LONDON: Touchstone Exploration has agreed to acquire Trinity Exploration and Production, with the boards of both companies expressing their satisfaction over the terms of the all-share offer. The acquisition, structured as a scheme of arrangement under the Companies Act, will result in Trinity shareholders receiving 1.5 new Touchstone shares for each share they hold.

Upon completion, Trinity shareholders are set to receive a total of approximately 58.3 million new Touchstone shares, giving them a 19.9% stake in the combined entity. The deal values Trinity’s shares at an implied 61.9 pence each, or roughly US$0.77, marking the entire issued share capital of Trinity at about £24.1 million (US$30.1 million).

This acquisition price is a 71.9% premium over Trinity’s closing share price of 36 pence on April 30, 2024, and also exceeds the 3-month and 9-month volume weighted average prices by 55.4% and 13.6%, respectively. The transaction is poised to reshape the market landscape, reflecting a strategic consolidation in the sector.

Touchstone Exploration is currently the largest independent onshore oil and natural gas producer in Trinidad, with assets in several reservoirs that have an extensive internally estimated inventory of petroleum and natural gas development and exploration opportunities.

Having brought its Coho-1 well online in Q4 2022 and its first two wells at its Cascadura field, Cascadura-1ST1 and Cascadura Deep-1, in late Q3 2023, Touchstone’s production and funds flow from operations has increased markedly. Touchstone’s 2024 guidance published on 19 December 2023 anticipates funds flow from operations of US$32m, which will give it the financial resources to continue to invest in its development and exploration activity to increase Touchstone’s future reserves base and production volumes.

Touchstone believes that from this position, the Acquisition will provide an opportunity to create a business of significant scale in Trinidad with an enhanced ability to deliver growth in reserves, production and cash flow for the benefit of both sets of shareholders and local stakeholders.

Touchstone believes that the Acquisition presents a compelling strategic opportunity for both companies and their shareholders.

Commenting on the Acquisition, Jeremy Bridglalsingh, the Chief Executive Officer of Trinity, said: “I am pleased to be recommending Touchstone’s offer to our shareholders. Our two companies have operated in close proximity over many years. The premium offered demonstrates the value Touchstone sees in Trinity’s team and operations and its confidence in the future potential of the enlarged business.”

Commenting on the Acquisition, Paul Baay, the President and Chief Executive Officer of Touchstone, 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 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 programmes and accelerate the growth potential of the enlarged asset base, thereby giving us the potential to materially enhance long-term value”.

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