Touchstone Exploration Inc (AIM:TXP, TSX:TXP, OTC:PBEGF) swung into a sizeable profit in the half year to end June 2024 as its newly developed fields at Cascadura in Trinidad contributed fully.
Second-quarter net earnings soared to US$3.33 million against a small loss for the comparable period a year ago, while interim net profits jumped to almost US$7 million.
Natural declines from the fields saw second-quarter production of 5,432 barrels daily against 7,015 in the first three months.
Lower oil and gas prices also meant revenues dropping to US$14.1 million from US$16.5 million in the first quarter but were still almost double the previous year.
More fields are scheduled to come on stream in the second half of the year, but due to the higher-than-expected declines, Touchstone has reduced its mid-point production estimate to 8,000 barrels a day and year-end exit production to 13,500 barrels a day.
Touchstone added it had also decided to leverage the current drilling rig location at Cascadura and drill two more wells there rather than the previously planned two wells at Coho, another site.
Estimates for cash flow have also been reduced to US$28 million from US$35 million, which includes US$1.5 million for the proposed acquisition of Trinity Exploration.
The group indicated it is pressing ahead with its bid for Trinity even though a new and higher offer from a third party, Lease Operators, has been recommended.
Touchstone has received irrevocable acceptances from nearly 40% of Trinity shareholders, which it says remain binding unless it withdraws its offer.
Paul Baay, Touchstone’s chief executive, said: “Our results for the first half of 2024 highlight Touchstone's remarkable transformation over the past year, with notable improvements in both financial and production performance compared to the previous year.
“We were excited to increase average sales volumes to 5,816 boe/d in July 2024, following the successful recompletion of the Cascadura Deep-1 well, representing an 18 per cent increase from June 2024.
“Since we began production at Cascadura in September 2023, we have gained valuable insights into the reservoir that will benefit our future drilling initiatives.
“However, we have observed that field declines have been steeper than anticipated, leading us to adjust our midpoint forecasted 2024 average production to 8,000 boe/d.
“Consequently, we now project an approximate annual funds flow from operations of $28 million for 2024.”