Touchstone Exploration has announced that it intends to complete a private placement directed towards United Kingdom institutional investors. The Company expects to raise gross proceeds of £3.8 million (approx. C$6.5 million) by way of a placing of 31,666,667 new common shares of no par value at a price of 12 pence (approx. C$0.205) per New Common Share. The Placement Price represents a 4 percent discount to 12.5 pence, which was the closing price of the Company's common shares on the AIM market of the London Stock Exchange on February 18, 2019.
The Company intends to use the net proceeds from the Private Placement to finance the drilling of an exploration well in the Corosan west region of its Ortoire exploration property (80% working interest). Touchstone anticipates spudding the well in the second quarter of 2019 targeting a total depth of 9,000 feet. For details of the nature and quantities of contingent and prospective gas resources targeted, see the estimates prepared by the Company's independent reserve and resource evaluators summarised in the Company's January 17, 2019 announcement.
In response to the crude oil price volatility experienced in the fourth quarter of 2018, Touchstone has held back from recommencing a development drilling program. This remains under active review, and the Company expects to use cash flows from operations to finance future development drilling based on the prevailing commodity market. The Company delivered average crude oil sales volumes of 1,994 barrels per day in January 2019.
Shore Capital and GMP FirstEnergy acted as joint brokers in connection with the Private Placement.
Paul Baay, President and Chief Executive Officer, commented: 'The Ortoire block has been the primary focus of our exploration team over the past three years, and the recent independent prospect evaluation prepared by our independent reserve and resource evaluators has supported our belief in its potential.
Today's funding allows us to make a firm commitment for the drilling of the first exploration well on the property. Success at this well could deliver a new core area and may enable us to de-risk multiple follow-up locations on the property. The opportunity at the Ortoire block represents a potential step change for Touchstone in terms of reserves, production and net asset value, and I look forward to updating the market post drilling.'