Paul R. Baay, President and Chief Executive Officer, commented: It is very exciting to commence drilling in Ortoire at our Coho-1 prospect.
Calgary, Alberta – August 8, 2019 – Touchstone Exploration Inc. (“Touchstone” or the “Company”) (TSX / LSE: TXP) announces that drilling operations have commenced with the spudding of the first exploration well on the Ortoire block. The Company also provides an operational update and a date for the release of interim results.
Highlights
· Spudded Coho-1, the Company’s first exploratory well on its Ortoire property, on August 7, 2019.
· Achieved crude oil sales of 1,768 barrels per day (“bbls/d”) and 1,944 bbls/d for the three and six months ended June 30, 2019, respectively, representing increases of 3% and 19% relative to the prior year comparative periods.
· Delivered an average of approximately 1,829 bbls/d of field estimated crude oil production through the first six days of August 2019.
· Received regulatory approval to reinject produced water from four of our producing properties.
Drilling Operations
Touchstone spudded the Coho-1 exploration well on the Ortoire exploration block on August 7, 2019, using Well Services rig #80. The Coho-1 well is targeting gas prospects in the Herrera formation at depths between 5,200 and 8,500 feet. The well offsets the Corosan-1 well drilled by Vintage Petroleum Inc. in 2001. Touchstone’s Coho-1 well is targeting the same zones tested in the Corosan-1 well in an up-dip location and the well is also expected to penetrate a second and previously untested thrust sheet that the Company deems perspective based on 3D seismic and offset production records. The Coho-1 well is expected to be drilled to a total measured depth of 8,545 feet at an estimated cost of approximately US$3 million. Drilling is anticipated to take approximately 28 days and the Company will make a further announcement once the well is drilled and logged. Following the rig release, we will utilize a smaller service rig to test the well. Testing is anticipated to take up to 30 days as full flow and build-up is planned to be completed on each zone.
The Coho-1 well is the first of four earning exploration wells under Touchstone’s Ortoire Exploration and Production Licence. The Company has an 80% working interest in the well but is responsible for 100% of the drilling, completion and testing costs associated with the well. Heritage Petroleum Company Limited holds the remaining 20% working interest.
Touchstone has no Reserves associated with this well location included in the Company’s December 31, 2018 Reserves Report. An independent prospect evaluation review prepared by GLJ Petroleum Consultants Ltd. dated January 16, 2019 and effective December 31, 2018 estimated 2,058 thousand barrels of oil equivalent (best estimate) of unrisked Contingent Resources (Development Pending) and 1,190 thousand barrels of oil equivalent (best estimate) of unrisked Prospective Resources (Prospect) for the Company’s 80% working interest in the well. Please refer to Touchstone’s January 17, 2019 announcement titled “Touchstone Announces Ortoire Independent Prospect Evaluation” for further information, definitions and advisories regarding the resources other than reserves associated with prospects evaluated on the Ortoire exploration block.
Production
After a strong 2019 first quarter of production buoyed by flush volumes from the 2018 drilling programme, the Company embarked upon a well optimization programme which spanned the majority of the second quarter of 2019. The programme focused on converting flowing wells to pumping wells as volumes declined, equipping certain wells with capillary strings to combat wax production and to extend run-times and the recompletion of low rate producers. As a result of these initiatives, various wells and associated production were off-line during the second quarter. Additionally, mechanical issues with a bottom hole assembly in the Company’s CO-372 well resulted in nil production in the second quarter.
As a result, the Company averaged 1,768 bbls/d of crude oil sales in the second quarter of 2019 and 1,944 bbls/d of crude oil sales during the six months ending June 30, 2019. Field estimated production through the first six days of August 2019 has averaged approximately 1,829 bbls/d, which the Company anticipates maintaining in the third quarter of 2019 through further well optimization and recompletions.
Water Disposal
The Company has commenced transportation of all produced water from its Barrackpore, San Francique and Palo Seco properties to the recently commissioned water disposal facility on our Fyzabad block. We have also completed an initial injectivity test on our WD-8 block and will now begin a test period where substantially all produced water originating from the property will be disposed. These are key environmental milestones as we have undertaken to eliminate all surface water release by the end of 2019.
Paul R. Baay, President and Chief Executive Officer, commented:
“It is very exciting to commence drilling in Ortoire at our Coho-1 prospect. This is a significant milestone for Touchstone as we begin drilling the prospective exploration wells. We look forward to sharing the results of the wells with our shareholders throughout this potentially transformational period. The exploration programme has been a priority for 2019, but it is important that we continue to see annual production growth from our current producing assets. We are currently prioritizing our development drilling locations and will continue to focus on maintaining base production. While fostering a safe work environment we intend to further enhance our operations through various initiatives including our water disposal programme.”
Notice of Results
The Company expects to release its unaudited interim results for the three and six months ended June 30, 2019 on August 14, 2019.
About Touchstone
Touchstone Exploration Inc. 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 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”.
