First Quarter Results And Operational Update

CALGARY, ALBERTA (May 14, 2024) - Touchstone Exploration Inc. ("Touchstone", "we", "our" or the "Company") (TSX, LSE: TXP) reports its financial and operating results for the three months ended March 31, 2024 and provides an operational update.

Selected financial information is outlined below and should be read in conjunction with our March 31, 2024 unaudited interim condensed consolidated financial statements and related Management's discussion and analysis, both of which will be available under our profile on SEDAR+ (www.sedarplus.ca) and on our website (www.touchstoneexploration.com). Unless otherwise stated, all financial amounts presented herein are rounded to thousands of United States dollars, and all production volumes disclosed herein are sales volumes based on Company working interest before royalty burdens.

Paul R. Baay, President and Chief Executive Officer, commented:

"We are pleased to announce positive first quarter 2024 results during what has been a very busy time for the Company. Since coming onstream in September 2023, the Cascadura field has transformed Touchstone both operationally and financially, having contributed an estimated $20 million in operating netbacks, ahead of tying in the two further successfully drilled development wells from the surface location. Initial decline rates on our two producing Cascadura wells have been steeper than we first expected but we are learning more about the reservoir for further exploitation. We are maintaining our full year guidance given production increases are heavily weighted towards the fourth quarter of 2024.

As announced on May 1, 2024, we were delighted to reach an agreement with the Board of Directors of Trinity Exploration and Production Plc on the terms of a recommended all-share acquisition. We believe the benefits of the proposed transaction will provide further scale and strength to Touchstone in addition to growth opportunities that will be driven by the increased production of the two companies. We are excited at the greater flexibility such a deal would give us around future capital programs, in addition to allowing us to potentially accelerate our development plans.

We look forward to updating shareholders on our ongoing operating and corporate workstreams in due course."

First Quarter 2024 Financial and Operating Highlights

• Achieved average quarterly production of 7,015 boe/d (80 percent natural gas), representing a 228 percent increase from first quarter 2023 average production volumes of 2,139 boe/d (40 percent natural gas). First quarter 2024 production decreased by 18 percent relative to 8,504 boe/d produced in the fourth quarter of 2023 (79 percent natural gas), mainly reflecting natural declines from our Cascadura field.
• Realized petroleum and natural gas sales of $16,584,000 (Q4 2023 - $20,759,000).
• Cascadura field production volumes in the quarter contributed $6,961,000 of net natural gas sales at an average realized price of $2.49 per Mcf and $1,657,000 of net NGL sales at an average realized price of $69.59 per barrel.
• Natural gas production from the Coho-1 well averaged net volumes of 2.8 MMcf/d (460 boe/d) in the quarter and contributed $542,000 of net natural gas sales at an average realized price of $2.16 per Mcf.
• Crude oil production from our legacy fields contributed $7,424,000 of net sales at an average realized price of $69.95.
• Generated an operating netback of $10,463,000, a 24 percent decrease from the fourth quarter of 2023, primarily due to decreased natural gas and NGL sales volumes.
• Achieved quarterly funds flow from operations of $6,142,000 in the first quarter of 2024 compared to $10,489,000 in the preceding quarter.
• Delivered net earnings of $3,628,000 ($0.02 per basic and diluted share).
• $11,962,000 in quarterly capital investments primarily focused on expenditures directed towards one CO-1 crude oil development well and two Cascadura development wells, and progressing construction on the flowline from the Cascadura C surface location to the Cascadura natural gas processing facility.
• Exited the first quarter of 2024 with a cash balance of $9,537,000 and a net debt position of $27,621,000, resulting in a reduced net debt to annual funds flow from operations ratio of 1.45 times.

Post Period-end Highlights

• Successfully drilled and cased the CO-375 development on our CO-1 block, with openhole logs and drilling data indicating a sand thickness of approximately 530 feet in the Forest Formation and approximately 625 feet in the Cruse Formation.
• On April 18, 2024 we executed a third amended and restated loan agreement with our existing lender providing for an additional $13 million of bank debt capacity, which will be used to finance our previously announced initial 2024 capital program.
• On May 1, 2024, we announced that we reached an agreement with the Board of Directors of Trinity Exploration and Production Plc on the terms of a recommended all-share acquisition.

First Quarter 2024 Financial and Operating Results Overview

Three months ended

Notes:

• Refer to "Advisories - Product Type Disclosures" for further information.
• Non-GAAP financial measure. See the "Advisories - Non-GAAP Financial Measures" for further information.

Outlook and Guidance

Our 2024 capital program is progressing as planned, with four of the six wells in the program successfully drilled and cased. Road and pipeline construction to tie-in our two recently drilled Cascadura development wells to our natural gas facility is progressing and we expect the infrastructure will complete prior to the end of the third quarter of 2024.

Although Cascadura field production has declined higher than originally anticipated, we currently forecast to maintain our preliminary 2024 guidance announced on December 19, 2023. The material forecasted 2024 production increase is expected to be weighted to the fourth quarter of 2024 based on estimated initial production from our two recently drilled Cascadura development wells. Management will update its 2024 guidance for the proposed acquisition of Trinity Exploration and Production Plc if and when appropriate.

Operational Update

Cascadura

The Cascadura field produced approximately 5,388 boe/d (95 percent natural gas) in the first quarter of 2024, representing 77 percent of our total quarterly net production. Since initial production in September 2023 through March 31, 2024, our Cascadura-1ST1 and Cascadura Deep-1 wells have cumulatively produced approximately 8.77 Bcf of gross natural gas volumes (net - 7.02 Bcf) and over 121,000 barrels of gross NGLs (net - 97,000 barrels) in 208 total days. Over the same period, the field has contributed a net operating netback of approximately $19.96 million.

During the first seven-months of production we have continually monitored and optimized natural gas rates from the two Cascadura wells. In the Cascadura-1ST1 well, we replaced the original choke valve with a larger valve. In the Cascadura Deep-1 well, we ran a production logging tool to indicate the source of gas within the wellbore and we added perforations above and below the original completion interval which marginally increased production. Both Cascadura-1ST1 and Cascadura Deep-1 continue to produce through surface chokes to control pressure.

Production in the first quarter of 2024 was impacted by natural declines as well as approximately six days of downtime in the Cascadura Deep-1 well associated with the operations noted above. Based on our analysis to date, including higher than expected initial decline rates as compared to pre-production models, the wells are exhibiting a dual porosity/permeability system which indicate that production is derived from both sand porosity/permeability as well as a fracture porosity system. A fracture porosity system can deliver high initial production rates and pressure which can decline quickly while sand matrix porosity/permeability may deliver at lower production rates for longer periods of time.

Given the nature of the production, and the apparent influences of natural fractures in the structure, we have commenced a feasibility study to determine the potential benefits of a stimulation program to optimize natural gas and associated liquids recovery from the wells.

CO-1 Drilling Operations

The CO-375 development well, located on our CO-1 block, was spud on April 3, 2024 and reached a total depth of 6,500 feet on April 30, 2024. The Forest Formation, which was the secondary target, was observed at a depth of 2,805 feet and the primary Cruse Formation target was encountered at a depth of 4,598 feet. Drilling samples and openhole wireline logs indicated the presence of sands in both formations. The Forest Formation indicated 530 feet of sand, with approximately 250 feet of net hydrocarbon pay. Similarly, the Cruse Formation indicated 625 feet of sand, with an estimated 240 feet of net hydrocarbon pay. The well has been cased in preparation for oil production and the drilling rig has been released.

The completion rig was mobilized to the surface location and completion operations are underway on the CO-374 well, following which the CO-375 well will be completed. We expect that both development wells will be online by the end of May 2024.

Production

In April 2024, we produced average net volumes of 5,940 boe/d as follows:

• Cascadura field contributed net sales volumes of 4,360 boe/d consisting of:
• natural gas sales volumes of 25.4 MMcf/d or 4,226 boe/d with a realized price of $2.51 per Mcf; and
• natural gas liquids volumes of 134 bbls/d with an average realized price of $76.12 per barrel;
• Coho net average natural gas sales volumes were 2.6 MMcf/d or 426 boe/d at a realized price of $2.28 per Mcf (excluding third party processing fees); and
• average net daily crude oil sales volumes were 1,154 bbls/d with an average realized price of $76.12 per barrel.

2024 Annual Meeting of Shareholders

Touchstone's virtual-only Annual Meeting of Shareholders (the "Meeting") will be held on Wednesday, June 19, 2024 at 10:30 a.m. (Mountain time).

Registered and beneficial shareholders will be mailed a notice-and-access notification and form of proxy on or around May 17, 2024, advising as to the electronic availability of the Meeting materials, including the 2024 Management Information Circular, the 2023 audited consolidated financial statements and related Management's discussion and analysis.

For holders of our depositary interests, hard copies of our Management Information Circular and form of direction will be mailed on or about May 17, 2024.

Subsequent to the mailing date, the Meeting materials will be available on our website (www.touchstoneexploration.com/investors/shareholder-meetings) and under our profile on SEDAR+ (http://www.sedar.com/www.sedarplus.ca).

Management Update

As Touchstone continues to pursue its growth strategy and operations are becoming engineering intensive, Touchstone is pleased to announce that Mr. Brian Hollingshead has been promoted to Executive Vice President, Engineering and Business Development. In addition to joining our executive team, Mr. Hollingshead will oversee our production, engineering and facilities departments. In conjunction, Mr. James Shipka's title has been amended from Chief Operating Officer to Executive Vice President, Asset Development and HSE, where he will continue to lead our HSE, drilling and subsurface teams.

Touchstone Exploration Inc.

Touchstone Exploration Inc.

Paul Baay, President and Chief Executive Officer Tel: +1 (403) 750-4487

Scott Budau, Chief Financial Officer

James Shipka, EVP Asset Development and HSE

Shore Capital (Nominated Advisor and Joint Broker)

Daniel Bush / Toby Gibbs / Tom Knibbs Tel: +44 (0) 207 408 4090

Canaccord Genuity (Joint Broker)

Adam James / Ana Ercegovic Tel: +44 (0) 207 523 8000

FTI Consulting (Financial PR)

Nick Hennis / Ben Brewerton Tel: +44 (0) 203 727 1000

Advisories

Non-GAAP Financial Measures

This announcement references various non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures as such terms are defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure. Such measures are not recognized measures under Canadian Generally Accepted Accounting Principles ("GAAP") and do not have a standardized meaning prescribed by International Financial Reporting Accounting Standards ("IFRS") and therefore may not be comparable to similar financial measures disclosed by other issuers. Readers are cautioned that the non-GAAP financial measures referred to herein should not be construed as alternatives to, or more meaningful than, measures prescribed by IFRS, and they are not meant to enhance the Company's reported financial performance or position. These are complementary measures that are commonly used in the oil and natural gas industry and by the Company to provide shareholders and potential investors with additional information regarding the Company's performance. Below is a description of the non-GAAP financial measures, non-GAAP ratios, capital management measures and supplementary financial measures disclosed herein.

Funds flow from operations

Funds flow from operations is included in the Company's consolidated statements of cash flows. Touchstone considers funds flow from operations to be a key measure of operating performance as it demonstrates the Company's ability to generate the funds necessary to finance capital expenditures and repay debt. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow from operations provides a useful measure of the Company's ability to generate cash that is not subject to short-term movements in non-cash operating working capital.

Operating netback

Capital expenditures

Capital expenditures is a non-GAAP financial measure that is calculated as the sum of exploration and evaluation asset expenditures and property, plant and equipment expenditures included in the Company's consolidated statements of cash flows and is most directly comparable to cash used in investing activities. Touchstone considers capital expenditures to be a useful measure of its investment in its asset base.

Working capital and net debt

Working capital and net debt are capital management measures used by Management to monitor the Company's capital structure to evaluate its true debt and liquidity position and to manage capital and liquidity risk. Working capital is calculated by subtracting current liabilities from current assets as they appear on the applicable consolidated balance sheet. Net debt is calculated by summing the Company's working capital and the principal (undiscounted) long-term amount of senior secured debt and is most directly comparable to total liabilities.

Net debt to funds flow from operations ratio

Supplementary Financial Measures

Royalties per boe - is comprised of royalties as determined in accordance with IFRS, divided by the Company's total production volumes for the period.

For further information, please refer to the "Advisories - Non-GAAP Financial Measures" section of the Company's most recent Management's discussion and analysis for the three months ended March 31, 2024 accompanying our March 31, 2024 unaudited interim condensed consolidated financial statements, both of which will be available on our website (www.touchstoneexploration.com) and under our SEDAR+ profile (www.sedarplus.ca).

Oil and Natural Gas Measures

Product Type Disclosures

This announcement includes references to crude oil, NGLs, natural gas, and average daily production volumes. Under National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), disclosure of production volumes should include segmentation by product type as defined in the instrument. In this MD&A, references to "crude oil" refer to "light crude oil and medium crude oil" and "heavy crude oil" combined product types; references to "NGLs" refer to condensate; and references to "natural gas" refer to the "conventional natural gas" product type, all as defined in the instrument. In addition, references to "crude oil and liquids" herein include crude oil and NGLs.

For information regarding specific product disclosures in accordance with NI 51-101, please refer to the "Advisories - Product Type Disclosures" section in the Company's most recent Management's discussion and analysis for the three months ended March 31, 2024 accompanying our March 31, 2024 unaudited interim condensed consolidated financial statements, both of which will be available on our website (www.touchstoneexploration.com) and under our SEDAR+ profile (www.sedarplus.ca).

Abbreviations

The following abbreviations are referenced in this announcement:

bbls/d barrels per day

boe barrels of oil equivalent

boe/d barrels of oil equivalent per day

NGLs natural gas liquids

Mcf thousand cubic feet

Mcf/d thousand cubic feet per day

MMcf million cubic feet

MMcf/d million cubic feet per day

Bcf billion cubic feet