BALA CYNWYD, Pa.--(BUSINESS WIRE)--Aug. 18, 2004--Touchstone Resources USA, Inc. (OTC:TSNU - News; "Touchstone") announces an update on the oil and gas projects in which it has an operating and/or working interest. If all of the projects are successful, Touchstone projects that its current portfolio of holdings could have gross potential reserves in excess of 450 billion cubic feet ("BCF") of gas (183 BCF net to Touchstone's interest) and 240 million barrels of oil (18 million barrels of oil net to Touchstone's interest). The potential aggregate future gross value of Touchstone's net interest in all of these projects could be worth in excess of $1 billion.
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Steve Harrington, President of Touchstone, commented, "In a relatively short period of time, we have amassed a substantial inventory of exploration and production assets. We believe this provides us with a great mix of lower-risk, relatively inexpensive opportunities, which will help us grow our operating cash flow over the near term, as well as higher-risk, larger investment opportunities, which could provide us with significant increased asset value in the long term. We will continue to endeavor to communicate our progress and results as they happen over the coming months on all of our projects."

Touchstone currently has interests in the following domestic and international exploration and production projects, including: the Louisiana Shelf Project and the Knox Miss Project; eight Texas Projects, including the Vicksburg Project, the Wharton County Project, the Maverick Basin Exploration Project, the Pierce Ranch Project, the Vela Ranch Project, the Martinez Ranch Project, the La Paloma Ranch Project and the Good Friday Project; and two New Zealand projects, including the PHT Stent Partners Project and the Awakino South Exploration Project. An update of the current status of each of these projects is provided below:

Our Louisiana Projects

The Louisiana Shelf Project

Touchstone has an approximate 25% net interest in and is the operator of the Louisiana Shelf Partners project on approximately 1,800 acres in offshore South Louisiana. Touchstone has just drilled and completed the SL 17742 #1 in East Cameron Block 4. The well tested at a rate of 1 million cubic feet ("MMCF") of gas per day and 100 barrels of oil per day and is now shut-in, awaiting hook-up to production facilities. Touchstone anticipates drilling an offsetting development well, the SL 17742 #2, as soon as a drilling rig can be secured. Touchstone plans on drilling approximately 5 additional wells over the next two years to develop the Louisiana Shelf Project, which it projects could yield on a gross basis in excess of 100 BCF of gas in potential reserves.

The Knox Miss Project

Touchstone has an approximate 35% net interest in the Knox Miss Project exploring for potential reserves in the Black Warrior Basin in Mississippi in a joint venture with Clayton Williams Exploration Inc. We plan to spud Touchstone's initial exploration well on the project, the Gammill #1, as soon as a rig is available. The well will be designed to drill to a depth of 15,000 feet to test the Knox formation, productive in Total-Devon's Maben field (with estimated reserves of 100 BCF). Additional objectives are the Pennsylvanian Sands from 6,000-9,000 feet and Mississippian Sand at 12,000 feet. Pennsylvanian sand has been recompleted in Total's Tormin well in the Maben field at 9,200 feet at a rate of 10.4 MMCF of gas per day and is expected to produce 6-7 BCF of gas in potential reserves. Total is also preparing to acquire a 100-square-mile proprietary 3D seismic program in the area later in the year. If the initial exploration wells drilled in the Knox Miss Project are successful, Touchstone could drill in excess of 100 wells over several years yielding on a gross basis in excess of 300 BCF of gas in potential reserves.

Our Texas Projects

The Vicksburg Project

Touchstone has a net 8% interest in and is also the operator of the Vicksburg Project on approximately 5,000 acres in Starr and Hidalgo Counties in South Texas. The Vicksburg Project currently has six wells in production, the G.L.Richards #1, the Diaz #1, the Diaz #2, the Garcia #1, the Diaz A-1 and the Diaz B-1. The gross current field production is approximately 4 MMCF of gas per day and 125 barrels of oil and condensate per day. The seventh well in the project, the Yturria #1, southwest of the Richards #1, is drilling to a proposed total depth of 10,500 feet. The main objectives for the well are the 2nd, 3rd and 4th Massive Sands that have produced in the Diaz #2 and Garcia #1. These reservoirs are the main pay sands at the Samano field two miles to the north. New wells offsetting the Massive Vicksburg sand production in the Diaz #2 and Garcia #1 are planned to commence in early September following completion of the Yturria #1. Drill depths of 9,000 feet are anticipated. These intervals have produced an average of 3-5 BCF of gas per well in the Samano field to the North. Touchstone anticipates drilling a minimum of 25 wells over the next three years to fully develop the Vicksburg Project, which it projects could yield on a gross basis in excess of 75 BCF of gas in potential reserves.

The Wharton County Project

Touchstone has an approximate 18% net interest in and is also the operator of the Wharton County Project on approximately 2,000 acres in Wharton County, Texas. The Wharton County project has drilled and completed one well, the Duncan #1, a shallow well, which is about to be placed into production at a rate of approximately 750 thousand cubic feet of gas per day. New geophysical work done by Touchstone shows very promising deeper potential for Wilcox Sands at depths from 9,600 to 15,500 feet. Equivalent production to the southwest of Touchstone's acreage in the Newfield Wilcox field should yield over 150 BCF of gas in potential reserves. Touchstone is aggressively pursuing additional acreage complementing its current Wharton County holdings and is planning on new wells to be drilled early this fall to test the deeper objectives in two areas of its acreage, which it believes are highly promising. Touchstone plans on drilling approximately 15 wells over the next three years to develop the Wharton County Project, which it projects could yield on a gross basis in excess of 60 BCF of gas in potential reserves.

The Maverick Basin Exploration Project

Touchstone has a 12.5% net interest in and is the operator of the Maverick Basin Exploration Project on 10,000 acres in Maverick Basin in South Texas, with the option to increase their position to 20,000 acres. Touchstone's partners in the project are Maverick Oil and Gas and Blue Star Exploration. Touchstone has identified its first four drilling locations from high quality 3D seismic data, and will commence drilling on the project's first exploration well by the end of September. If the first wells are successful, as many as 130 horizontal wells will be drilled in the currently owned and optioned acreage over the next years, and Touchstone will continue to aggressively pursue additional acreage in the Basin. Touchstone anticipates the well completions will average 1 BCF of gas per well, yielding on a gross basis in the current acreage in excess of 130 BCF in potential gas reserves.

The Pierce Ranch Project-Matagorda County

Touchstone has approximately 50% net interest in Touchstone Pierce Exploration, which owns several prospects in the 26,000-acre Pierce Ranch in Matagorda County, Texas. Touchstone is still undertaking geophysical and technical analysis to determine the location of its initial exploration well on the project. If the first well is successful, Touchstone anticipates drilling up to an additional nine wells, which could yield on a gross basis in excess of 30 BCF in potential gas reserves.

The Vela Ranch Project-Zapata County

Touchstone has a net revenue interest of approximately 16% of the Vela Ranch Project on approximately 1,600 acres in Zapata County in South Texas, operated by Reichmann Petroleum. The initial exploration well, the Vela #1, was drilled to a depth of 13,500 feet and will be perforated and tested in the next few weeks. Touchstone anticipates production from the Vela #1 to be approximately 2.5 MMCF of gas per day. Touchstone anticipates drilling up to an additional five wells on the Vela Project, which could yield on a gross basis in excess of 13 BCF of potential gas reserves.

The Martinez Ranch Project-Zapata County

Touchstone has a net revenue interest of approximately 15% and is the operator of the Martinez Ranch Project on approximately 1,600 acres in Zapata County in South Texas. Touchstone is planning on drilling the initial exploration well on the project in the next 30 days, a 12,500-foot well to test the Lobo-Wilcox sands. If the initial exploration well on the project is successful, Touchstone anticipates drilling up to an additional four wells, which could yield on a gross basis in excess of 12 BCF of potential gas reserves.

The Las Palomas Project-Zapata County

Touchstone has a net revenue interest of approximately 8% of the Las Palomas Ranch Project on approximately 1,425 acres in Zapata County in South Texas, operated by Reichmann Petroleum. The initial exploration well on the project is currently being drilled and should be completed within the next thirty days. If the initial exploration well on the project is successful, Touchstone anticipates drilling up to an additional two wells, which could yield on a gross basis in excess of 15 BCF of potential gas reserves.

The Good Friday Project-Zapata County

Touchstone has a net revenue interest of approximately 10% of the Good Friday Project on approximately 2,300 acres in Zapata County in South Texas, operated by Reichmann Petroleum. The initial exploration well on the project should be drilled within the next 60 days. If the initial exploration well on the project is successful, Touchstone anticipates drilling up to an additional 5 wells, which could yield on a gross basis in excess of 20 BCF of potential gas reserves.

Our New Zealand Projects

The PHT Stent Partners Project

Touchstone has a net revenue interest of approximately 15% of the Stent Project on approximately 96,000 acres in the Taranaki Basin in New Zealand operated by Discovery Geo Corp. The initial exploration well on the project has just commenced drilling operations and should be completed and tested within 45 days. The Stent Project is targeting two formations in the prospect, which Touchstone anticipates could yield in excess of 10 million barrels of oil plus associated reserves of natural gas. If the initial exploration well is successful, Touchstone anticipates the drilling of up to an additional five wells, which could yield in excess of 30 million barrels of oil in potential reserves.

The Awakino South Exploration Project