Touchstone Exploration Inc. ('Touchstone', 'we', 'our' or the 'Company') (TSX, LSE: TXP) is pleased to announce its annual 2024 capital budget, preliminary 2024 guidance and an operational update.
Paul Baay, President and Chief Executive Officer, commented: 'Our top priority remains maintaining a culture of safe and responsible operations that continues to drive near and long-term value creation for our investors. I am pleased to announce our growth-oriented capital budget for 2024 which reinforces Touchstone's commitment to pursue development opportunities that generate positive returns to position the Company for sustained success. The budget and preliminary guidance reflects our near-term strategy to deploy capital to developmental drilling opportunities and use our existing natural gas and liquids infrastructure capacity. We will remain disciplined when deploying our 2024 capital and increasing our credit capacity, adhering to our long-term net debt and liquidity targets. This approach will allow us to fund future exploration drilling from cash flows expected to be generated through our 2024 development drilling program and maximization of our existing financing facilities.'
Funding Position(1)
The Company is in advanced discussions with its existing lender to increase its current debt capacity to facilitate the forecasted timing and amount of the 2024 capital budget presented herein. The 2024 budget contemplates increasing the Company's revolving component of its credit facility from $7 million to $20 million in the first quarter of 2024. Although we are confident of reaching agreement, currently there is no firm commitment in place between the parties. Accordingly, the 2024 budget and preliminary guidance may be subject to change, and such changes may be material. The Company will provide further updates in due course
2024 Budget Highlights(1) Capital budget allocation - we plan to invest approximately $33 million of capital in 2024, with approximately 42 percent of our capital expenditures(2) directed to our Cascadura field and 38 percent to our Coho assets. The remaining 20 percent is allocated to our legacy oil properties, exploration licence payments and corporate infrastructure. Drilling operations - the initial 2024 capital budget contemplates drilling two Cascadura development wells, two CO-1 Block crude oil development wells, one Coho development well, and one Coho exploration well. Production growth - our 2024 mid-point annual average production guidance of 9,400 boe/d represents an approximate 135 percent increase from our forecasted 2023 average production, with a budgeted exit average production rate of 14,500 boe/d. Annual production guidance is 9,100 to 9,700 boe/d (approximately 82 percent natural gas weighted). Funds flow generation and balance sheet strength - the 2024 budget is designed to generate approximately $32 million of funds flow from operations(2) (Brent price of $75.00/bbl and an 18 percent realized Brent differential), resulting in a net debt to annual funds flow from operations ratio(2) of 0.78 times
2024 Budget and Guidance Overview
For 2024, Touchstone's Board of Directors has approved an initial capital budget of $33 million to drill, complete and tie-in six wells, resulting in estimated annualized average daily production between 9,100 boe/d and 9,700 boe/d with a forecasted production mix of 82 percent natural gas and 18 percent crude oil and liquids. Touchstone's initial 2024 drilling plan includes drilling two legacy property crude oil wells, two Cascadura development wells, one Coho development well and one Coho exploration well. Production growth is expected to be weighted in the fourth quarter of 2024, with two Cascadura wells expected to be drilled in the first half of the year and tied-in to the Cascadura plant prior to the end of the third quarter of 2024. The two Coho wells are expected to be drilled in the fourth quarter of 2024, and production additions from those wells are anticipated in the first quarter of 2025. Using midpoint forecasted average production of 9,400 boe/d and a Brent Benchmark price of $75.00 for crude oil and liquids, Touchstone expects to generate approximately $32 million of funds flow from operations. Based on the approved capital budget of $33 million, Touchstone is forecasting to exit 2024 with a net debt of $25 million, resulting in a net debt to annual funds flow from operations ratio of 0.78 times.
Touchstone Exploration Inc.
Touchstone's updated corporate presentation is available on our website at www.touchstoneexploration.com. Touchstone Exploration Inc. is a Calgary, Alberta 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. The Company's common shares are traded on the Toronto Stock Exchange and the AIM market of the London Stock Exchange under the symbol 'TXP'.
Forward-looking Statements
The information provided in this news release contains certain forward-looking statements and information (collectively, 'forward-looking statements') within the meaning of applicable securities laws. Such forwardlooking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words 'expect', 'plan', 'anticipate', 'believe', 'intend', 'maintain', 'continue to', 'pursue', 'design', 'result in', 'sustain' 'estimate', 'potential', 'growth', 'near-term', 'long-term', 'forecast', 'contingent' and similar expressions, or are events or conditions that 'will', 'would', 'may', 'could' or 'should' occur or be achieved. The forward-looking statements contained in this news release speak only as of the date hereof and are expressly qualified by this cautionary statement. Specifically, this news release includes, but is not limited to, forward-looking statements relating to: the Company's business plans, strategies, priorities and development plans; Touchstone's ability to pursue development opportunities that generate positive returns and position it for success; the Company's intention to expand the current revolving portion of its credit facility; the focus of Touchstone's 2024 capital plan, including pursuing developmental drilling activities and optimizing existing natural gas and liquids infrastructure capacity; anticipated 2023 and 2024 annual average production and production by commodity; forecasted production decline rates; anticipated timing of developmental and exploration drilling production; anticipated 2024 capital expenditures including estimations of costs and inflation incorporated therein; expected drilling activities, including locations and the timing thereof; anticipated timing of well tiein operations; forecasted 2024 average Brent reference price and the Company's budgeted realized price in relation thereto; forecasted royalty, operating, general and administration, cash finance and income tax expenses; anticipated funds flow from operations and net debt; field estimated production; the Company's expectation of decreased Coho fluid hauling expenses; the quality and quantity of prospective hydrocarbon accumulations based on analysis of wireline logs and Touchstone's current and future financial position, including the sufficiency of resources to fund future capital expenditures and maintain financial liquidity. The Company's actual decisions, activities, results, performance, or achievement could differ materially 5 from those expressed in, or implied by, such forward-looking statements and accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Touchstone will derive from them. The assumptions used to generate this forward-looking formation and statements include, among other things, the assumption that the Company will be able to increase the revolving component of its credit facility from $7 million to $20 million in the first quarter of 2024. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forwardlooking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Certain of these risks are set out in more detail in the Company's 2022 Annual Information Form dated March 23, 2023 which is available under the Company's profile on SEDAR+ (www.sedarplus.ca) and on the Company's website (www.touchstoneexploration.com). The forwardlooking statements contained in this news release are made as of the date hereof, and except as may be required by applicable securities laws, the Company assumes no obligation or intent to update publicly or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise. This news release contains future-oriented financial information and financial outlook information (collectively, 'FOFI') about Touchstone's prospective results of operations and production included in its 2024 guidance, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the paragraphs above. The FOFI contained in this news release was approved by Management as of the date of this news release and was provided for the purpose of providing further information about Touchstone's future business operations. This information has been provided for illustration only and, with respect to future periods, is based on budgets and forecasts that are speculative and are subject to a variety of contingencies and may not be appropriate for other purposes. Touchstone and its Management believe that FOFI has been prepared on a reasonable basis, reflecting Management's best estimates and judgments, and represents, to the best of Management's knowledge and opinion, the Company's expected course of action. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results. Touchstone disclaims any intention or obligation to update or revise any FOFI contained in this news release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein, and the financial outlook information contained herein is not conclusive and is subject to change. Changes in the intended increase in the Company's credit facility, variations in forecasted crude oil and liquids prices, differences in the amount and timing of capital expenditures, and variances in average production estimates and decline rates can have a significant impact on the key performance measures included in the guidance disclosed herein. Management does not have firm commitments for its intended increase in debt capacity nor for the costs, expenditures, prices or other financial assumptions used to prepare the financial outlook or assurance that such operating results will be achieved and, accordingly, the complete financial effects of the forecasted costs, expenditures, prices and operating results are not objectively determinable. The actual results of the Company's operations and the resulting financial results will vary from the amounts set forth in this news release and such variations may be material.
TOUCHSTONE EXPLORATION INC. 
