Touchstone Exploration today announced a summary of their 2021 year-end reserves and an operational update. 

2021 Year-end Reserves Report Highlights

• Relative to year-end 2020, increased 3P gross reserves by 21% to 121,332 Mboe, increased 2P gross reserves by 16% to 75,547 Mboe and increased 1P gross reserves by 13% to 38,731 Mboe in 2021.
• Touchstone's net present value of future net revenues discounted at 10% ("NPV10") on a before tax 3P basis increased by 31% to $1.31 billion, before tax 2P NPV10 increased by 29% to $881.8 million and before tax 1P NPV10 increased by 31% to $474.9 million from the prior year.
• Realized after tax 3P NPV10 of $535.6 million, representing an increase of 28% from the prior year, after tax 2P NPV10 increased by 26% from year-end 2020 to $363.1 million and after tax 1P NPV10 increased by 29% from the prior year to $210 million.
• Achieved 1P F&D costs of $10.36 per boe, resulting in a recycle ratio of 2.6 times using our unaudited annual estimated 2021 operating netback of $26.55 per boe.
• Realized 2P F&D costs of $6.96 per boe, resulting in a 2P recycle ratio of 3.8 times, demonstrating our capital efficient operations on the Ortoire block.
• Relative to year-end 2020, increased Cascadura 1P reserves by 14% to 26,902 Mboe and 2P total reserves by 16% to 52,082 Mboe following our successful Cascadura Deep-1 well tested in 2021.
• The Royston exploration discovery was assigned gross working interest 3P reserves of 4,800 Mboe, gross working interest 2P reserves of 3,520 Mboe and gross working interest 1P reserves of 1,280 Mboe.
• The Company's independent reserves evaluator estimates that the Royston structure has a low estimate of 128.3 MMbbl, a best estimate of 165.7 MMbbl and a high estimate of 211.7 MMbbl of total petroleum initially-in-place from the overthrust and intermediate sheets of the Herrera Formation, with no estimate provided in the subthrust sheet. 

Paul Baay, President and Chief Executive Officer, commented:
"Our 2021 independent reserves evaluation confirms the significant opportunities at our Ortoire property and the profitability of all of our assets in Trinidad. The estimated additions of both future net revenues and reserves at the newly discovered Royston light oil pool are reflective of our successful drilling activities in 2021 and the considerable size of the prospect in the Herrera Formation. The initial Royston reserves evaluation was conservative, given only one well was drilled to date and no reserves were assigned to the subthrust sheet. We have two exciting opportunities to substantially increase reserves in the area with the Royston Deep well intended to evaluate the subthrust sheet of the Herrera Formation and the Kraken well targeting the deeper Cretaceous Formation. 

We are proceeding with the final step to bring the Coho gas field online with anticipated first natural gas production in May 2022, which will represent a milestone for Touchstone and Trinidad. We also remain on track with our operations at Cascadura, as we have submitted the required regulatory applications and procured the long lead items for the surface facility, providing visibility to estimated completion in September 2022. 

Our focus is to convert our extensive Trinidad resource base to cash flows while continuing to target further exploration opportunities across our licence areas. It is an exciting time for Touchstone, as it is rare to have a combination of solid low decline base production, a near-term step change in production, a multi-year development drilling program and extensive exploration opportunities. I would encourage anyone requiring additional information to view the updated corporate presentation available on our website." 

Operational Highlights

• With all relevant agreements executed, pipeline tie-in operations for the Coho-1 well are proceeding with anticipated first gas in May 2022 subject to weather conditions.
• The Company is currently awaiting regulatory approvals to commence constructing the Cascadura natural gas facility, with equipment procurement and delivery of pressure vessels on track for facility completion in September 2022 assuming timely receipt of required regulatory approvals.
• The extended flow test at Royston has confirmed the well is capable of over 675 bbls/d of light, sweet oil production from a combination of the overthrust and intermediate sheets of the Herrera Formation.
• The three development wells drilled on our legacy crude oil blocks in the fourth quarter of 2021 have produced a field estimated 210 bbls/d since coming on production, contributing to our current field estimated aggregate net base production of approximately 1,449 bbls/d, excluding production testing volumes from Royston-1.

Operational Update

Coho
All of the required agreements with our third-party partners to allow for the final tie-in of the Coho gas field on the Ortoire block have been executed. Pipeline installation operations have commenced with first gas anticipated in May 2022 subject to weather delays that may hinder trenching and welding operations. Following testing and purging of the pipeline, we are anticipating natural gas production to increase over time to a gross target of 10 MMcf/d (8 MMcf/d net, representing approximately 1,333 boe/d net production).

Cascadura
The Cascadura facility is proceeding with the major facility components nearing completion for transportation to Trinidad. The components will be delivered on skids and will be assembled in the field by local contractors. In parallel with the facilities procurement and construction, we have submitted the required regulatory application and expect to receive a response on or before mid-May 2022. Upon approval, we will proceed with four distinct projects at Cascadura: road construction, condensate pipeline construction, facility construction and construction of future development drilling locations. 

Royston
We commenced a long-term production test of the uppermost 84 feet of the Herrera overthrust section in January 2022 with the goal of evaluating different flowing regimes and possible pump configurations to maximize oil production. While conducting the test, approximately 2,200 feet of pipe and perforating guns were stuck in the bottom portion of the well, not allowing any further testing of the deeper zones. However, with these constraints, the well has continued to deliver both pumping and flowing volumes from the uppermost 84 feet.

Combined with the previous test in the intermediate zone, the well has shown that the completed intervals are capable of producing over 675 bbls/d of oil. Produced oil is being sold at our Barrackpore sales facility, and all associated water has been separated on-site and reinjected at our water disposal facility. We anticipate production testing continuing until the commencement of future drilling operations at Royston.

Legacy Wells
The three development wells drilled by the Company in the fourth quarter of 2021 are on production. Since being brought onstream, they have contributed an aggregate average of 210 bbls of net oil per day. We have prepared the next location on our Coora-1 block where we plan to drill two commitment infill wells targeting the Forest and Cruse Formations.

James Shipka, Chief Operating Officer, commenting on the Royston-1 well test, said:
"Testing of the Royston-1 exploration well resumed in early January with the well initially flowing at rates of over 250 barrels of oil per day from the uppermost 84 feet of the overthrust reservoir. Over the course of flow testing and, as anticipated, production rates gradually declined due to liquid loading in the wellbore and we subsequently moved a service rig to the location to install a pump to increase production. While attempting to raise the downhole assembly, we discovered an issue with the casing at approximately 7,250 feet that prevented us to run the optimized downhole pumping assembly. The wellbore could not be cleared, and we ultimately severed the existing tubing string at approximately 7,200 feet. In early February, we ran a downhole pump above the pre-existing tubing string, and we are currently working on optimizing production in this restricted configuration. 

Despite these mechanical challenges, our testing program at Royston-1 has confirmed that the Royston structure will be a core oil development property for Touchstone. The light oil discoveries in the intermediate and overthrust sheets have displayed production rates in excess of 675 barrels of oil per day from the structure. With an independent estimate of up to 212 million barrels of total petroleum initially-in-place in the high case, including upside potential from the upper two sheets, Royston will be an exciting long-term project. Our 2021 reserves bookings reflect Royston's initial development stage, and we look forward to our future exploration wells which will further delineate and expand our understanding of the structure. Until then, we will continue our testing program at Royston to gather additional information and refine our model of the reservoir. The similarities between Royston and the Penal-Barrackpore fields are significant and have given us confidence in our understanding of how the different thrust sheets may contribute to the ultimate recovery of the field."