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Touchstone Exploration: 2017 year-end reserves and results

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Oilfield Technology,

Touchstone Exploration Inc. has announced the results of its independent year-end 2017 reserves evaluation. Reserve numbers provided herein were derived from an independent reserves report prepared by GLJ Petroleum Consultants Ltd. effective December 31, 2017.

All currency amounts are in Canadian dollars unless otherwise stated. The financial information contained herein is based on the company’s unaudited expected results for the year ended December 31, 2017 and is subject to change.

The company expects to release an operational update next week and 2017 year-end results on March 27, 2018.

2017 Year-end Reserve Report Highlights

The Company increased proved reserves by 20% or 1 756 000 bbls after production and increased proved plus probable reserves by 18% or 2 837 000 bbls after production.

The increase in reserves replaced production by 450% on a 1P basis and 665% on a 2P basis.

The company’s December 31, 2017 net present value of future net revenues before tax (discounted at 10 percent) was US$407.9 million (US$210.5 million on a 1P basis).

December 31, 2017 net present value of future net revenues after tax (discounted at 10%) was US$156.7 million (US$83.5 million on a 1P basis).

Future development costs associated with a portion of the company’s internally identified drilling location inventory and portfolio of low risk recompletion projects totalled US$57.8 million for 1P and US$85.3 million for both 2P.

Finding and development costs (including changes in FDC) were US$7.66 for 1P and US$6.33 for 2P. Using the company’s estimated 2017 operating netback of US$24.23/bbl, the 1P recycle ratio was 3.2 times, and the 2P recycle ratio was 3.8 times.

The company’s asset base remains conservatively booked, with 1P assigned 62 drilling locations (30% of the company’s identified drilling inventory) and 2P assigned 90 drilling locations (43% of the company’s identified drilling inventory).

Paul Baay, President and Chief Executive Officer, commented:

“The updated reserves report confirms the large reserve base consolidated by the company and the opportunity to significantly increase production over the near term. With 208 drilling locations identified by Management and only 90 locations booked in the report, the team remains conservative on the potential upside of the asset base. With the current drilling and recompletion programme the company expects to rapidly convert reserves into production, cash flows and earnings.”

2017 Year-end reserves summary

Touchstone’s year-end crude reserves in Trinidad were evaluated by independent reserves evaluator GLJ in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserves information as required under NI 51-101 will be included in the Company’s Annual Information Form, which will be filed on SEDAR on or before March 31, 2018. The reserves estimates set forth below are based upon GLJ’s Reserve Report dated March 7, 2018. All values in this announcement are based on GLJ’s forecast prices and estimates of future operating and capital costs as at December 31, 2017. In certain tables set forth below, the columns may not add due to rounding. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

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