Touchstone operations improve despite net loss

Touchstone Exploration's operations improved in the second quarter of 2021 in which it recorded a lower net loss of $284,000 compared to $2.7 million for the same period of 2020.

In its financials for the six months ending June 30, 2021, Touchstone said the loss was due to increases in operations, pricing and royalties.

“The decreased net loss was primarily attributed to an increase in operating netbacks, which were driven by increased realised pricing and slightly offset by increases in associated royalties and operating costs as we resumed pre-pandemic field operation levels.”

The company also reported funds flow from operations of $1.2 million compared to $450,000 use of funds flow last year.

“In comparison to the second quarter of 2020, the increase primarily reflected a 101 per cent increase in crude oil realised pricing, which increased 2021 second quarter operating netbacks by $2 million from 2020.

“Relative to the second quarter of 2020, further savings in second quarter 2021 term loan interest costs were offset by increased general and administration costs and income tax expenses accrued from increased taxable income.”

President and CEO Paul Baay said the results showed progress in all areas of operations in a challenging covid19 atmosphere.

“The positive cashflow derived from our base assets and our strong liquidity position have allowed us to advance our exploration operations while we work towards initial natural gas production at our Coho and Cascadura discoveries.”

“The team has been active in increasing our base oil production through a series of low-cost workovers and well optimisation while preparing for the four development well drilling programme planned for the fourth quarter of 2021.”

He added that progress on the Ortoire block was coming along on all fronts and remained confident that available credit facility capacity and anticipated funds flow from operations will be sufficient to complete their four well development programme and the drilling of Royston-1.

Touchstone also recorded a cash balance of $11.2 million, a working capital balance of $4.7 million and $7.5 million drawn on its term credit facility resulting in a net debt position of $2.8 million.

“Our near-term liquidity is augmented by $12.5 million of current undrawn credit capacity, which we may access any time prior to the end of the year based on an amendment to the $20 million term credit facility agreement executed in June 2021.

“Our primary objective remains to bring our Coho and Cascadura area natural gas exploration discoveries at Ortoire onto production as soon as practicable. Our focus in the second quarter of 2021 remained on Ortoire exploration operations, as we invested $6.7 million.”

The company said crude oil sales averaged 1,402 barrels per day (bbls/d) in the second quarter, which represented an eight per cent increase from the first quarter of 2021 and consistent with production realised in the second quarter of 2020.