumes disclosed herein are sales volumes based on company working interest before royalty burdens.

First quarter 2026 financial and operating highlights:

• Production growth: Average daily production increased 8 per cent year over year to 4,657 barrels of oil equivalent per day as production from the Central field (2,131 boe/d) successfully mitigated natural declines in legacy assets. Relative to the preceding quarter, average quarterly production decreased from 4,877 boe/d, primarily due to natural declines in mature crude oil and Ortoire natural gas volumes.
• Revenue and realized pricing: Petroleum and natural gas sales totalled $12.5-million, a 14-per-cent increase from the $11-million recorded in the previous quarter. This was driven by an 18-per-cent increase in realized natural gas prices and a 25-per-cent recovery in realized crude oil pricing, with March, 2026, crude oil volumes averaging $86.58 per barrel:
  • Crude oil sales: $5.68-million from average production of 929 barrels per day at a realized price of $67.94 per barrel;
  • NGL (natural gas liquid) sales: $1.5-million from average production of 422 bbl/d at a realized price of $39.38 per barrel;
  • Natural gas sales: $5.36-million from average production of 19.84 million cubic feet per day (3,306 boe/d) at a realized price of $3 per thousand cubic feet.
• Operating netback: The company realized an operating netback of $13.73 per boe, a 46-per-cent improvement over the $9.41 per boe recorded in the preceding quarter. This expansion reflected higher commodity pricing and stable royalty structures, which more than offset the increased operating cost base.
• Funds flow from operations: Funds flow from operations increased to $1.85-million from $620,000 in the previous quarter, primarily driven by a $1.54-million increase in operating netbacks.
• Net income: The company recorded a net loss of $2.38-million (one cent per basic share), a normalization from $13.62-million in net income reported in the fourth quarter of 2025, which was skewed by $14.53-million in one-time non-cash gains.
• Capital investments: Expenditures were focused on high-impact projects, including the FR-1835 crude oil development well, tie-in of the CR-3 natural gas development well and the Cascadura compression project, totalling $3.22-million for the quarter.
• Financial position: Touchstone ended the period with a net debt position of $76.07-million.

Post-period-end highlights:

• Strategic infrastructure: Touchstone successfully delivered the Cascadura compressor to the facility in April, with commissioning expected in June, 2026, to unlock further production capacity.
• WD-8 block drilling: Touchstone completed drilling the FR-1836 well ahead of schedule, with the well encountering an estimated 227 feet of net hydrocarbon pay.
• Production update: In April, 2026, the company produced estimated average net production volumes of 4,677 boe/d, including average net natural gas sales volumes of 19.3 million cubic feet per day (3,221 boe/d) and average net crude oil and natural gas liquid sales volumes of 1,456 bbl/d.

Operational update

Carapal Ridge 3 (CR-3)

Since commencing production, the CR-3 well has delivered stable gross production rates of approximately 2.2 million cubic feet per day of natural gas and 14 bbl/d of condensate. Based on current well performance and flowing parameters, the well appears to be experiencing an inflow restriction. To optimize performance, the company is awaiting the availability of equipment to complete a coiled tubing cleanout and acid stimulation aimed at enhancing reservoir inflow and well productivity.

Cascadura infrastructure

The Cascadura compressor arrived in Trinidad on April 23, 2026. Installation is progressing, with commissioning targeted to commence in June, 2026. The compressor is intended to alleviate production constraints associated with elevated sales pipeline pressures and is expected to enhance production rates and improve operational stability at the facility.

Oil block drilling

Following the successful drilling of FR-1835 on the WD-8 block in March, 2026, drilling operations on FR-1836 commenced on March 26, 2026, with total depth reached on April 7, 2026. Wireline log analysis indicates approximately 227 feet of net hydrocarbon pay. Both wells were drilled ahead of schedule with turnkey drilling costs financed by the drilling operator. Completion operations are currently under way, and both wells are expected to be brought on stream imminently.

Liquidity and recapitalization

As at March 31, 2026, the company had a working capital deficit of $22.2-million (excluding the convertible debenture maturing in 2028). Due to the current debt structure and projected 2026 covenant levels, the company's March 31, 2026, unaudited interim condensed financial statements include a note regarding the existence of material uncertainties over its ability to continue as a going concern.

In the absence of mitigating actions, the company's current cash resources and forecast cash flows from operations may not be sufficient to finance expected operating and development expenditures and scheduled bank debt repayments over the next 12 months.

Touchstone is actively executing a strategic recapitalization plan to address near-term liquidity and ensure the company is financed for its high-growth development program, which includes:

• Debt restructuring: constructive and ongoing discussions with Touchstone's lender regarding loan amendments and waivers for the currently projected annual 2026 covenant breaches; the company has a history of pro-active engagement and receiving covenant waivers from its lender;
• Value-added tax recovery: continuing engagement with the Trinidad and Tobago government to collect outstanding value-added tax receivables (approximately $10.1-million outstanding as at March 31, 2026);
• Operational cash flow: anticipated production growth as new wells and the compression project come on line in 2026 and benefiting from strengthening commodity pricing;
• Equity initiatives: evaluating strategic opportunities to strengthen the balance sheet and support future work commitments.

About Touchstone Exploration Inc.

Touchstone Exploration is a company (based in Calgary, Alta.) 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. The company's common shares are traded on the Toronto Stock Exchange and the AIM (Alternative Investment Market) of the London Stock Exchange under the symbol TXP.

We seek Safe Harbor.