Oil price, Touchstone, Chariot, Southern, Corcel.

WTI (June) $63.67 +$1.72, Brent (July) $66.63 +$1.67, Diff -$2.96 -5c.

USNG (June) $3.65 u/c, UKNG (June) 85.33p +0.4p, TTF (June) €35.585 +€0.03.

Oil price

Another good day for crude yesterday as Donald spends the day with his new BF MbS in Saudi Arabia. Retail gasoline prices in the US continue to fall, overall at $3.12 and falling a 2 handle would look good. 

Touchstone Exploration

Touchstone has reported its operating and condensed financial results for the three months ended March 31, 2025.

Selected financial information is outlined below and should be read in conjunction with our March 31, 2025 unaudited interim condensed consolidated financial statements and related Management’s discussion and analysis, both of which are available online under our profile on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are in United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

First Quarter 2025 Financial and Operating Highlights

·      Production: Average quarterly production decreased to 4,317 boe/d (72 percent natural gas), compared to 5,287 boe/d (73 percent natural gas) in the fourth quarter of 2024 and 7,015 boe/d (80 percent natural gas) in the first quarter of 2024. The decrease was primarily driven by natural declines in natural gas and liquids production from the Cascadura-1ST1 and Cascadura Deep-1 wells, partially offset by incremental volumes from the Cascadura-2ST1 and Cascadura-3ST1 wells which began production in November 2024.

·      Revenue: Petroleum and natural gas sales totaled $11.11 million, an 18 percent reduction from the $13.54 million recorded in the previous quarter.

–     Crude oil sales: $6.68 million from average production of 1,162 bbls/d at a realized price of $63.86 per barrel.

–     NGL sales: $0.22 million from average production of 39 bbls/d at a realized price of $64.05 per barrel.

–     Natural gas sales: $4.21 million from average production of 18.7 MMcf/d (3,116 boe/d) at a realized price of $2.50 per Mcf.

·      Operating Netback: Generated $6.15 million in operating netback, an 11 percent decrease from the fourth quarter of 2024, primarily due to decreased petroleum and natural gas sales and related royalties, partially offset by a 38 percent reduction in operating costs, supported in part by revisions to historical crude oil field head licence expenses.

·      Funds Flow from Operations: Decreased to $2.58 million from $3.61 million in the previous quarter, as lower operating netbacks and higher cash finance and general and administrative expenses were partially offset by reduced transaction and current income tax expenses.

·      Net Earnings: Recorded net earnings of $41,000 ($0.00 per basic and diluted share), compared to a net loss of $542,000 ($0.00 per basic share) in the fourth quarter of 2024 which was primarily driven by both $2.31 million in pre-tax Ortoire exploration asset impairment expenses and higher depletion expenses recorded in the prior quarter following Cascadura reserves reductions.

·      Capital Investments: Invested $6.67 million during the quarter, primarily for the Cascadura-4 development well. Drilling operations were suspended in February for rig repairs, briefly resumed in March, and halted again due to wellbore instability. Activities are expected to resume by the end of May with the arrival of specialized equipment.

·      Financial Position: Ended the quarter with a cash balance of $5.72 million and net debt of $33.33 million, resulting in a net debt to funds flow from operations ratio of 2.53 times.

Post Period-end Highlights

·      Private Placement: On May 8, 2025, the Company announced a private placement targeting United Kingdom investors, expected to raise gross proceeds of approximately $20.5 million through the issuance of 75,000,000 common shares at a price of 20.5 pence sterling per share (approximately C$0.38 per share). Proceeds will be used to advance development activities.

·      Acquisition Financing: On May 12, 2025, Touchstone executed a Fourth Amended and Restated Loan Agreement with its existing Trinidad-based lender, securing a new six-year, $30 million non-revolving term loan facility to finance the Company’s previously announced acquisition.

·      Production Update: In April 2025, the Company produced average net sales volumes of 3,628 boe/d, including average net natural gas sales volumes of 14.7 MMcf/d (2,445 boe/d) and average net crude oil and natural gas liquid sales volumes of 1,183 bbls/d.

First Quarter 2025 Financial and Operating Results Overview

Notes:

(1)   Refer to “Advisories – Product Type Disclosures” for further information.

(2)   In the table above and elsewhere in this announcement, references to “boe” mean barrels of oil equivalent that are calculated using the energy equivalent conversion method. Refer to “Advisories – Oil and Natural Gas Measures” for further information.

(3)   Specified or supplementary financial measure. Refer to “Advisories – Non-GAAP Financial Measures” for further information.

2025 Outlook and Guidance

We remain focused on financial discipline and maximizing value from our development and exploration assets. Our near-term strategy is to close the previously announced acquisition and increase cash flows through the development of the Cascadura field, leveraging the processing capacity established in 2024.

On December 9, 2024, we issued a news release announcing the approval of our preliminary financial and operating guidance for 2025. Given the material nature of the pending acquisition, the Company intends to provide updated 2025 guidance following its expected closing.

With so much going on at the moment, and I expect the closure of the Central block deal imminently, this announcement is effectively for record purposes only, no surprises and most of the action has taken place in recent months, after the first quarter.

As the paragraph above, until the deal and financings are completed the company is unable to give updated 2025 guidance at which stage analysts will I’m sure update the market with stats. 

Chariot

Chariot has announced that Energean plc  has returned its Moroccan offshore interests to Chariot by completing the transfer of their wholly owned subsidiary which holds 45% and 37.5% respectively in the Lixus Offshore and Rissana Offshore licences. Chariot is now Operator and has a 75% working interest in each licence, with ONHYM retaining their 25% stake. 

The Anchois gas field is located in the Lixus Offshore licence where three wells have now been drilled. The Anchois-3 well was completed in September 2024 and whilst this well did not deliver the additional volumes required to enable an expansion of the initially planned Anchois development, multiple good quality gas bearing reservoirs were found in the main B sand appraisal interval. With operatorship restored, Chariot remains committed to progressing the licence work programmes and will collaborate with ONHYM to assess and adapt the Anchois development plan based on discovered resources. Chariot will continue to assess the additional potential of the wider Lixus and Rissana licence areas and further updates will be provided in due course.

Adonis Pouroulis, CEO of Chariot, commented:

“We are pleased to have completed the transfer of these licences and regained operatorship as we see material value within our diversified Moroccan position, both offshore and onshore. The Anchois gas discovery still offers the potential for a rescaled development and our next steps are to scope this based on the core resources found in the three wells underpinned by our previous work on engineering design, environmental and regulatory approvals, project financing and gas sales. Gas market fundamentals in Morocco are robust with strong gas demand and excellent fiscal terms and we will look to work with all stakeholders, including our partner ONHYM and the Ministry of Energy Transition and Sustainable Development to advance these important domestic projects.”

This report makes for interesting reading, for those who watched as the value drained from the two companies as the results from the Anchois-3 appeared there will be two schools of thought. For those in the Energean camp, who had just farmed into the licences, the pain was writ large as the upside was not there.

So today Energean gives back the interests in Lixus and Rissana offshore Morocco to Chariot who still think that a development, albeit rescaled project can work. They argue that downsizing will work in a country where ‘gas fundamentals are robust with strong demand and excellent fiscal terms’. 

The message from Chariot as well as Morocco plc is that this development can and will go ahead and there is little doubt that one way or another anything possible will be done to make it happen. The shortage of gas around Europe makes it at least a decent bet that we haven’t heard the last of Anchois….

Southern Energy Corp

Southern continues to progress its plans to complete its first Gwinville drilled and uncompleted well and has finalized procuring key services.  Field operations are scheduled to commence on the 13-13 #2 Lower Selma Chalk horizontal well in the next few weeks, and Southern expects first production from the well during June 2025.  This will be the Company’s first of three planned DUC completions at Gwinville.

Unrelated to Southern’s current growth plans at Gwinville, Southern is involved in an ongoing dispute in which it is bringing a claim regarding what it believes are excessive transportation fees being charged by a third party midstream company associated with the Mechanicsburg and Green’s Creek fields.  On April 29, 2025, Southern was pleased to receive confirmation that the pipelines subject to the dispute are regulated by the Federal Energy Regulatory Commission (“FERC”).  The third party made its initial response filing to the regulator which includes setting maximum allowable transportation rates, subject to FERC review and approval.

Southern will work closely with FERC staff to expedite the rate determination process and, in parallel, will continue to engage with the pipeline operator to pursue an agreement on an equitable fee structure. 

In the interim, Southern has elected to voluntarily shut-in approximately 400 boepd of production from the Mechanicsburg and Greens Creek Fields to avoid increasing the quantum of disputed fees.  This accounts for approximately 20% of Southern’s production on a volumetric basis, but only approximately 10% of the Company’s operating income from Q1 2025. This will not impact the rest of Southern’s operations or the proposed DUC completions in Gwinville.

Southern are back and working up a well, one of three DUC’s at the Gwinville field at 13-13 2 the Lower Selma Chalk horizontal which should come on production in June 2025.

And in a dispute with a third party, Southern is bringing a claim against a midstream company with regard to ‘excessive transportation fees’, the good news is that the pipelines concerned are regulated by the FERC and the 400 boepd will be shut in to protect the size of the claim. 

Corcel- How did they do that?

Corcel has announced that, through its subsidiary Atlas Petroleum Exploration Worldwide Ltd (“APEX”), it has conditionally acquired an additional 30% gross interest in its operated Block KON-16 in the Kwanza Basin, onshore Angola, from a joint venture partner of the block, subject to Governmental approval. Concurrently, Corcel is also delighted to announce the signing of a binding heads of terms for a strategic alliance with Sintana Energy Inc (SEI: TSX-V) (“Sintana”), a transaction that secures $2,500,000 in exchange for a 5% net interest in Block KON-16. The result of these two transactions, upon completion, will increase Corcel’s net interest in Block KON-16 from 49.5% to 71.5%.

Highlights:

·    APEX acquires an additional 30% gross (27% net to CRCL) interest in Block KON-16, consolidating an 85% controlling interest in its high-impact, high-potential operated block;

·    APEX has entered into a binding heads of agreement to sell a 5% net interest in Block KON-16 to Sintana Energy Inc for a cash consideration of $2,500,000, which provides an indicative gross value of $50,000,000 for the entirety of KON-16, pre-seismic;

·    Corcel enters a strategic alliance with Sintana Energy Inc through a Joint Study and Bid Agreement (“JSBA”), which targets further opportunities in onshore and offshore Angola; and

·    Transaction proceeds enable Corcel to accelerate and fund its 2025 seismic program in KON-16 leading to drilling an initial exploration well in KON-16 in 2026.

Scott Gilbert, Chief Executive Officer at Corcel commented: 

“We are extremely pleased to have executed two value-accretive transactions in rapid succession. Upon completion, our acquisition of an additional working interest and the strategic alliance with Sintana are clear validations of Corcel’s first-mover advantage in the onshore Kwanza Basin. Starting with a 35% gross interest in KON-16, we increased our stake to 55% in September 2024 at no cost to Corcel. Today, with a modest outlay, we have secured a controlling interest in the block. We have firmly consolidated, monetised, and funded forward – all while preserving substantial long-term upside.

As we continue to build Corcel, we do so with a stronger balance sheet, a clear strategic vision, and a growing track record of delivering non-dilutive, value-generative transactions. Our focus now shifts to operational delivery and continuing to scale with discipline.  I would like to thank Sintana for sharing our vision, the Corcel team for their outstanding execution, ANPG for their continued support, and, of course, our shareholders for their trust and patience as we position Corcel for sustained growth and regional leadership.”

Robert Bose, Chief Executive Officer at Sintana commented:

“Our emerging partnership with Corcel is emblematic of our strategy to partner with best-in-class entrepreneurs and deploy high impact capital that provides exposure to significant resource opportunities.  Our partnership with Corcel provides us a superior platform for our entry to Angola and we are particularly excited about the potential of KON-16.  We look forward to much success together.”

Readers know that I have been watching Corcel for about a year, when the previous management moved on, leaving Scott Gilbert to make his moves onshore Angola and with KON-16 now firmly in his grasp and a partnership with Sintana Energy signed up it can truly be called a great start.

The strategic alliance will accelerate and sale of a 5% net interest to Sintana will add some cash with which to fund its 2025 seismic programme with the intention of drilling next year. But way more importantly the deal ‘provides an indicative gross value of $50,000,000  for the entirety of KON-16, pre-seismic’ and therefore makes me want to think about the potential as the relationship continues. 

As June signals the next Bucket List selection I have a feeling that Corcel may be very much in the running, after all, against a number of people advising me against covering it I feel quite justified. The interview with Robert Bose is at the bottom, he talks about Corcel towards the end, dont say you weren’t warned…

APEX has entered into a binding heads of agreement to sell a 5% net interest in Block KON-16 to Sintana Energy Inc for a cash consideration of $2,500,000, which provides an indicative gross value of $50,000,000 for the entirety of KON-16, pre-seismic;

Transaction Details:

Acquisition of a 30% gross interest in KON-16:

Through APEX, its 90% owned subsidiary, Corcel has acquired a 30% gross (27% net to CRCL) interest in its operated Block KON-16 from Intank Global DMCC (“Intank”). The acquisition of this incremental interest, subject to the requisite government approvals, shall complete with a cash payment to Intank of $500,000. As part of the Sale and Purchase Agreement, signed between Corcel and Intank, Intank shall receive a future 5% Overriding Royalty Interest (“ORRI”) limited to the first development area of KON-16 in the event of a commercial discovery. The attributable losses for the year ended 31 December 2024 for the 27% net interest acquired in KON-16 are £81,271.

Divestment of a 5% net interest in KON-16:

Corcel has subsequently agreed a binding heads of terms to divest a 5% net interest in KON-16 to Sintana by selling a 5.88% equity stake in a newly formed Special Purpose Vehicle (“SPV”) that will hold the consolidated 85% interest in KON-16.  Following completion of this transaction, Corcel’s net interest in KON-16 will be 71.5%. The cash consideration for the acquisition of the net 5% interest in KON-16 is $2,500,000 and as part of the agreement, Sintana will receive a future 2.5% Net Profit Interest (“NPI”) on Corcel’s interest in KON-16 up to $50,000,000, after which the NPI reduces to 1.5%, in the event of a commercial discovery. The attributable losses for the year ended 31 December 2024 for the 5% net interest acquired in KON-16 are £15,050.  A $500,000 down payment of consideration is receivable upon entering into the heads of terms, with a further $2,000,000 payable upon completion.

Joint Study and Bid Agreement:

Corcel and Sintana have also executed a Joint Study and Bid Agreement establishing an alliance to evaluate and pursue oil and gas exploration and production opportunities in Angola both onshore and offshore.  Under the agreement, both parties commit to jointly collaborate on evaluating opportunities. Participation in any specific opportunity is voluntary and subject to unanimous agreement on commercial and other bid terms.

Strategic Rationale:

The transactions with Intank and with Sintana represent significant milestones in Corcel’s efforts to unlock value from its upstream oil and gas portfolio in Angola’s Kwanza Basin. The acquisition of an additional 30% gross interest and the subsequent sale of a net 5% participating interest in KON-16 for a cash consideration of $2.5 million provides clear market validation of the asset’s potential and monetises part of Corcel’s position at a relatively early stage of the project lifecycle.

Key strategic benefits of the Sintana transaction include:

·      Early-Stage Value Realisation: The deal crystallises upfront cash returns on Corcel’s investment in KON-16 and provides tangible evidence of third-party valuation support at a material premium to historic entry costs

·      Non-Dilutive Capital Inflow: The proceeds strengthen Corcel’s balance sheet without dilution to shareholders, enhancing the Company’s ability to progress its broader portfolio and strategic objectives

·      Partnership with an Industry-Aligned Counterparty: Sintana brings both capital and strategic alignment, offering a collaborative pathway to de-risk and advance the KON-16 block through exploration drilling planned in 2026

·      Preserved Control and Future Upside: Corcel retains a significant majority interest and strategic control over the asset, while Sintana’s acquisition is structured to support governance efficiency and future joint liquidity considerations

·      Attractive Long-Term Profit Participation: The Net Profit Interest structure allows Sintana to benefit from long-term cash flows, aligning incentives without impacting Corcel’s near-term operational strategy or asset development plans.

Overall, this transaction strengthens Corcel’s position as a nimble and value-focused energy company in sub-Saharan Africa, demonstrating disciplined portfolio management and a clear path to monetisation, while retaining significant upside exposure in a high-potential asset.

Next Steps:

The Company will update the market upon the completion of the acquisition form Intank, which remains subject to Angolan Government approval, and on the completion of the sale to Sintana, that remains subject to a sale and purchase agreement. On completion and approval of the Environmental Impact Assessment on KON-16 (announced 30 April 2025), the Company will then be able to move forward with seismic acquisition operations, which will ultimately lead to the drilling of the first new well on the block since the 1960‘s. At present, an acquisition program of 300-line km of 2D seismic is planned over KON-16 to better image targets in both the shallow post-salt and the deeper pre-salt levels. The Company is also currently reviewing and interpreting recently received reprocessed 2D seismic and data from the 2024 acquisition of high resolution eFTG data over KON-16, which will result later this year in an independent resource report on the asset to quantify volumetrics.

 Core Finance CEO Interview: Robert Bose of Sintana Energy