WTI (Sep) $62.65 -52c, Brent (Oct) $65.63 -49c, Diff -$ 2.98 +3c
USNG (Sep) $2.83 -12c, UKNG (Sep) 80.49p +0.5p, TTF (Sep) €32.54 -€0.04

Oil price

Oil is a dollar better today after President Trump indicated that the Ukraine Government would be brought in on talks, maybe as soon as this week. 

Touchstone Exploration

Touchstone has announced that it has closed a private placement of a secured convertible debenture and warrants, with Canadian private investor and existing shareholder, JJR Wood Holdings, for gross proceeds of US$12,500,000. The Offering reflects the Company’s ongoing commitment to advancing its strategic development initiatives.

Paul R. Baay, President and Chief Executive Officer, commented:
“This financing will provide the capital necessary to immediately restart drilling operations at Cascadura and subsequently bring new production online at the Cascadura facility. We are pleased to have secured continued support from both an existing shareholder and our Trinidad-based lender, reflecting confidence in our strategic direction and the quality of our asset base. This confidence is further demonstrated by the debenture’s principal conversion price, set at the US dollar equivalent of C$0.30 per common share, representing a significant premium to the current share price.”

It is certainly good news that the company has made good the shortfall in the recent raise and that coming from an existing shareholder does indeed reflect ‘confidence in our strategic direction and the quality of our asset base. This confidence is further demonstrated by the debenture’s principal conversion price, set at the US dollar equivalent of C$0.30 per common share, representing a significant premium to the current share price’.

With the hiatus on the raise, it was crucial to make up for lost time and for no fault of their own during the raise they had to delay all the wells at Cascadura to close the Central Block deal. Accordingly, instead of coming on in the first half they came on in the second half. delaying things entirely down to the delay in finance.

So, not an operational problem and I would expect this to be recognised in the adjusted guidance announced today, so hard to blame management for this unexpected hazard and it is them who are cleaning up the mess. 

As a result the preliminary 2025 capital program contemplated four Cascadura development wells at Cascadura. The updated program replaces two of these wells with one development well on the Central block and two development wells at the WD-8 property. In addition, approximately $2.6 million in capital expenditures are expected in the second half of 2025 for a Cascadura facility compression project, scheduled for completion in the second quarter of 2026.

As a result of the Acquisition and the deferral of the initial Cascadura wells, the midpoint of the 2025 production forecast has been reduced by approximately 20 percent, and expected funds flow from operations has decreased by 50 percent. Forecast year-end net debt is expected to increase by 113 percent, primarily reflecting the $30 million term loan facility used to finance the Acquisition and proceeds from the Offering to support development activities.

Todays announcement of 3Q results, whilst not adding anything historically has upgraded numbers and drilling plans in line with the new financial reality. Opportunities have not been impacted other than merely delayed and although it must be galling I expect drilling to make up in due course.

Offering Terms

• Offering Size: US$12,500,000 through the issuance of a secured convertible debenture with an aggregate principal amount of US$12,500,000 (the “Debenture”).
• Interest Payments (Coupon) and Securities Offered: The interest rate on the Debenture is 5 percent and the Company also issued 6,250,000 warrants (the “Warrants”) to purchase common shares of the Company (“Common Shares”) to the Holder as additional compensation.
• Maturity: 3-year term.
• Conversion Price: The Debenture is convertible into Common Shares at US$0.21813 (the “Conversion Price”), being the US$ equivalent of C$0.30 per Common Share based on the Bank of Canada exchange rate immediately prior to the issuance of the Debenture.
• Warrants: Each Warrant is exercisable at C$0.40 per Common Share for a period of two years.
• Closing Date: August 13, 2025, with an effective date for the Debenture of August 8, 2025. The net proceeds of the Debenture have been received by the Company.
• Placement Fee: 5 percent of the principal amount, payable to the Holder in cash on closing.
• Conversion Limits: Total Common Shares ultimately issuable in connection with the Offering (including upon conversion of the Debenture, any interest payments that may be paid in Common Shares, and the exercise of Warrants) are capped at 65,248,201, representing 24.99 percent of the currently outstanding Common Shares.
• Ownership Restrictions: The Holder may not convert the Debenture or receive interest in Common Shares if doing so would cause the Holder’s ownership to exceed 19.9 percent of the outstanding Common Shares without prior Toronto Stock Exchange (“TSX”) clearance and shareholder approval.
• Change of Control: In the event of a change of control, the Debenture may be redeemed for principal and accrued interest, though the Holder may convert prior to the closing of such transaction.
• Listing: Neither the Debenture nor the Warrants will be listed on any exchange; however, the Common Shares issuable upon conversion or interest payment of the Debenture and/or exercise of the Warrants will be listed on the on the TSX and admitted to trading on the AIM market of the London Stock Exchange (“AIM”).
• Loan Agreement: The Company has received written confirmation from Republic Bank Limited (“RBL”) that the net proceeds of the Debenture satisfy an equivalent amount of the equity raise requirement under the Company’s Fourth Amended and Restated Loan Agreement (the “Loan Agreement”). Consequently, the Company will need to raise a further US$7.3 million in equity (net of any selling commissions) before December 31, 2025 to fully meet its equity obligations under the terms of the Loan Agreement.

Use of Proceeds

Net proceeds from the Offering will be used to fund the following development activities and reduce outstanding accounts payable:

• immediate commencement of drilling the Cascadura-4ST2 development well; and
• complete and tie-in the Cascadura-4ST2 and Cascadura-5 wells.

2Q results

Touchstone has reported its financial and operating results for the three and six months ended June 30, 2025. Selected financial information is outlined below and should be read in conjunction with Touchstone’s June 30, 2025 unaudited interim condensed consolidated financial statements and related Management’s discussion and analysis, both of which are available online on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars.

Second Quarter 2025 Highlights

• Strategic Acquisition: Completed the acquisition of Shell Trinidad Central Block Limited, adding approximately 1,910 boe/d of liquids-rich natural gas production and providing access to global LNG pricing.
• Production: Averaged 4,399 boe/d in the second quarter of 2025 (69 percent natural gas), compared to 4,317 boe/d (72 percent natural gas) in the first quarter of 2025 and 5,432 boe/d (77 percent natural gas) in the second quarter of 2024. Second quarter 2025 volumes include approximately 1.5 months of production from the Central block acquisition, which contributed approximately 1,910 boe/d over the post-acquisition period.
• Petroleum and Natural Gas Sales: Totaled $11.01 million, a 22 percent decrease from $14.1 million recorded in the comparative prior year quarter.
• Crude oil sales: $6.08 million from average production of 1,142 bbls/d at an average realized price of $58.52 per barrel.
• NGL sales: $0.68 million from average production volumes of 210 bbls/d at an average realized price of $35.40 per barrel.
• Natural gas sales: $4.25 million from average production of 18.3 MMcf/d (3,047 boe/d) at an average realized price of $2.55 per Mcf.
• Operating Netback: Generated $5.04 million in operating netback, a 38 percent decrease from the second quarter of 2024, primarily due to decreased petroleum and natural gas sales and related royalties and increased natural gas related operating expenses.
• Funds Flow from Operations: Declined to $1.43 million from $3.97 million in the prior year equivalent quarter, largely driven by lower operating netbacks and increased cash finance expenses, partially offset by lower current income tax.
• Second quarter of 2024. The variance was primarily driven by the decrease in year-over-year funds flow from operations and a $1.5 million gain on asset disposition recorded in the prior year.
• Capital Investments: Invested $4.66 million, primarily directed toward the drilling of the Cascadura-5 development well.
• Private Placement: Raised net proceeds of $5.22 million in the quarter from the issuance of 24,636,585 common shares at 20.5 pence sterling (approximately C$0.38) per share.
• Financial Position: Net debt increased to $63.89 million at June 30, 2025, reflecting the close of the Central block acquisition which was funded by an additional $30 million term loan facility.

Post Period-end Highlights

• Convertible Debenture Offering: On August 13, 2025, the Company closed a $12.5 million private placement of convertible debentures and common share purchase warrants (the “Offering”) with a Canadian private investor. Net proceeds will fund the remaining 2025 Cascadura development drilling program and reduce outstanding accounts payable. The Company has received written confirmation from its lender that the Offering proceeds satisfy an equivalent portion of the equity raise requirement under its Fourth Amended and Restated Loan Agreement (the “Loan Agreement”).
• Production Update: July 2025 field-estimated production averaged 5,281 boe/d, up 3.8 percent from 5,088 boe/d in June. Estimated volumes included 22.3 MMcf/d of net natural gas production (3,717 boe/d) and 1,564 bbls/d of net crude oil and liquids production.

Second Quarter 2025 Financial and Operating Results Overview

Notes:

(1) Refer to “Advisories – Product Type Disclosures” for further information.
(2) Refer to “Advisories – Oil and Natural Gas Measures” for further information.
(3) Specified or supplementary financial measure. Refer to “Advisories – Non-GAAP Financial Measures” for further information.

2025 Outlook and Guidance

On December 9, 2024, the Company released its preliminary 2025 operational and financial guidance (the “Original Guidance”). Following the closing of the Central block acquisition in May 2025, Touchstone has updated its 2025 guidance as summarized in the following table.

Notes:

(1) Forward-looking statement and financial outlook information  based on Management’s current estimates. Refer to “Advisories – Forward-looking Statements”.
(2) As previously announced on December 9, 2024.
(3) Specified or supplementary Non-GAAP financial measure. Refer to “Advisories – Non-GAAP Financial Measures”.
(4) Based on the midpoint of the average production forecast: updated –  5,600 boe/d; original – 7,000 boe/d.

The Company remains focused on capital discipline and maximizing value from its core development and exploration assets. The near-term strategy prioritizes enhancing operating cash flows through disciplined development drilling and the execution of targeted projects.

The Company now plans to fund its 2025 capital program primarily through proceeds from the May private placement and the $12.5 million Offering, supplemented by an additional equity financing of approximately $7.3 million, expected to close before the end of 2025, to satisfy obligations under the Loan Agreement. This approach replaces the original plan to fund the program through expanded credit facilities, which were utilized to finance the Acquisition.

The preliminary 2025 capital program contemplated four Cascadura development wells at Cascadura. The updated program replaces two of these wells with one development well on the Central block and two development wells at the WD-8 property. In addition, approximately $2.6 million in capital expenditures are expected in the second half of 2025 for a Cascadura facility compression project, scheduled for completion in the second quarter of 2026.

As a result of the Acquisition and the deferral of the initial Cascadura wells, the midpoint of the 2025 production forecast has been reduced by approximately 20 percent, and expected funds flow from operations has decreased by 50 percent. Forecast year-end net debt is expected to increase by 113 percent, primarily reflecting the $30 million term loan facility used to finance the Acquisition and proceeds from the Offering to support development activities.

Sunda Energy

Sunda has provided updates on its existing business and new venture activities.

Timor-Leste

Following the announcement on 16 June 2025 of the postponement of drilling of the Chuditch-2 well by its wholly owned Timor-Leste subsidiary SundaGas Banda Unipessoal, Lda. (“SundaGas”), the Company has been engaged with the Timor-Leste authorities concerning the realisation of the drilling campaign, likely to be in H1 2026. Dr Andy Butler, CEO and Mr Gerry Aherne, Chairman, visited Dili in July and held a number of meetings, including with the Minister of Petroleum and Mineral Resources, upstream regulator Autoridade Nacional do Petróleo (“ANP”) and state-owned joint venture partner TIMOR GAP. Discussions were constructive and positive, with all parties committed to completing drilling preparations and executing the campaign on the revised timeline.

SundaGas has now received a revised proposal from the Timor-Leste helicopter company for support of the planned offshore drilling operations at Chuditch and is currently in the process of reviewing this proposal and seeking clarifications. The Company is also engaged with a number of rig operators in preparation for a full tender exercise to enable the retimed drilling campaign.

The process of securing an Environmental Permit continues. SundaGas has received a formal response and recommended changes to the Environmental Impact Statement (“EIS”) and Environmental Management Plan (“EMP”) from the Evaluation Committee, made up of ANP and other stakeholders. The requested actions are currently being addressed by the Company and its environmental consultants, and updated drafts of the EIS and EMP are currently expected to be submitted during September 2025.

Philippines

Sunda’s applications for two blocks in the Sulu Sea, offshore Philippines, remain outstanding, pending final Presidential signature. The Company participated in meetings in Manila during July and its joint venture operator and Philippines partners met with the Philippines authorities in early August. It is understood that there are now nine new Service Contracts pending signature, including the two in which Sunda will participate, and there is an expectation that these will all be signed in the near future, as a trigger for renewed oil and gas activities in the Philippines. The Company remains excited about the potential of its two application blocks and is eager to commence activities in the area. Detailed descriptions of the blocks will be provided following award.

New Business Activities

As part of Sunda’s growth plans, as well as the desire to expand and diversify its upstream portfolio, the Company is actively engaged in the pursuit of a number of new business initiatives. The target opportunities are potentially material and would be highly impactful to Sunda if secured. Further details will be provided at the appropriate time if any of these new business activities are successful.

Dr Andy Butler, CEO of Sunda, commented:
“The Company is focussed on delivering on the revised timeline for drilling of the Chuditch well in Timor-Leste, as well as delivering on a number of exciting new venture initiatives. Despite the setback of the drilling postponement, the team is fully engaged, and we look forward to significant progress in the coming months. We are committed to providing further information on our progress in Timor-Leste and with other new business initiatives, including through interviews and investor events, as soon as we are able to do so.”

Mr Gerry Aherne, Chairman of Sunda, added:
“It was good to have positive meetings with the Minister of Petroleum, our partners TIMOR GAP and the various government authorities on my recent Timor-Leste visit. I was able to experience first-hand the strong shared commitment to develop the Chuditch project and the dedication of the Sunda Energy team in Dili.”

The announcement  didn’t say much but it’s nice to know that relationships in country are good and things are progressing, a setback but things are progressing on what is still a huge potential project for Sunda.

Gulf Keystone Petroleum

Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, confirms it will be announcing its results for the half year ended 30 June 2025 on Thursday 28 August 2025.

GKP’s management team will be hosting a presentation for analysts and investors at 10:00am (BST) via live audio webcast:

https://brrmedia.news/GKP_GY_25      

Sell-side analysts are requested to join the meeting via the dial-in details provided to them separately and ask questions verbally. Investors are encouraged to pre-submit written questions via the webcast registration page, with the opportunity to submit questions live during the presentation.

A recording of the presentation will be made available on GKP’s website.

Update on Shaikan Field operations 

Production operations recently restarted at the Shaikan Field following a security assessment and consultation with the Kurdistan Regional Government. A further update on production and sales will be provided as part of the 2025 Half Year Results. The Company continues to actively engage with government stakeholders regarding a resumption of pipeline exports and remains ready to restart as soon as possible, contingent on securing written agreements.

 Nothing to add to this except the one liner that production has started, still only to locals though.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog