Touchstone Exploration Inc.

Touchstone Exploration Inc.

August 22, 2011 14:29 ET

Touchstone Announces Completion of Primera Group Acquisition

CALGARY, ALBERTA--(Marketwire - Aug. 22, 2011) -


Touchstone Exploration Inc. (TSX VENTURE:TAB) ("Touchstone" or the "Company") is pleased to announce completion of the acquisition (the "Primera Acquisition"), through its indirect wholly-owned Trinidad subsidiary Territorial Services Limited, of all of the issued and outstanding shares of Primera Oil & Gas Ltd. ("POGL"), Primera Oilfield Management Services Ltd. ("POMS") and Primera East Brighton Ltd. ("PEBL") (together, the "Primera Group") from C L Financial Limited ("CL Financial") pursuant to the share purchase transaction originally disclosed in the Company's news releases of May 11, 2011 and July 11, 2011. Transfer documents are escrowed but will be effective from August 19, 2011 pending payment of the purchase price from funds released from escrow by Computershare Trust Company of Canada (see below).

The Primera Group consists of equity interests in three privately owned Trinidad-based companies engaged in the exploration for and development and production of oil and gas reserves in Trinidad and Tobago. The underlying assets associated with the Primera Group consist of rights to develop and extract oil from 16 Blocks (each consisting of a lease or a number of leases of adjoining tracts of land that constitute a unit of acreage sufficient to justify the expense of oil and gas drilling and exploration) of which six, for the three months ending March 31, 2011, had a net total production of 38,101 barrels of oils per day, three are currently undergoing exploration activities and the remaining seven are undeveloped with no significant exploration work having been performed. These undeveloped Blocks have a total gross acreage of 6,948 acres. Total gross acreage is 121,666 acres with a net working interest of 30,441 acres. All Blocks are onshore with the exception of East Brighton. Touchstone also acquired technical support, equipment and equipment rentals as well as various administrative and management services with respect to the exploration, development and production of crude oil and natural gas resources in the Trinidad & Tobago region.

The total purchase price, net of liabilities assumed, is (US)$50,700,000. A previously paid deposit of (US)$5,070,000.00 was applied to partial payment of the purchase price at closing. Pursuant to a loan agreement dated August 19, 2011 between Touchstone and CL Financial, an aggregate of (US)$23.3 million of the purchase price was financed by way of vendor take-back notes payable in two equal consecutive yearly installments on each of the first and second anniversary of issuance and otherwise maturing on August 19, 2013. The principal amount will bear coupon interest at a rate of 8% per annum payable monthly until the principal amount is repaid. The obligations of the Corporation are secured by a charge over the shares of POGL, POMS and PEBL acquired by Territorial Services Limited together with debentures and assignments of revenue issued in favour of CL Financial by each of POGL, POMS and PEBL. The balance of the cash consideration payable will be satisfied by receipt of the proceeds from the recently completed brokered private placements of 44,107,573 subscription receipts ("Subscription Receipts") and $6,000,000 principal amount of convertible debenture units ("Debenture Units") with Paradigm Capital Inc. ("Paradigm") and FirstEnergy Capital Corp. as lead agents together with a syndicate of agents comprised of Canaccord Genuity Corp., CIBC World Markets Inc., Fraser Mackenzie Limited and Haywood Securities Inc. (collectively the "Agents"). As consideration for their services in respect of the private placement of the Subscription Receipts, the Agents were paid a cash commission equal to 6% of the gross proceeds raised, one-half paid at closing of the private placement of the Subscription Receipts on June 29, 2011 and the other one-half paid upon the release of the Subscription Receipt proceeds.

The aggregate proceeds with respect to the offering of the Subscription Receipts were held in escrow by Computershare Trust Company of Canada pending the completion of the Primera Acquisition and were released today to partially fund the purchase price payable. As the Company has not obtained a final receipt for a (final) short form prospectus in Alberta, British Columbia, Ontario and Saskatchewan qualifying the distribution of the common shares ("Common Shares") of the Company underlying the Subscription Receipts, the Common Shares underlying the Subscription Receipts have not been issued and will not be issued (unless exercised by the holder) until the earlier of the date that such final receipt is obtained and the date that is four months and a day after the closing of the offering of the Subscription Receipts. Each Subscription Receipt will entitle the holder to receive, without additional consideration or further action, 1.1 Common Shares. No fractional Common Shares will be issued and any fractional number of Common Shares equal to or greater than 0.5 will be rounded up to the nearest whole number and less than 0.5 will be rounded down to the nearest whole number. The Company will continue to use its best efforts to obtain a final receipt for a (final) short form prospectus in Alberta, British Columbia, Ontario and Saskatchewan qualifying the distribution of the Common Shares underlying the Subscription Receipts as soon as practicable after the closing of the Primera Acquisition.

This news release is not for distribution to United States newswire services, should not be disseminated in the United States and does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities of Touchstone Exploration Inc. have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

The companies in which Touchstone Exploration Inc. directly and indirectly owns investments or assets are separate entities. In this news release "Touchstone" is sometimes used for convenience where references are made to Touchstone Exploration Inc. and its subsidiaries in general.

Cautionary Note Regarding Forward-looking Statements: Information in this news release that involves Touchstone's expectations, plans, intentions or strategies regarding the future are forward-looking statements that are not facts and involve a number of risks and uncertainties. Touchstone generally uses words such as "outlook", "will", "could", "would", "might", "remains", "to be", "plans", "believes", "may", "expects", "intends", "anticipates", "estimate", "future", "plan", "positioned", "potential", "project", "remain", "scheduled", "set to", "subject to", "upcoming", and similar expressions to help identify forward-looking statements. Forward-looking information in this news release may include, but is not limited to, information with respect to the Primera Acquisition and the anticipated benefits thereof. The forward-looking statements in this news release are based upon information available to Touchstone as of the date of this news release. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Touchstone and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding and are implicit in, among other things, the ability of Touchstone to realize the anticipated benefits of such acquisition. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.For further information regarding specific risks and uncertainties applicable to Touchstone please see the Company's Material Change Report to be filed with respect to this News Release, Touchstone's Annual Information Form and the most recent management discussion and analysis, which may be viewed with other Touchstone disclosure documents through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at Touchstone does not undertake any obligation to publicly update forward-looking information except as required by applicable securities law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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