Touchstone Exploration's 2025 Guidance: Drill-to-Fill Strategy and Financial Discipline

Touchstone Exploration Inc. (TSX:TXP)(LSE:TXP) has announced its preliminary annual 2025 capital budget and financial guidance, focusing on sustainable growth and optimizing its foundational Cascadura asset. The company's "drill-to-fill" strategy involves drilling four gross development wells to increase production and capitalize on existing processing capacity. This approach aligns with Touchstone's commitment to maintaining financial stability, with a net debt level consistent with 2024.

Touchstone plans to invest approximately $23 million in capital expenditures for 2025, with $20 million allocated to the Cascadura field and $3 million for exploration licence payments and well optimization across crude oil properties. The company expects a mid-point annual average production of 7,000 boe/d for 2025, reflecting a 19% increase from its latest 2024 guidance. This production growth is projected to result in a net debt to annual funds flow from operations ratio of 1.36 times, well within the Company's internal target of 2.0 times or below.

To manage the timing of the 2025 capital program, Touchstone plans to increase its existing debt capacity by $10 million in the first quarter of 2025. This expansion will support the company's capital expenditure plans and maintain financial stability. The company aims to fund the program through operating cash flows, demonstrating a commitment to financial discipline.

Touchstone's "drill-to-fill" strategy carries potential risks and challenges, such as drilling delays, cost overruns, and production shortfalls. To mitigate these risks, the company plans to increase its debt capacity and fund the program through operating cash flows. Additionally, Touchstone's strategy leverages existing infrastructure and processing capacity, reducing the risk of stranded assets. The company's prudent financial management and focus on optimizing asset performance further mitigate risks.

In conclusion, Touchstone Exploration's 2025 guidance demonstrates a strategic focus on sustainable growth and financial discipline. The company's "drill-to-fill" strategy aims to optimize its Cascadura asset and maintain a strong financial position. While there are potential risks and challenges, Touchstone's approach to risk management and financial discipline positions the company well for future success.