Finance & Investing | Debt | Reserves | Capital Markets

Touchstone Updates Credit Facility, 2015 Reserves

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 Touchstone Exploration Inc. announces an update regarding its credit facility.

As previously disclosed, the Company was in breach of its credit facility January 2016 monthly production volume covenant. Effective March 8, 2016, the Company and its lender executed an Amendment and Limited Waiver to the Credit Agreement to waive the covenant breach. The Waiver also makes certain amendments to the credit facility, including a reduction of the Trinidad minimum production test (previously set at 1,600 barrels of oil per day) to 1,350 barrels of oil per day for the months of February and March 2016 and 1,400 barrels of oil per day thereafter. Touchstone's February 2016 Trinidad average production was 1,369 barrels of oil per day. Based on field estimates, Trinidad average production for the first week of March was 1,397 barrels of oil per day.

The Waiver also amends the credit facility to require mandatory prepayments of US$2,000,000 on March 8, 2016 (which was funded from cash on hand and hedging proceeds received on January and February settlements) and US$1,000,000 by April 8, 2016. Following these prepayments, the credit facility borrowing base will be US$9,000,000 before reflecting the semi-annual borrowing base redetermination scheduled on April 1, 2016. This borrowing base redetermination will incorporate the Company's recently announced December 31, 2015 independent reserves evaluation.

US$6,000,000 of the US$9,000,000 borrowing base is currently dedicated to the Company's letter of credit relating to the East Brighton property. Following the finalization of the sale of the property and the cancellation of the letter of credit, the borrowing base will be reduced to US$3,000,000, resulting in no change to the available credit facility balance. The Waiver also requires that the Company prepay an amount equal to the refund of all or any portion of the US$2,080,000 deposit paid under the previously announced Trinidad asset acquisition should the transaction fail to close.

Reserves

The following tables summarize the Company's net present values of future net revenues based on the results of the Company's independent December 31, 2015 crude oil reserves evaluation:

The Company believes the future net revenues of its reserves as reflected in the table above allow for adequate borrowing base capacity. In addition, at December 31, 2015, the Company had a derivative asset fair value of approximately US$5,500,000 and a total of US$6,000,000 drawn on its credit facility.