Touchstone Exploration Inc. announced that it have executed ten-year Lease Operatorship Agreements ("LOAs") with Heritage Petroleum Company Limited ("Heritage") for CO-1, CO-2, WD-4 and WD-8 Blocks (collectively, the "Blocks") effective January 1, 2021. The LOAs governing core legacy oil producing properties expire December 31, 2030 and were renewed under substantially similar terms to the previous arrangements. In conjunction with the execution of the LOAs, the Company's Board of Directors has approved the drilling of one well on each Block in the second half of 2021. Under the new arrangements, the Company is subject to annual minimum production levels and minimum work obligations from 2021 through 2030 specified under each LOA. Failing to reach either the annual minimum production levels or complete the annual minimum work obligations will not constitute a breach provided the minimal production levels have been attained or the minimum work obligations have been completed, as the case may be. The LOAs contain an aggregate minimum of 20 new infill wells and 40 well recompletions to be completed over the licence periods. Similar to the previous arrangements, will be required to provide aggregate guarantees to Heritage of approximately $0.5 million to support the future minimum work obligations. The new LOAs include favourably adjusted royalty rates to incentivize increased production from all field activities. In addition to the crown royalty rate of 12.5%, the LOAs apply a sliding scale overriding royalty ("ORR") structure, which is indexed to the average price of oil realized in a production month. Base ORR rates are applicable to pre-defined monthly base production levels which decline by 2% per annum. For any monthly volumes sold in excess of base production levels, the Company incurs reduced enhanced ORR rates. The former arrangements allowed for new drill ORR incentives, which were reduced ORR rates applicable to production from new wells drilled in the initial two years. This concept has been replaced with the super enhanced ORR, which contemplates a further reduction in royalty rates based on increased property production from all field activities. The super enhanced ORR applies a 50% reduction from enhanced ORR rates for any production in excess of combined base and enhanced production levels.