Touchstone Exploration Canadian and UK placings to accelerate exploration and development

Touchstone Exploration Inc. (TSX, LON:TXP) has announced that the Company launched a private placement in Canada 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 Company further announced a proposed placing in the UK 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 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 Canadian Private Placement and the UK Placing 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 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 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 and Canaccord Genuity Limited 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 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, 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. 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 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”.

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