Touchstone Exploration has announced that it has reached an agreement with Trinity Exploration and Production on the terms of an all-share acquisition by which Touchstone will acquire all of the issued and to be issued ordinary share capital of Trinity.
The Board of Directors of Trinity intends to recommend unanimously that Trinity shareholders vote in favour of the acquisition and Touchstone has received irrevocable undertakings from certain of Trinity's shareholders (including directors) to vote their Trinity shares in favour of the Acquisition representing, in aggregate, approximately 38.9 percent of Trinity's issued ordinary share capital as of April 30, 2024 (excluding Trinity shares held in treasury). Completion of the Acquisition is subject to customary regulatory, stock exchange and Trinity shareholder approvals and is expected to close by the end of the third quarter of 2024.
The acquisition creates a Trinidadian operator of scale with a significant inventory of onshore and offshore exploration and development assets.
According to Touchstone, combined funds flow from operations from an increased production base will allow the combined company to invest in multiple development programs concurrently to accelerate the potential of the asset base and allow greater optionality over capital allocation decisions. The combined company will benefit from greater economies of scale and recurring annual cost synergies with a significant anticipated reduction in combined fixed overhead and corporate costs.
Paul Baay, President and Chief Executive Officer, said "We believe this acquisition represents a compelling strategic opportunity which will deliver enhanced scale, balance sheet strength, and growth opportunities. The business combination will create an upstream oil and natural gas company of increased scale in Trinidad, enhancing our ability to deliver growth in reserves, production and cash flows for the benefit of our combined shareholders and local stakeholders. The combined group will be able to invest in multiple development programs and accelerate the growth potential of the enlarged asset base, thereby giving us the potential to materially enhance long-term value."
According to Touchstone, the Trinity assets are a natural extension of the company’s assets in Trinidad assets. The addition of Trinity's existing production portfolio, along with its exploration and development assets, will position Touchstone as a key player in the Trinidad oil and gas sector, and one of the leading independent operating companies dedicated to investing in both onshore and offshore activity to grow Trinidadian oil and natural gas production.
On a pro-forma basis, the acquisition is expected to create a producing portfolio between approximately 11,700 and 12,400 boe/d (based upon 2024 average daily production guidance from each company) with combined estimated proved plus probable reserves of approximately 80.3 MMboe as of December 31, 2023.