Canada-based Touchstone Exploration has agreed to acquire UK company Trinity Exploration and Production which has onshore and offshore oil assets located solely in Trinidad and Tobago.
Under the terms of the acquisition, Trinity shareholders will receive 1.5 common shares of Touchstone for each Trinity common share held.
The acquisition represents an implied value of Trinity of approximately $30.1 million based on the closing Touchstone share price of 41.25 pence on AIM on April 30, 2024, representing a 71.9% premium to the April 30, 2024 closing price of Trinity Shares on AIM of 36 pence.
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.
"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 pot,” said Paul Baay, President and Chief Executive Officer of Touchstone.
The Trinity assets are a natural extension of Touchstone's assets in Trinidad, according to the company.
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.
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.
Following completion of the acquisition, Touchstone will have strong cash flows from operations from an increased crude oil and natural gas production base, the company noted.
The combined group will have the resources, capacity and flexibility to invest in multiple development programs concurrently to accelerate the potential of the combined asset base.
The combined entity will have a portfolio of exploration and development prospects across Trinity's onshore Hummingbird portfolio and Buenos Ayres block, as well as its TGAL discovery at the offshore Galeota block, and at Touchstone’s Ortoire area and Cipero, Charuma, and Rio Claro blocks, subject to the execution of the relevant license agreements.
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