**Summary of Touchstone Exploration Inc.s Third Quarter 2025 Results**
**Overview**
Touchstone Exploration Inc. reported its third-quarter 2025 financial and operational results, highlighting mixed performance in production, revenue, and profitability. The company faced challenges in petroleum and natural gas sales, operating netbacks, and funds flow from operations, while continuing strategic investments in drilling and infrastructure.
**Key Highlights**
1. **Production**
Averaged **5,141 boe/d** (71% natural gas), up from **4,399 boe/d** in Q2 2025 but slightly <mark style="background-color:yellow">below</mark> Q3 2024’s **5,211 boe/d**.
Central field contributed **2,217 boe/d**, with natural gas dominating production.
2. **Financial Performance**
**Petroleum and Natural Gas Sales**$12.70 million, a **4% decline** from Q3 2024 due to lower prices and volumes.
Crude oil sales$5.84 million (avg. price $60.30/barrel).
Natural gas sales$5.52 million (avg. price $2.74/Mcf).
**Operating Netback**: $5.86 milliondown **21%** YoY due to lower saleshigher royaltiesand increased operating expenses.
**Funds Flow from Operations**$0.74 million, a **76% drop** from Q3 2024, driven by lower netbacks, higher finance costs, and taxes.
**Net Loss**$2.06 million ($0.01/share), compared to a **$1.85 million profit** in Q3 2024, attributed to reduced funds flow, higher depletion expenses, and no asset disposition gains.
3. **Capital Investments**
Invested **$9.60 million** in Cascadura drilling and compression equipment for the natural gas processing facility.
4. **Financing**
Issued a **$12.5 million convertible debenture** at 5% interest, increasing net debt to **$77.75 million**.
5. **Strategic Moves**
Divested the non-core Fyzabad property for three turnkey drilling wells on WD-8 and WD-4 blocks, reducing liabilities by **$2.59 million**.
6. **Post-Period Updates**
Raised **$9.1 million** via a private placement, securing a bank waiver for debt covenants.
October production averaged **4,691 boe/d**, down **3.3%** due to planned maintenance.
Mobilized drilling rig to Central block for a natural gas well, expected to tie into the processing facility by Q1 2026.
**Cascadura-5 Well Update**
Commenced production on **November 1, 2025**, averaging **500 boe/d** (liquids-rich gas and 26-degree API crude oil).
Initial rates below expectations, but identified additional reservoir intervals for optimization.
**2025 Outlook and Revised Guidance**
Revised average daily production to **4,700 boe/d** (down from 5,000 boe/d), with **71% natural gas**.
Funds flow from operations reduced to **$4 million** (from $6 million).
Capital expenditures increased to **$27 million**.
Net debt projected at **$69 million** (up from $65 million).
**Liquidity Concerns**
Working capital deficit of **$16.74 million** as of September 30, 2025.
Going concern statement issued, contingent on VAT receivables and production increases.
Management evaluating contingency measures, including operational adjustments and potential financing.
**CEO Commentary**
Paul Baay emphasized stable legacy oil production, Cascadura stabilization, and Central field outperformance. Highlighted challenges in Cascadura-5 production rates but noted opportunities for reservoir optimization and compression benefits.
**Conclusion**
Touchstone faces near-term financial pressures but remains focused on operational efficiency, strategic divestments, and infrastructure development to enhance cash flows and long-term growth.