Touchstone Exploration Inc. press release

Canadian Private Placement and Proposed UK Placing to Accelerate Exploration and Development at Ortoire

2022-12-06

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.‎

TOUCHSTONE EXPLORATION INC.

CALGARY, AB / ACCESSWIRE / December 6, 2022 / Touchstone Exploration Inc. ("Touchstone" or the "Company") (TSX:TXP)(LSE:TXP) announces that the Company launched a private placement in Canada (the "Canadian Private Placement") at 5 p.m. EST on December 5, 2022 to raise a minimum of C$7.5 million (approximately US$5.5 million and £4.5 million) up to a maximum of C$10 million (approximately US$7.4 million and £6.1 million) at a price of C$0.90 (approximately 54.5 pence) per Common Share (as defined below) of no par value (the "Canadian Placement Shares").

The Company further announces a proposed placing in the UK (the "UK Placing") to raise approximately US$5.5 million (approximately £4.5 million and C$7.4 million) through the issue of Common Shares (as defined below) of no par value (the "UK Placing Shares") with institutional and other investors in the United Kingdom at a price of 54.5 pence per UK Placing Share (approximately C$0.90) (the "Placing Price").

The Canadian Private Placement and the UK Placing (collectively, the "Fundraise") are expected to raise aggregate gross proceeds of between US$11 million (approximately £9 million and C$14.9 million) and US$13 million (approximately £10.6 million and C$17.5 million) to allow Touchstone to accelerate its Ortoire exploration and development program.

In the event of excess demand, the Company reserves the right to increase the size of the UK Placing and/or the Placing Price. The UK Placing is being completed by way of an accelerated book building process (the "Bookbuild") and UK Placees (as defined below) will be subscribing for Common Shares pursuant to the terms and conditions set out in the Appendix to this announcement. Shore Capital and Canaccord (each as defined below) are acting as Joint Bookrunners in connection with the UK Placing.

The Bookbuild in respect of the Canadian Private Placement and the UK Placing is expected to close on or around 3.00 p.m. London Time (10.00 a.m. EST) on December 6, 2022 but the timing of the closing of the Bookbuild for the UK Placing is at the absolute discretion of the Joint Bookrunners and the Company.

Background to the Fundraise and Use of Proceeds

In recent years, the Company has been focusing on its successful exploration and development program on the Ortoire block, onshore in the Republic of Trinidad and Tobago (Touchstone 80% working interest), which has identified significant natural gas discoveries at the Coho and Cascadura projects and an oil discovery at Royston.

Touchstone recently completed the development of its facility at Coho and announced initial natural gas production on October 10, 2022, with the Coho-1 well delivering average net natural gas sales of 7.3 MMcf/d (approximately 1,212 boe/d) over 19 operational days in October.

On August 16, 2022, the Company received a Certificate of Environmental Clearance ("CEC") to conduct development operations within the Cascadura area of the Ortoire block from the Trinidad and Tobago Environmental Management Authority. The CEC approved the construction of a multi-well surface production facility with a designed production capacity of 200 MMcf/d of natural gas, 5,000 bbls/d of associated liquids and 200 bbls/d of produced water, with a storage capacity of 8,800 barrels of liquids on the Cascadura A wellsite. In addition to the facility, the CEC includes the drilling of up to eight wells on two additional well pads (Cascadura B and C) and the establishment of associated pipelines and infrastructure within the Ortoire block.

Construction of the Cascadura surface facility and associated infrastructure required to bring production online from the two existing Cascadura wells is in progress. Once production at Cascadura is online, which the Company anticipates will be by the end of the first quarter of 2023, initial gross aggregate natural gas and associated liquids production from the Cascadura-1ST1 and Cascadura Deep-1 wells, based on previous well tests, has been forecasted at approximately 11,500 boe/d (9,200 boe/d net).

In addition to the development of the Cascadura facility, the Company has a portfolio of further exploration and development drilling targets at the Ortoire block. In order to allow the Company to continue to accelerate these prospective exploration, development and production opportunities while the Company's cash balance and cash flows from operations are being allocated towards the Cascadura facility construction, Touchstone is seeking to complete the Canadian Private Placement and the UK Placing in order to side track Royston-1ST1 to drill and test the intermediate and subthrust sheets of the Herrera Formation. Net proceeds will also be applied to bring forward the drilling and potential completion of the Cascadura-2 development well.

The funds raised will strengthen the Company's balance sheet and the Company also intends to use a portion of the net proceeds for working capital purposes as it continues constructing the Cascadura facility.

Details of the UK Placing

The UK Placing is being completed within the Company's existing share issuance authorities. Shore Capital and Corporate Limited and Shore Capital Stockbrokers Limited (together, "Shore Capital") and Canaccord Genuity Limited ("Canaccord") (Shore Capital and Canaccord together, the "Joint Bookrunners") will be conducting an accelerated book building process, in respect of the UK Placing. The book will open with immediate effect. Shore Capital and Canaccord have entered into an agreement with Touchstone (the "Placing Agreement") under which, subject to the conditions set out therein, Shore Capital and Canaccord will agree to use their respective reasonable endeavours to procure subscribers for the UK Placing Shares at the Placing Price. The UK Placing is subject to the terms and conditions set out in the Appendix to this announcement, including the completion of the Canadian Private Placement. Members of the public are not entitled to participate in the UK Placing. The Placing Price represents a 13.5 percent discount to 63 pence, being the closing price of the Common Shares on the AIM market of the London Stock Exchange ("AIM") on December 5, 2022.

The UK 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 of no par value each ("Common Shares"). The number of UK Placing Shares to be allotted and issued by the Company pursuant to the UK Placing will be determined at the close of the Bookbuild. It is envisaged that the Bookbuild will close no later than 3.00 p.m. (London Time) on December 6, 2022 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 UK Placing Shares and the Placing Price will be announced as soon as practicable after the closing of the Bookbuild. The UK Placing is not being underwritten. The UK Placing is conditional upon the completion of the Canadian Private Placement and the admission to trading and settlement of the Canadian Placement Shares. The Placing 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$1.65 such that it will be the same price in pounds sterling equivalent as for placees participating in the Canadian Private Placement.

Details of the Canadian Private Placement

The Canadian Private Placement is separate to and is being managed distinctly from the UK Placing. UK investors are not entitled to participate in the Canadian Private Placement. The placement of the Canadian Placement Shares in Canada is not conditional upon the completion of the UK Placing nor on the admission to trading and settlement of the UK Placing Shares.

Admission and Settlement

Application will be made for the Canadian Placement Shares and the UK Placing Shares to be admitted to trading on AIM ("Admission") and the Toronto Stock Exchange (the "TSX"). It is expected that Admission will take place at or around 8.00 a.m. (London time) on December 14, 2022 (or such later date as may be agreed between the Company, Shore Capital and Canaccord). The UK Placing is conditional upon, inter alia, the completion of the Canadian Private Placement and Admission becoming effective. The UK Placing is also conditional upon the Placing Agreement not being terminated in accordance with its terms.

UK Placing Shares issued in connection with the UK Placing will be subject to a four-month and one day restricted hold period which will prevent such UK Placing Shares from being resold in Canada, through a Canadian exchange or otherwise, during the restricted period without an exemption from the Canadian prospectus requirement. Any such UK Placing Shares will otherwise be freely transferable.

This announcement should be read in its entirety. In particular, you should read and understand the Appendix and the information provided in the "Important Notice to Investors" section of this announcement.

Touchstone Exploration Inc.

Touchstone Exploration Inc. is a Calgary, Alberta 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".

For further information about Touchstone, please visit our website at www.touchstoneexploration.comor contact:

Touchstone Exploration Inc. Mr. Paul Baay, President and Chief Executive Officer Tel: +1 (403) 750-4487 Mr. Scott Budau, Chief Financial Officer

Shore Capital (Nominated Advisor and Joint Broker) Daniel Bush / Toby Gibbs / Iain Sexton Tel: +44 (0) 207 408 4090

Canaccord (Joint Broker) Adam James / Gordon Hamilton Sam Lucas / Darren Furby Tel: +44 (0) 207 523 8000

Camarco (Financial PR) Billy Clegg / Emily Hall / Lily Pettifar Tel: +44 (0) 203 781 8330

Advisories

Exchange Rate

For reference purposes in this announcement, one British pound has been converted into United States dollars at a rate of 1.00 to US$1.22 and Canadian dollars at a rate of 1.00 to C$1.65.

Forward-looking Statements

Certain information provided in this announcement may constitute forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable securities laws. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or are events or conditions that "will", "would", "may", "could" or "should" occur or be achieved.

Forward-looking statements in this announcement include, but are not limited to, those in respect of the UK Placing and the Canadian Private Placement, including the size, pricing and timing thereof, the type of securities being offered thereunder, the investors participating therein, the intended use of proceeds therefrom (including with respect to future exploration, development and production activities and the locations thereof), the conditions and approvals required and applications being filed in connection therewith, the expected construction of the Cascadura facility and timing thereof, and the expectation of bringing exploration wells to production and the forecasted production rates derived from previous well production tests. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Certain of these risks are set out in more detail in the Company's December 31, 2021 Annual Information Form dated March 25, 2022 which has been filed on SEDAR and can be accessed at www.sedar.com. The forward-looking statements contained in this announcement are made as of the date hereof, and except as may be required by applicable securities laws, the Company assumes no obligation nor intent to update publicly or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Oil and Gas Measures

Where applicable, natural gas has been converted to barrels of oil equivalent based on six thousand cubic feet to one barrel of oil. The barrel of oil equivalent rate is based on an energy equivalent conversion method primarily applicable at the burner tip, and given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.

Abbreviations

bbls/d barrels per day

boe barrels of oil equivalent

boe/d barrels of oil equivalent per day

MMcf/d million cubic feet per day

NGL(s) natural gas liquids

Important Notice to Investors

Members of the public are not eligible to take part in the UK Placing. This announcement (including the Appendix) and the terms and conditions set out herein are for information purposes only and are directed only at persons whose ordinary activities involve them acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments and are: (A) if in a member state of the European Economic Area (the "EEA"), persons who are qualified investors ("Qualified Investors"), being persons falling within the meaning of Article 2(e) of the Prospectus Regulation (EU) 2017/1129; ("EU Prospectus Regulation") or (B) if in the United Kingdom, qualified investors as defined under Article 2(e) of the UK version of the Prospectus Regulation (EU) 2017/1129, which forms part of the domestic law by virtue of European Union (Withdrawal) Act 2018, as amended, ("UK Prospectus Regulation") who are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); or (ii) high net worth companies, unincorporated associations and other persons falling within Article 49(2)(a) to (d) of the Order; or (C) persons to whom it may otherwise by lawfully communicated (all such persons referred to in (A), (B) and (C) above together being referred to as "Relevant Persons"). No prospectus, offering document or admission document will be made available in connection with the matters contained in this announcement.

This announcement and any other documentation that may be delivered directly to certain persons in connection with the UK Placing may constitute offering documents as defined under applicable securities laws in certain jurisdictions. Otherwise, no prospectus, offering document or admission document will be made available in connection with the matters contained in this announcement.

This announcement, including the terms and conditions set out in the Appendix, must not be acted on or relied on by persons who are not Relevant Persons. Persons distributing this announcement must satisfy themselves that it is lawful to do so. Any investment or investment activity to which this announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This announcement does not itself constitute an offer for sale or subscription of any securities in the Company. Persons distributing this announcement must satisfy themselves that is lawful to do so. This announcement is for information only and does not constitute an offer to sell, or a solicitation of an offer to buy or otherwise acquire, any securities in any jurisdiction in which it is unlawful to do so.

Persons needing advice should consult an independent financial adviser.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this announcement should seek appropriate advice before taking any action.

Neither this announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, in whole or in part, in, into or from the United States of America (including its territories and possessions, any state of the United States of America (the "United States" or the "US")), Australia, New Zealand, Japan or the Republic of South Africa or transmitted, distributed to, or sent by, any national or resident or citizen of any such countries or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction (each a "Restricted Jurisdiction"). Any failure to comply with this restriction may constitute a violation of securities laws in the Restricted Jurisdictions.

This announcement is not being distributed by, nor has it been approved for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended ("FSMA") by, Shore Capital, Canaccord or any other person authorised under FSMA. This announcement is being distributed and communicated to persons in the United Kingdom only in circumstances in which section 21(1) of FSMA does not apply or otherwise falls within a relevant exemption. No prospectus will be made available in connection with the matters contained in this announcement and all offers of the UK Placing Shares will be made pursuant to an exemption under the EU Prospectus Regulation and the UK Prospectus Regulation from the requirement to produce a prospectus. Persons needing advice should consult an independent financial adviser.

Persons (including without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this announcement should seek appropriate advice before taking any action.

This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or other securities in Canada or the Restricted Jurisdictions. The UK Placing and the distribution of this announcement and other information in connection with the UK Placing in certain jurisdictions may be restricted by law and persons into whose possession this announcement and any document or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.