Touchstone Exploration Inc. press release

Touchstone Exploration Inc. Proposed Fundraise of US$10 Million to US$15 Million

2026-06-04

TSX - Toronto Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · Canada · Financing

THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) AND THE INFORMATION CONTAINED HEREIN ARE RESTRICTED AND ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW COMMON SHARES OF TOUCHSTONE EXPLORATION INC. IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED ("MAR"). IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

CALGARY, AB / ACCESS Newswire/ June 4, 2026 / Touchstone Exploration Inc. ("Touchstone" or the "Company") (TSX:TXP)(LSE:TXP) announces the launch of an integrated financing to raise gross proceeds of between US$10 million and US$15 million (between approximately £7.4 million / C$13.9 million and £11.2 million / C$20.8 million), of which US$10 million is expected to be provided by Touchstone's largest existing shareholder, Purebond Limited (the "Fundraise").

The Fundraise will be conducted via the issue of new common shares of no par value in the capital of the Company ("Common Shares") at a price of 7 pence (equivalent to approximately C$0.13) each (the "Issue Price") and consists of:

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an aggregate investment of up to US$10 million by Purebond Limited ("Purebond"), comprising (i) a direct subscription (the "Subscription") by Purebond for new Common Shares (the "Subscription Shares") at the Issue Price pursuant to the subscription agreement entered into with the Company dated June 4, 2026 (the "Subscription Agreement"), subject to clawback to satisfy valid applications pursuant to the Placing and the LIFE Offering (both as defined below) and (ii) pursuant to the Subscription Agreement and the related repayment and subscription agreement between the Company and Purebond, unsecured non-convertible debt securities of the Company (a debenture) (the "Debt Securities") in connection with the Fundraise; such Debt Securities are not issued at the Issue Price;

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a non-pre-emptive placing (the "Placing") of new Common Shares (the "Placing Shares") at the Issue Price to certain institutional and other investors, to be carried out by way of an accelerated bookbuild;

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a non-pre-emptive private placement (the "LIFE Offering") of new Common Shares (the "LIFE Offering Shares") at the Issue Price to certain investors in Canada pursuant to the Listed Issuer Financing Exemption ("LIFE") (under applicable Canadian securities laws); and

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a non-pre-emptive retail offer through the Winterflood Retail Access Platform ("WRAP") (the "WRAP Offer") to raise gross proceeds of up to £0.74 million (US$1.0 million / C$1.4 million) through the issue of new Common Shares at the Issue Price (the "WRAP Offer Shares" and together with the Placing Shares, the LIFE Offering Shares and the Subscription Shares, the "Offer Shares") to be made on terms outlined in a separate announcement.

The Issue Price represents a 3.4 percent discount to 7.25 pence, which was the closing price of the Common Shares on the AIM market ("AIM") of the London Stock Exchange on June 3, 2026.

The Placing is to be conducted by way of an accelerated bookbuild process (the "Bookbuild") which will commence immediately following this Announcement and will be subject to the terms and conditions set out in Appendix 1 to this Announcement.

Canaccord Genuity Limited ("Canaccord") is acting as Nominated Adviser and Lead Bookrunner and Cavendish Capital Markets Limited ("Cavendish") is acting as a Joint Bookrunner (together, the "Joint Bookrunners") in connection with the Placing.

There is an offering document (the "Offering Document") related to the LIFE Offering in Canada that can be accessed under the Company's profile at www.sedarplus.caand on the Company's website at www.touchstoneexploration.com. Prospective investors in Canada should read the Offering Document before making an investment decision.

Canaccord Genuity Corp, acting as Canadian Adviser, has been engaged to find subscribers for the LIFE Offering Shares on a "best efforts" basis.

The Subscription Shares will be subscribed for on the terms of the Subscription Agreement, rather than pursuant to the terms and conditions of the Placing or the LIFE Offering.

Trading of the Common Shares on the Toronto Stock Exchange ("TSX") was halted as of 11:36 a.m. (Toronto time) today at the request of the Company, pending the release of this Announcement. The trading halt will continue until 8:00 a.m. (Toronto time) on June 5, 2026, at which time trading of the Common Shares on the TSX is expected to continue in the normal course during trading hours.

The Fundraise is expected to close (being the admission and settlement of the Placing Shares, the LIFE Offering Shares, the Retail Shares, the First Tranche Subscription Shares and the Debt Securities) concurrently on or about June 10, 2026.

Background to the Fundraise and Intended Use of Proceeds

The net proceeds from the Fundraise are intended to accelerate the Company's 2026 development program and fortify its financial position. Specifically, capital will be deployed to:

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Execute high-impact drilling: Fund the next phase of development wells to drive near-term volume growth.

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Enhance existing assets: Perform low-cost, production-enhancing recompletions and workovers across the asset portfolio.

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Strengthen the balance sheet: Reduce aged trade payables and resolve historical working capital constraints.

Operational Performance and Pricing Dynamics

The Company has continued to advance its operational and development activities during 2026. Average daily production for the quarter ended March 31, 2026 rose 8 percent year-over-year to 4,657 boe/d, with April 2026 sales volumes averaging 4,700 boe/d.

A significant catalyst for revenue growth lies in the Company's transition to anticipated higher-margin Central block marketing contracts:

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Current realizations: March 2026 Central block LNG sales volumes achieved US$4.22/MMBtu (net of LNG fees) under the current Train 4 agreement.

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Near-term upside: All gross production exceeding 7.1 Bcf (approximately 4.6 Bcf net) for the October 2025 to September 2026 period is eligible for nomination to the Atlantic LNG Train 2/3 marketing contract.

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The arrangement utilizes pricing formulas that are more directly linked to international LNG pricing benchmarks and, based on pricing assumptions used in the Company's March 2026 forecasts, was estimated to generate net realizations of approximately US$11.75/MMBtu (net of LNG fees). Due to scheduled Train 4 and pipeline infrastructure maintenance periods running through July 19, 2026, the Company is currently redirecting and selling Central field production through this higher-yielding Train 2/3 contract and the domestic market.

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Future flexibility: The Train 4 agreement expires in May 2027, allowing the Company to transition all Central block production volumes to the Train 2/3 contract over the longer term.

2026 Development Plan

The Company has achieved strong operational progress on its 2026 capital program, as the FR-1835 and FR-1836 development wells on the WD-8 block were successfully drilled, completed and placed on production in mid-May 2026.

Key Upcoming Milestones:

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Second Quarter 2026: Commissioning of the Cascadura booster compressor is targeted for June to stabilize production and increase plant deliverability.

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Third Quarter 2026: Planned activities include drilling two development commitment wells on the WD-4 block(1), executing a targeted recompletion and workover program across the Central and Ortoire blocks, and spudding the Central block BR-2 well.

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Fourth Quarter 2026: Integration of the new WD-4 and BR-2 wells into the production stream and commencement of drilling the CR-4 development well(1)on the Central block.

(1)Note that the drilling of the WD-4 and the CR-4 development wells are contingent on the Company raising in excess of US$10 million as disclosed below.

Production Potential

Successful execution across the WD-4, Cascadura, and Central blocks provides for the potential for a meaningful increase in production volumes. Management estimates that average production could grow from approximately 4,700 boe/d to approximately 6,800 boe/d by March 2027. The majority of this incremental growth is expected to be driven from the Central block wells. These figures represent potential production levels based on successful development outcomes and remain subject to operational progress, final funding levels, and individual well productivity.

Liquidity and Going Concern Considerations

A portion of the proceeds from the fundraise are expected to be used to strengthen liquidity and reduce working capital constraints identified in the going concern note included in the Company's March 31, 2026, unaudited interim condensed consolidated financial statements.

Under Management's current assumptions, including the lower US$10 million funding scenario, this strategic use of capital is expected to mitigate the risk of year-end 2026 financial covenant breaches under its Trinidad-based loan agreement. Additionally, the Company has secured a formal waiver from its lender, eliminating the testing of the debt service coverage covenant for the 2026 financial year.

Expected Use of Proceeds

| Description of use of gross proceeds from the Fundraise (millions of US$) | US$10 million case | US$15 million case | | | | | | Well workovers (Cascadura and Central) | 1.1 | 1.1 | | WD-4 block (Two minimum commitment wells) | - | 2.7 | | New drill - BR-2 (Central) | 4.0 | 4.0 | | New drill - CR-4 (Central) | - | 1.8 | | Working capital and vendor payables | 8.4 | 10.1 | | Less: forecasted funds flow from operations | (3.5) | (4.7) | | Total gross proceeds | 10.0 | 15.0 |

Related Party Participation

Purebond has entered into a Subscription Agreement with the Company as part of the Fundraise. This is deemed to be a transaction with a related party pursuant to Rule 13 of the AIM Rules for Companies by virtue of Purebond being a 15.4 percent shareholder of the Company. The Fundraise may also constitute a related party transaction for purposes of applicable Canadian securities laws, including Multilateral Instrument 61-101. Further details of the Purebond allocations and related party transaction details shall be provided upon close of the Fundraise.

Shareholder Approval

It is expected that the Fundraise will be undertaken in two tranches. Under the first tranche (the "First Tranche"), the Company plans to issue such number of Common Shares as may be permitted to be issued without shareholder approval underapplicable TSXrequirements, and for those shares (the "First Tranche Shares") to be admitted to trading on the AIM market ("AIM") and the TSX in advance of the remaining Offer Shares to be issued to Purebond (as described below) (the "First Admission").

As part of the First Tranche, pursuant to the Subscription Agreement, the Company will issue to Purebond a number of Subscription Shares (the "First Tranche Subscription Shares") such that, prior to obtaining shareholder approval at the General Meeting, Purebond's beneficial ownership of Common Shares does not exceed 19.99 percent of the Company's total issued share capital, and any remaining Purebond commitment that cannot be satisfied through the issuance of Common Shares within applicable equity issuance limitations (including any applicable TSX insider participation requirements) will be satisfied through the issuance of Debt Securities.

Under the second tranche (the "Second Tranche"), subject to shareholder approval from independent shareholders at a general and special meeting of shareholders of the Company to be held on or about July, 23, 2026 (the "General Meeting") and other applicable approvals, the Company expects that any Debt Securities issued to Purebond in connection with the Fundraise will be repaid in full and such repayment amount redirected into a subscription for Common Shares one (1) Business Day following the General Meeting (provided shareholder approval is obtained), or otherwise as described in the repayment and subscription agreement between the Company and Purebond. If shareholder approval is not obtained, such subscription and repayment mechanics will not proceed, and the Debt Securities will remain outstanding. It is expected that such Common Shares (the "Second Tranche Shares") will be admitted to trading on AIM and the TSX on or about July 28, 2026 (the "Second Admission").

It is important to note that the First Tranche Shares shall be issued on First Admission, which is expected to occur at 8:00 a.m. on June 10, 2026 (or such later date as the Company and the Joint Bookrunners may agree). If the approvals and other conditions required to repay in full the Debt Securities and redirect the repayment amount into Common Shares (or otherwise settle them) are not subsequently satisfied, the portion of Purebond's commitment not satisfied through the issuance of Common Shares in the First Tranche will remain in the form of the Debt Securities pending any further approvals.

Details of the Fundraise

UK Placing

The Joint Bookrunners will be conducting an accelerated book building process, in respect of the Placing. The book will open with immediate effect. The Joint Bookrunners have entered into an agreement with Touchstone (the "Placing Agreement") under which, subject to the conditions set out therein, the Joint Bookrunners will agree to use their respective reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing is subject to the terms and conditions set out in Appendix 1 to this Announcement, including the completion of the Subscription and the LIFE Offering. Members of the public are not entitled to participate in the Placing.

The Placing Shares will, when issued, be credited as fully paid and will rank _pari passu_in all respects with Touchstone's existing issued Common Shares. The number of Placing Shares to be allotted and issued by the Company pursuant to the Placing will be determined at the close of the Bookbuild. It is envisaged that the Bookbuild will close no later than 7:00 p.m. (London Time) on June 4, 2026 but the timing of the closing of the Bookbuild and allocations are at the absolute discretion of the Joint Bookrunners and the Company. Details of the final number of Placing Shares and the Issue Price will be announced as soon as practicable after the closing of the Bookbuild. The Placing is not being underwritten. The Placing is conditional upon the completion of the Subscription and the LIFE Offering and the admission to trading and settlement of the First Tranche Subscription Shares and the LIFE Offering Shares. The Issue Price for UK Placees (as defined below) pursuant to the UK Placing has been translated at a fixed exchange rate of £1.00 to C$1.864 such that it will be the same price in pounds sterling equivalent as for placees participating in the LIFE Offering. In managing allocations among the Placing and the WRAP Offer, the Company intends to comply with applicable TSX requirements, including the TSX Company Manual s.607 limitation on the number of Common Shares that may be issued without shareholder approval in connection with the non-LIFE components of the Fundraise, with the LIFE Offering structured as a bona fide LIFE offering under the TSX Company Manual s.606.

Canadian LIFE Offering

Concurrent with the Placing, the WRAP Offer and the Subscription, subject to compliance with applicable regulatory requirements and in accordance with National Instrument 45-106 - Prospectus Exemptions ("NI45-106"), the LIFE Offering Shares that may be sold in Canada under the LIFE Offering will be offered for sale to purchasers in each of the provinces of Canada other than Quebec, pursuant to the listed issuer financing exemption under Part 5A of NI 45-106, as amended by Coordinated Blanket Order 45-935 - Exemptions from Certain Conditions of the Listed Issuer Financing Exemption (the "Listed Issuer Financing Exemption"). LIFE Offering Shares issued under the Listed Issuer Financing Exemption will not be subject to a hold period under Canadian securities legislation.

Canaccord Genuity Corp, acting as Canadian Adviser, has been engaged to find subscribers for the LIFE Offering Shares on a "best efforts" basis.

Subscription

Concurrent with the Placing, the LIFE Offering and the WRAP Offer, the Company has entered into a Subscription Agreement with Purebond in accordance with which Purebond has irrevocably agreed to invest up to US$10,000,000 into the Company pursuant to:

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a subscription for a number of Common Shares equal to its pro rata portion of the Placing Shares, the WRAP Offer Shares and the LIFE Offering Shares (the "Basic Tranche 1 Subscription Shares") as part of the Offering (the "Basic Subscription");

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to the extent that the proceeds of: (i) the Basic Subscription; (ii) the Placing; (iii) the WRAP Offer; and (iv) the LIFE Offering would otherwise be less than US$10,000,000 (a "Basic Subscription Shortfall"), a subscription for such additional Common Shares (if any) (the "Additional Tranche 1 Subscription Shares" and, together with the Basic Tranche 1 Subscription Shares, the "Tranche 1 Subscription Shares") at the Issue Price which would give rise to proceeds equal to such Basic Subscription Shortfall (the "Additional Tranche 1 Subscription" and together with the Basic Subscription, the "Tranche 1 Subscription"), provided that, after giving effect to such Additional Tranche 1 Subscription, Purebond's beneficial ownership of Common Shares does not exceed 19.99 percent of the issued share capital of the Company prior to the General Meeting, and the issuance of such Common Shares complies with applicable TSX requirements (including any applicable insider participation requirements); and

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to the extent that the proceeds of: (i) the Tranche 1 Subscription; (ii) the Placing; (iii) the WRAP Offer; and (iv) the LIFE Offering is less than US$10,000,000 (a "Tranche 1 Subscription Shortfall"), a subscription for Debt Securities of the Company (the "Tranche 2 Subscription" and, together with the Tranche 1 Subscription, the "Subscription") with an issue price which would give rise to proceeds equal to such Tranche 1 Subscription Shortfall.

Purebond's obligation to subscribe for, and the Company's obligation to issue, the Tranche 1 Subscription Shares is conditional upon admission of the Tranche 1 Subscription Shares to trading on AIM.

The Company's obligation to issue the Tranche 1 Subscription Shares is also conditional upon (inter alia) acceptance of the terms of the Offering and the Subscription Agreement by the TSX and all other regulatory approvals in accordance with applicable law and regulation, including for greater certainty the AIM Rules, Canadian Securities Laws and the TSX Company Manual.

In connection with the Subscription, the Company will issue the Debt Securities to Purebond. Such Debt Securities are expected to be repaid in full and the repayment amount redirected into a subscription for Common Shares one (1) Business Day following the General Meeting, provided shareholder approval is obtained and all other conditions to such repayment and subscription mechanics are satisfied (including TSX approval, as applicable, or otherwise as described in the repayment and subscription agreement between the Company and Purebond). If shareholderapproval is not obtained (or the other conditions are not satisfied), such repayment and subscription mechanics will not proceed, and the Debt Securities will remain outstanding. The Company will not complete any subscription, repayment and redirection into Common Shares if it would result in the cumulative issuance of more than 81,183,402 Common Shares (being 25 percent of the Company's issued and outstanding Common Shares as of the date of the agreement) without shareholder approval.