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Be the first with the news that moves the market- Oil and gas company, Touchstone Exploration (TSX:TXP) reported a 2019 net loss of C$3.5 million, after 2018’s net profit of $358,000
- The loss was the result of impairment charges on the company’s equipment, which created a non-cash cost of $7.5 million
- Despite the loss, Touchstone managed to maintain a net-back per barrel of around $26 year-on-year
- Due to historically low oil prices and COVID-19’s ongoing economic impact, the company is currently evaluating its assets for cost efficiencies
- Touchstone Exploration (TXP) is down 9.8 per cent, with shares trading at $0.46 and a market cap of $82.7 million
Oil and gas company, Touchstone Exploration (TSX:TXP) reported a C$3.5 million 2019 net loss, and is facing a difficult 2020.
Touchstone reported a net profit of $358,000 in 2018, suggesting a steep turn around in the last 12 months.
This is surprising, as the company managed to keep its net-back relatively steady year-on-year, at around $26 a barrel.
Net-back is how much a company makes per barrel of oil sold after deducting royalties and operating expenses. It is often used to determine how well an oil company is operating.
The loss is not a result of sales or production costs. It appears that impairment charges on Touchstone’s equipment in 2019 resulted in a $7.5 million loss for the company. This amount roughly halved through deferred tax.
The resulting $3.7 million impairment is the main cause of the net loss. However, without the impairment, the company would have only generated $0.2 million in net profit, a third less than 2018’s.
Looking forward, the current market prospects do not bode well for Touchstone. With oil-prices historically low and impacts from the ongoing COVID-19 pandemic, Touchstone has been forced to make adjustments.
As a result, the company is analysing and vetting all operations for unnecessary expenses. Touchstone is willing to shut down any oil wells that are not currently generating profit.
The company’s chief focus in 2020 is bringing the Coho-1 and Cascadura-1ST1 oil wells into production as soon as possible.
Despite current market conditions, Touchstone is hesitant to adjust these projects’ budgets, and stated it will only do so if absolutely necessary.
Touchstone Exploration (TSX:TXP) is down 9.8 per cent, with shares trading at $0.46 at 1:04pm EST.
