Torchlight offers 168,000 contiguous acres in the heart of the Orogrande and has executed a five-year drilling lease with a second five-year option with the state of Texas University Land System. Find out more about how we use your information in our privacy policy and cookie policy. Torchlight offers 168,000 contiguous acres in the heart of the Orogrande and has executed a five-year drilling lease with a second five-year option with the state of Texas University Land System. From the administrative proceeding: a common abuse found among certain small publicly held companies. So, v a = PPA. This report is a good example. Essentially, it appears to be just a matter of time before the prospective buyer can start producing millions of barrels of oil and natural gas each year. Located in Winkler County, Texas, the project includes 640 gross (67.2 net) acres. Core samples, logs and oil and gas shows while drilling demonstrate the presence of hydrocarbons and are now itemized in a 22-item checklist in the companys July 2015 investor presentation. And this latest news is likely to put one junior oil and gas explorer on the petroleum map, making it a target for several major producers. 72,727. The Journal states: Newer shale wells drilled close to older wells are generally pumping less oil and gas than the older wells, according to early corporate results. /property/Oro_Grande_x5-4654244/ Nelle Ave Orogrande, NM, 88342 Please disable your ad-blocker and refresh. Is my math way off? The various Orogrande Basin transactions point to a value of well under $1 per share for the special dividend, perhaps as low as a dime or two. company with a market cap of over $120 million. Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. There are laws that keep them from lying, that's why they call them 'possible', but when it comes to rocks a mile under the ground, it's easy to say you see things that are promising. Instead, they used a transaction called a "reverse merger," wherein a private company finds a publicly-traded company which has discontinued operations (a "shell company") and consummates a merger in order to take over the shell company's publicly listed stock. Based on the formula mentioned in Metamaterial's circular, Torchlight may issue approximately 403 million shares to exchange for Metamaterial's shares, which would imply around 3.3 Torchlight shares for each Metamaterial share. At that price ($2.5 million for the sale of a 9.5% working interest), Torchlight's 66.5% working interest would be worth approximately $17.5 million. The company paid a total consideration of 865,000 shares of Torchlight common stock and $100,000 in cash to the seller. Please. Complete this form to receive a Free copy of our Research on . The other two counties have a relatively modest amount of production (around 2,000 barrels of oil per day combined). Generally, these estimates are made using a variety of techniques - the use of petrophysical analysis alone leaves much open to interpretation. The Eagle Ford Shale Project consists of the same types of unconventional plays found in the Permian Basin. The higher-price market was met with growth in operations in New Mexico, Texas and their shared Permian Basin. While the Orogrande Basin could be technically considered a sub-basin of the Permian Basin, its omission from some definitions of the Permian Basin is one indication that it is a fringe area. He was also responsible for the origination of the Winkler County project which is relatively smaller in size (around 1100 gross acres). They are a public company looking for investors. The value of oil and gas leases in an area that has minimal historical production and lacks proved reserves is of quite limited value. Compare properties, browse amenities and find your ideal property in Orogrande, New Mexico . The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. 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More:$1.9 billion oil and gas merger targets Permian Basin amid growing energy prices of oil per day and 110,000 cubic feet of gas per day The company's entire perceived value is based on possible oil in its Orogrande Project. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. . Texas allows for single drilling and development units. See the 3rd party verified return on each of our bearish reports over the last 24 months at: https://breakoutpoint.com/as-summary/white-diamond-gvmtg/To inquire about becoming a premium subscriber, send a PM here or email us at research@whitediamondresearch.com.Follow us on twitter @whiteresearch. Such efforts by the management to improve the efficiency of extraction will go a long way in reducing the indirect costs and improving the profitability and shareholder value in the long term. Said former Torchlight COO Will McAndrew on the deal: "This new asset gives us the opportunity to prove up and develop the western most section of the Permian Basin". The value of the special dividend is estimated at $0.45 million for the Winkler Project sale plus $12.4 million for the Hazel Project sale if that goes through. has pushed up prices. AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. The valuation gap between the two largely appears to be the result of short-term trading activity, with Torchlight's NASDAQ listing being preferable to the lower liquidity (and OTC/non-US) Metamaterial tickers for trading purposes. All rights reserved. Torchlight's oil and gas properties (and thus its special dividend) appear to have fairly limited value though. We have an over 80% success rate, see our reports at whitediamondresearch.com. Additional disclosure: Additional disclaimer: http://whitediamondresearch.com/disclaimer/. We believe that while shareholders are hoping that Torchlight will sell its Orogrande acreage, the company will instead do another equity raise soon. You can do the same for the tax liability. The newer shale wells often interfere with the output of older wells, because blasting too many holes in dense rock formations can damage nearby wells and lower the overall pressure, making it harder for oil to seep out. Since commencing operations in 2013, the company has generated only $10.7 million in revenue while incurring $52.8 million in operating expenses and paying $14.4 million in interest expense, for a cumulative net loss of $83.9 million. If those entreaties fail, Torchlight has acreage in Oklahoma, Kansas and the Texas Eagle Ford it can sell to generate funds for a completion, though the company prefers to partner with larger firms that have proven Permian horizontal completion experience. Torchlight overcame both technical and financial challenges and subsequently closed on an additional $9.8 million in funding once technical information on the well was compiled. For more information, please see our There is also likely to be zero proved reserves attributed to the Orogrande Project in Torchlight's 2020 10-K. UNITED STATES. The Energy Report. Shares even hit the $2 target on . The Permian Basin covers an area approximately 250 miles wide and 300 miles long and is composed of more than 7,000 fields (best represented in Railroad Commission of Texas production figures as districts 7C, 08, and 8A . Saint used 0.50 per barrel in his calculations (I work in oil & gas industry, 0.50 is low, but we'll use this as floor price evaluation). Washington, D.C. 20549 . Any Yes No . Until recently, Torchlight's auditor was Calvetti Ferguson P.C. . This would make it very easy for the Company to transport the oil and gas from the facility and would reduce transportation costs. Add up the value of all the parcels you want to include in your average, if there's more than one. Can we trust Torchlights financial reporting? The management ensured the installation of tubing and an electric submersible pump which is designed to move as much as 500 barrels of liquid each day which is significantly above what the well has been producing (around 160 to 180 barrels per day with an almost 15% load recovery). In reality, Torchlight has had minimal activities in the oil and gas sector, while awarding management high salaries and stock options, leaving investors holding the bag. However, according to Mr. Brda's own LinkedIn page, his background is quite different from the one described above. If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. Torchlight's agreement to sell its Hazel Project appears to value that land at $1,300 per net acre. In 2007, Mr. Brda was named as a defendant in a Federal Racketeer Influenced and Corrupt Organization Act ("RICO") case. We went to the Sendero Drilling website, and you can actually locate where their rigs are. Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. In the Permian Basin, a prospect is to be drilled soon in the lightly explored Orogrande Basin. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. Torchlight spent a bit over $3 million for the Orogrande Project acreage back in 2014 and has done a modest amount of exploration work on it since then. . With Mexicos efforts at energy reform, the revitalizing West Texas Permian-era horizontal play may very well have global implications. In comparison, Torchlight is trading now at around $1.46 per share. Prices per acre can range from $10,000 to $60,000 in Texas. Metamaterial may have approximately 122 million fully diluted shares now, while Torchlight may have around 153 million fully diluted shares. For the transition period from _____ to _____. SmallCapsDaily.com, a leading financial news informational web portal designed to provide the latest trends in Market News, Investing News, in-depth broadcasts on Stock News, Market Analysis and Company Interviews. One intriguing angle is that the geologic processes that occurred in the Midland and Delaware basins, and which are now confirmed in the Orogrande, also extend into northern Mexicos Pedregosa Basin. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. We are short Torchlight Energy Resources, Inc. (TRCH) because we believe it is a classic pump-and-dump run by a questionable management team in our opinion, with some of the leadership having previous run-ins with securities regulators. He graduated college in 1988 with a B.S. TRCH only paid $3.35M in cash and stock for 75% of the Orogrande in August 2014 when oil prices were much higher than today. Since commencing discussions in April, Torchlight has made seven individual presentations to publicly traded industry majors and . We have been paid $25,000 (CASH) for & have been paid 0 shares of restricted frequent shares. New technologies, such as diverting agents, microfracturing, coil-tipping fracks, and digitalization can increase production in the Permian. Click Manage settings for more information and to manage your choices. !, 21.3 acres in Fabens, Texas offered at $200. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. A Texas General Land Office lease auction in April 2011 brought a bid of $3,264 per acre for 30,000 acres, compared with an average bid of $906 per acre six months earlier. Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . Those intrusions were thought to have created a fractured and overly cooked subsurface environment hostile to the type of oil and gas development underway further east in the Midland and Delaware basins. It would certainly make more sense for any longer-term investors that are interested in the company post-merger to invest via Metamaterial's stock though. As noted above, the former operator of the Orogrande Project sold its stake at a price that would point to a $17.5 million value for Torchlight's current stake. Torchlight's Winkler Project sale involves a . 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