Touchstones Starts Sidetrack Well in Hell Hole Bayou

Touchstone Resources USA Inc. reports that its second Hell Hole well, the McAlester Fuel S.L. 16141 #2, located in Vermilion Parish, La., has begun sidetracking operations. The sidetrack target will reach approximately 1,000 feet to the east to reach a total depth of 16,800'. To sidetrack, the operator will enter the wellbore of the S.L. 16141 #2 at a depth of approximately 13,000' and at an angle of approximately 25 degrees to reach the target. This well will confirm the reservoir quality and 300 foot sand thickness of the Lower Miocene "O" sand encountered in the Seneca #1 well. 3D seismic data indicates that the sidetracked well will find improved sand porosity than that seen in the Seneca well. This operation should take approximately 30 days to drill and log. If the well proves to be commercial, as many as 10 additional well locations could be drilled on the acreage held by the company. On trend, the objective sands have produced 10 to 50 BCF per well.

3D seismic data has also confirmed several large down-thrown structures within the company's acreage. The next deep test will target the Lower Miocene Siph. Davisi sands at 19,900'. The structure has 3,000 acres of closure. These reservoirs have produced several hundred BCF from fields on trend. "The deep potential in this play has not begun to be exploited," states CEO Mark A. Bush. "We intend to drill one of the larger structures in mid-July. With gas prices at or near the $5 mark, we could become a major player in the area."

The Company announces that incentive stock options previously granted to directors and employees to purchase a total of 2,259,000 common shares at prices ranging from US$1.00 to US$1.92 per share have been re-priced at US$0.60 per share, subject to approval by the regulatory authorities and, if required, Company shareholders. The options are exercisable on or before dates ranging from August 2003 to February 2007.