WTI (May) $102.88 +$3.24, Brent (May) $112.78 +21c, Diff -$9.90 -$3.03
USNG (May) $2.89 -14c, UKNG (May)* 136.25p -1.75p, TTF (May)* €53.925 -€1.765
*Denotes expiry of the April contracts

Oil price

Oil is up again today with conflicting messages as usual coming out of the White House. On one side Trump has threatened to ‘obliterate’ Iranian power and desalination plants but then the Wall Street Journal run with a story that suggest that he may step back albeit temporarily….

Either way a KPC tanker was hit by an Iranian missile whilst in port in Dubai which has obviously raised the tensions big time.

Touchstone Exploration

Touchstone has reported its operating and condensed financial results for the three months and year ended December 31, 2025. Selected financial information is outlined below and should be read in conjunction with Touchstone’s December 31, 2025 audited consolidated financial statements and related Management’s discussion and analysis, both of which are available on the Company’s profile on SEDAR+ (www.sedarplus.ca) and website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

These are in line with expectations and of course historic, and with the changes made during the period, including the game-changing Central Block acquisition much has changed at Touchstone. As I wrote in yesterday’s piece, the CR-3 well coming on will boost production and of course with prices linked to LNG. 

Add to that the further drilling and the Cascadura booster compressor arriving soon, which will increase production further and at higher prices gains will be a double whammy. I’m happy with my 30 TP and its position in the Bucket List.

FY25 results. Revenues of $45.8m (FY24 $57.5m) with net income rising to $10.9m (FY24 $8.3m) –although this was boosted by a $9.6m tax rebate and $5.0m gain on disposals. Net debt jumped to $72.9m (from 29.1m). Production fell in the period to 4,686boepd (from 5,734boepd) with natural declines the principal reason for the drop in output, coupled with sale of the Fyzabad assets. The bungled fund raise last year, has stressed the balance sheet, and the high debt burden will weigh on outlook. Lift in commodity prices will be a welcome boost with netbacks set to be markedly higher in FY26.

Fourth Quarter 2025 Financial and Operating Highlights

• Production: Averaged 4,877 boe/d (71% natural gas) in Q4 2025, an 8% decrease from 5,287 boe/d (73% natural gas) in Q4 2024. The Central field contributed 2,065 boe/d, highlighting its significant contribution to the portfolio since its acquisition.
• Revenue: Petroleum and natural gas sales totaled $11.0 million, a 19% decrease from $13.54 million in Q4 2024, primarily due to lower production and softened realized pricing.
• Crude oil sales: $5.0 million from average production of 996 bbls/d at an average realized price of $54.57 per barrel.
• NGL sales: $1.15 million from average production volumes of 413 bbls/d at an average realized price of $30.30 per barrel.
• Natural gas sales: $4.85 million from average production of 20.8 MMcf/d (3,468 boe/d) at an average realized price of $2.54 per Mcf.
• Operating netback: Generated $4.22 million, a 39% decrease year-over-year, impacted by lower petroleum and natural gas sales and increased natural gas operating expenses.
• Funds flow from operations: Totaled $0.62 million, compared to $3.61 million in Q4 2024. The decline was driven by lower operating netbacks and higher cash finance expenses, partially offset by reduced general and administration expenses.
• Net income: Reported $13.62 million ($0.04 per share), compared to a net loss of $0.54 million in Q4 2024. The increase was primarily non-cash, driven by a $9.55 million deferred tax recovery and a $4.98 million gain on asset dispositions.
• Capital investments: Invested $7.44 million, focused on drilling the CR-3 development well on the Central property.
• Financial position: Net debt decreased to $72.89 million from $77.75 million at September 30, 2025, supported by $8.37 million in net proceeds from a private placement.

2025 Financial and Operating Highlights

• Health and safety: Achieved a safety milestone with zero lost-time injuries recorded throughout 2025.
• Strategic acquisition: Completed the acquisition of Shell Trinidad Central Block Limited on May 16, 2025. The asset contributed an average of 2,095 boe/d of liquids-rich natural gas since closing and provides critical exposure to global LNG pricing.
• Annual production: Averaged 4,686 boe/d, an 18% decrease from 5,734 boe/d in 2024. Incremental production from the Central block partially mitigated natural declines at Cascadura and mature crude oil fields.

Financial performance: 

• Revenue: Petroleum and natural gas sales totaled $45.82 million, down 20% from $57.47 million in 2024, primarily attributable to lower natural gas production volumes and decreased crude oil and liquids realized prices. 
• Operating netback: Generated $21.26 million ($12.44 per boe), compared to $32.89 million ($15.68 per boe) in 2024.
• Funds flow from operations: Reported $5.37 million, a 68% year-over-year decrease from $16.75 million in 2024.
• Net income: Realized $10.89 million ($0.04 per share), compared to $8.27 million ($0.04 per basic share and $0.03 per diluted share) in 2024, reflecting a $4.98 million gain on asset disposition and a $12.61 million deferred income tax recovery recorded in 2025.
• Capital program: Executed a $28.38 million capital program, pivoting from infrastructure build out to active drilling, including three gross (2.25 net) development wells. 
• Strategic portfolio rationalization: Divested the non-core Fyzabad property. Consideration included three turnkey drilling wells on the Company's WD-8 and WD-4 blocks, aligning with our strategy to focus on higher-return core assets. 

Financing and liquidity:

• Bank debt: Obtained an additional $30 million term loan facility to finance the Central block acquisition. 
• Convertible debt: Issued a $12.5 million three-year secured convertible debenture to fund the completion of the 2025 Cascadura drilling program. 
• Private placements: Raised an aggregate of $13.6 million in net proceeds through two equity placements in 2025.

2025 Financial and Operating Results Overview

Notes:

(1)   Refer to “Advisories – Product Type Disclosures” for further information.
(2)   In the table above and elsewhere in this announcement, references to “boe” mean barrels of oil equivalent that are calculated using the energy equivalent conversion method. 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.
(4)   Percentages have been rounded to the nearest whole number and are limited to increases or decreases of 100 percent.

Liquidity and Going Concern 

Management continues to closely monitor the Company's liquidity position to ensure that operating cash flows and working capital remain sufficient to support ongoing financial obligations, planned capital programs, and future work commitments. 

The Company's audited consolidated financial statements for the year ended December 31, 2025 include a note regarding the existence of material uncertainties over its ability to continue as a going concern. As at December 31, 2025, the Company had a working capital deficit of $15.4 million, excluding the convertible debenture maturing in 2028. Additionally, the Company currently projects a breach of its bank debt net senior funded debt to trailing annual EBIDA and debt service coverage covenants as of December 31, 2026, which could result in the bank debt becoming due at that time. 

Management is actively focused on several initiatives to bolster liquidity and address these uncertainties: 

• Operational cash flow: Realizing anticipated production growth from the 2025 and 2026 drilling programs and benefiting from strengthening commodity pricing. 
• Value-added tax receivables: Monitoring and accelerating the collection of outstanding value added tax receivables. 
• Capital management: Maintaining active engagement with its lender regarding potential amendments to the loan agreement or obtaining waivers for the projected 2026 covenant breaches. 

In the absence of mitigating actions, the Company's current cash resources may not be sufficient to fund expected operating and development expenditures and scheduled bank debt repayments over the next twelve months. Should these conditions persist, the Company is actively evaluating and is prepared to implement contingency measures, including optimizing capital expenditures or seeking additional debt or equity financing to ensure ongoing obligations are met. 

2025 Annual Filings

Touchstone has filed its annual audited financial statements, along with the related Management’s discussion and analysis and annual information form (“AIF”) for the financial year ended December 31, 2025. The AIF includes reserves data and other oil and gas disclosures in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). The reserves information presented in the AIF is consistent with the details disclosed in Touchstone’s announcement issued February 25, 2026. These documents are available on the Company’s profile on SEDAR+ (www.sedarplus.ca) and website (www.touchstoneexploration.com).

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