Touchstone Exploration Inc · TSX:TXP
Touchstone Exploration — Investor Presentation (February 2020)
37 slides from Touchstone Exploration's investor presentation, February 2020
Slide 1: Corporate Presentation
Corporate Presentation February 2020 Driving growth, profitability and responsibility in the Trinidad oil and gas industry TSX / LSE: TXP
Slide 2: Forward-looking Information
Forward-looking Information Unless otherwise stated, all financial amounts herein are presented in United States dollars (“$”). The Company may also reference Canadian dollars (“C$”), Trinidad and Tobago dollars (“TT$”) and Pounds Sterling (“£”) herein. Certain information regarding Touchstone Explo
Slide 3: Why invest in Trinidad?
Why invest in Trinidad? ➢ Proven oil reserves of approximately 200 million barrels as at year-end 2018(1) ➢ Largest oil and gas producer in the Caribbean, generating 87,000 bbls of crude oil per day and 3.3 Bcf of natural gas per day in 2018(1) ➢ The 8th largest exporter of liquified natural gas in
Slide 4: Why invest in Touchstone?
Why invest in Touchstone? ➢ Proven and experienced management team ➢ Focused strategy onshore Trinidad oil and gas ➢ Positive operating cash flows from current producing properties ➢ Significant exploration opportunities providing upside potential 4
Slide 5: Our Five Pillar Corporate Vision
Our Five Pillar Corporate Vision Exploration Upside Scalable Economic Growth Value Creation Environmental Stewardship Community Leadership 5
Slide 6: Land Holdings
Land Holdings || Developed Acreage Hi Undeveloped/Exploration Acreage (og Oil Pool 7,836 net working interest acres 54,297 net working interest acres Proved reserves of 11,222 Mbbls,3) BECR of 3,002 Mboe (unrisked) and 2,852 Mboe (risked),4) @ Gas Pool Proved+Probable reserves of 19,275 Mbblsj3y BEP
Slide 7: Exploration Upside
Exploration Upside Scalable Economic Growth Value Creation Environmental Stewardship Community Leadership 7
Slide 8: Ortoire Block
Ortoire Block 80% working interest and 35,785 net working interest acres Oil Balata East 10 MMbbls Pool Pipeline Gas CASCADURA Discovery Pool Pipeline CAS-1ST1 Well CHINOOK-1 Facility ROYSTON ROYSTON-1 CHINOOK COHO COHO-1 Baraka Central Block Gas Plant East c. 80 MMcf/d Capacity c. 40 MMcf/d Through
Slide 9: Exploration Upside – Ortoire Block
Exploration Upside – Ortoire Block Coho-1 Cascadura-1ST1 Chinook Royston Gas Discovery Gas Discovery Oil Prospect Gas Prospect 11.6 MMcf/d(5) 5,180 boe/d(5) Constructing Constructing 9
Slide 10: Coho-1 Significant Natural Gas Discovery
Coho-1 Significant Natural Gas Discovery Flowback testing exceeded expectations(5) Natural Gas Fiscal 46.0 MMcf/d AOF Advantage 11.6 MMcf/d Average Trinidad domestic price 19.8 MMcf/d Peak 12.5% crown royalty 9% Sandface drawdown Not subject to SPT Estimated future production rates of 10 – 12 MMcf/d
Slide 11: Cascadura-1ST1 Significant Liquids Rich Natural Gas Discovery
Liquids Rich Gas Cascadura-1ST1 Fiscal Advantage Significant Liquids Rich 12.5% crown royalty Natural Gas Discovery Natural gas not subject to SPT (c.87% of production test rate) Liquids Rich Gas Test(5) SPT payable only on NGL (c.13% of production test rate) Average 5,180 boe/d 26.9 MMcf/d Natural
Slide 12: Chinook-1 Crude Oil Prospect
Shell Trinidad Limited Shell Trinidad Limited BW-7, 7X & CHIN-1 Balata West 7 (BW-7) BW-7X Sidetrack Chinook-1 Spud: May 20, 1959 TD: August 18, 1959 BW-9 Crude Oil Prospect The original well was drilled in 1959, and encountered oil on core and oil while BW-7X CHINOOK-1 drilling. BW-7 • 1,172’ Gross
Slide 13: Royston-1 Natural Gas Prospect
Shell Trinidad Limited Ortoire Lizard Springs (OL-4) synclinal Royston-1 c. 1965 basin Natural Gas Prospect Original well was drilled in 1965 - logs indicated 700 feet of gas effect, but the well was never P10 Case tested. P50 Case P90 Case ROYSTON-1 LOC 13
Slide 14: Ortoire Resource Evaluation
Company Working Interest 80% Unrisked Ortoire Resource Low Estimate Best Estimate High Estimate Evaluation (4) Recoverable Volumes Contingent Resources (Development Pending) Residue (Natural) Gas (MMcf) 6,552 10,584 16,128 Oil (Mbbls) 396 944 2,190 Oil Equivalent (Mboe) 1,575 3,002 5,576 Recoverable
Slide 15: Scalable Economic Growth
Scalable Economic Growth Exploration Upside Value Creation Environmental Stewardship Community Leadership 15
Slide 16: Scalable Economic Growth
Scalable Economic Growth 19 Onshore blocks 10 Producing fields 208 Drilling locations(6) 16
Slide 17: 100,000 bbl Crude Oil Type Curve
200 100,000 bbl Crude Oil Type Curve Well Type Curves(7) Economics(7) 2017 & 2018 drilling 180 Internal Rate of 35% economics 160 Return Payout 2.1 years 140 Operating ~$28.50/bbl Oil Rate (bbls/d) 120 netback(9) Recycle ratio 2.6x 100 Cost per well $1.1MM 80 60 40 20 0 0 10,000 20,000 30,000 40,000
Slide 18: Corporate Crude Oil Production
2,500 Corporate Production January 2017 to October 2019 2,000 Crude Oil Production (bbls/d) 15 new development wells drilled since admission to AIM 2018 - 11 New Wells - achieving production growth 1,500 of 30%(9) 2017 – 4 New Wells Recompletions 1,000 Base production 500 Swab production 0 18
Slide 19: Value Creation
Value Creation Exploration Upside Scalable Economic Growth Environmental Stewardship Community Leadership 19
Slide 20: YTD September 2019 Results and Capital Structure
YTD September 2019 Results Petroleum Sales Operating Netback(8)(10) $29,734,000 $27.07/bbl A Snapshot of Touchstone Average Crude Oil Production 1,871 bbls/d Funds Flow From Operations(8) Capital Expenditures $4,822,000 $5,506,000 Working Capital Deficit(8)(11) Cash $805,000 $3,423,000 Capital Struc
Slide 21: Equity Return Comparison
Equity Return Comparison Touchstone (TXP) vs. TSX Capped Energy Index ETF (XEG) vs. TSX60 Index ETF (XIU) February 7, 2019 to February 7, 2020 Source: TMX Money 21
Slide 22: Environmental Stewardship
Environmental Stewardship Exploration Upside Scalable Economic Growth Value Creation Community Leadership 22
Slide 23: Environmental Stewardship
Environmental Stewardship Taking care of the environment is not a requirement; it is a privilege. “Touchstone is committed to working with our partners at both national and local levels to ensure we set the benchmark for high environmental standards in Trinidad.” Becoming an World International Annu
Slide 24: Water Disposal Projects
Implemented the first Water Disposal water disposal well in Projects Trinidad Progressing towards becoming Current water disposal the first company in Trinidad to well reduces surface have no surface released water effluent release by 100 bbls/d. 24
Slide 25: Community Leadership
Community Leadership Exploration Upside Scalable Economic Growth Value Creation Environmental Stewardship 25
Slide 26: Community Leadership
Community Leadership ➢ Strong culture and history of engagement with local communities ➢ Touchstone is dedicated to enhancing the livelihood of its employees and improving our local communities through a series of investments in physical activities and infrastructure projects. 26
Slide 27: Case Study – Restoration of Special Needs Centre
Case Study – Restoration of Special Needs Centre ➢ 11 employees, including our CEO, assisted in restoring a derelict building in the Rio Claro community into a development centre for special needs children. ➢ The centre will cater to children with intellectual, physical and developmental challenges
Slide 28: Investment Summary
Investment Summary 1 Significant exploration opportunities 2 Pipeline of healthy organic growth from a multi-year production programme 3 Strong capital discipline combined with positive cashflow 4 Management has a proven record of transforming small E&Ps 5 Achieve a sustainable level of social and e
Slide 29: Corporate Information and Abbreviations
Corporate Information Abbreviations Head Office bbl(s) barrel(s) Suite 4100, 350 7th Ave SW Year End: December 31 Mbbls thousand barrels Calgary, AB T2P 3N9 Engineers: GLJ Petroleum Consultants Ltd. MMbbls million barrels Office: (403) 750-4400 Auditors: Ernst & Young LLP bbls/d barrels per day Webs
Slide 30: Endnotes
Endnotes 1) Source: BP Statistical Review of World Energy 2019, 68th edition. 2) Source: International Gas Union: 2019 World LNG Report. 3) Based on December 31, 2018 GLJ Petroleum Consultants Ltd. independent reserves evaluation. See “Advisories: Oil and Gas Reserves”. 4) Based on the independent p
Slide 31: Endnotes
Endnotes 10) Operating Netback Nine months ended ($000’s unless otherwise indicated) September 30, 2019 Petroleum revenue 29,734 Royalties (8,336) Operating expenses (7,572) Operating netback 13,826 Crude oil production (bbls) 510,823 Operating netback ($/bbl) 27.07 11) ($000’s) September 30, 2019 C
Slide 32: Advisories
Advisories Advisories This presentation is for information purposes only and is not under any circumstances to be construed as a prospectus or an advertisement for a public offering of such securities. No securities commission or similar authority in Canada or elsewhere or the Toronto Stock Exchange
Slide 33: Advisories
Advisories Oil and Gas Reserves The reserves information summarized in this presentation are from the Company’s December 31, 2018 independent reserve report prepared by Touchstone’s independent reserves evaluator, GLJ Petroleum Consultants Ltd. (“GLJ”), dated March 6, 2019. This report was prepared
Slide 34: Advisories
Advisories Contingent and Prospective Resources (Continued) The prospect evaluation was performed to provide the Company with an independent assessment of the Ortoire exploration block opportunities and to assist in quantifying individual prospects. The estimation of resources quantities for a prosp
Slide 35: Advisories
Advisories Oil and Gas Metrics This presentation may contain certain oil and gas metrics that are commonly used in the oil and gas industry such as finding and development costs and recycle ratio. These metrics do not have standardized meanings or standardized methods of calculation and therefore su
Slide 36: Advisories
Advisories Type Well Information The full-cycle type well information contained in this presentation has been prepared effective January 1, 2020 by Management. The type well information has been prepared assuming a 100,000-barrel crude oil well producing over a 30-year life span under the Company’s
Slide 37: Advisories
Advisories Drilling locations (Continued) While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relative close proximity to such unbooked drilling locations, other unbooked drilling locations are farther away from existing wells where Management has less
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