Mr. Scott Budau reports

TOUCHSTONE ENTERS INTO ESCROW ARRANGEMENTS FOR US$20 MILLION TERM LOAN

Touchstone Exploration Inc.'s indirect wholly owned subsidiary, Touchstone Exploration (Trinidad) Ltd., has entered into escrow arrangements for a $20-million (U.S.) seven-year term loan agreement with Republic Bank Ltd., as initial lender, arranger and administrative agent. The term loan was arranged exclusively by the corporate and investment banking division of Republic Bank.

The term loan is expected to become effective prior to June 15, 2020, once all conditions precedent have been met, which include the completion of security interest filings in Trinidad and Barbados and the receipt of regulatory approvals in Trinidad. A portion of the term loan proceeds will be used to repay the company's $20-million existing credit facility, with the remainder used for general corporate purposes.

Material terms of the term loan are shown in the associated table.

  
Borrower                                                        Touchstone Exploration (Trinidad)

                                                    senior secured syndicated loan, with Republic
                                                 Bank Ltd. acting as initial lender, arranger and
Facility type                                                                administrative agent

Facility amount                                                                $20-million (U.S.)

Term                                                                seven years from closing date

Fixed interest rate                         7.85 per cent per annum, payable quarterly in arrears

                                                   principal moratorium for two years; thereafter
Principal amortization schedule           20 equal and consecutive quarterly principal repayments

                                       permitted after one year with a 1.0-per-cent penalty and a
Prepayments                          30-day notice period, no penalties payable after three years

                                        senior mortgage over fixed assets of the borrower and its
Collateral                       subsidiaries and corporate guarantee from Touchstone Exploration

                                                 net senior financed debt to EBITDA less than 2.5
Financial covenants (to be                   times; net senior financed debt to book value equity
initially tested for the year                    less than 0.7 times; debt service coverage ratio
ended Dec. 31, 2022)                                                       greater than 2.5 times

                                               maintain a balance of not less than the equivalent
Cash reserve balance                                       of two quarterly interest payments due

Fees                                         underwriting fee of 0.75 per cent of facility amount

Scott Budau, chief financial officer, commented: "We are pleased to be able to source local financing from Republic Bank, the largest lender in Trinidad and the Caribbean. The financial flexibility of the new facility will us allow to confidently proceed with our Ortoire exploration activities. In addition, the interest payable on the loan is expected to be tax deductible in Trinidad, equating to an after-tax cost of capital of 3.5 per cent. We would also like to give our sincere thanks to Crown Capital, who has supported us since 2012."

Prior to the effective date of the term loan, Touchstone continues to operate under its existing $20-million credit facility. In connection with the existing credit facility, the company granted the lender a production payment equal to 1.33 per cent of petroleum sales from Trinidad landholdings, payable quarterly through Oct. 31, 2021. The parties have agreed not to buy out the production payment obligation and as such have entered into an amended production payment agreement to continue the obligation under the previous terms and conditions. The total payout of the existing credit facility will include the $20-million principal balance, all accrued interest thereon, and a 1.0-per-cent prepayment fee.

About Touchstone Exploration Inc.

Touchstone Exploration is a Calgary-based company engaged in the business of acquiring interests in petroleum and natural gas rights and the exploration, development, production and sale of petroleum and natural gas. Touchstone is currently active in onshore properties located in the Republic of Trinidad and Tobago.

We seek Safe Harbor.