Thirdly, if a cratering share price and drastic drop in the price of crude oil weren't enough. It is the value of your property (v) divided by the number of acres (a). Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. We spoke to a representative of Sendero Drilling. company with a market cap of over $120 million. The area has 19 contiguous sections with a potential of as many as 300 horizontal drilling locations and a potential to generate 4 to 6 million barrels per section. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Torchlight Energy Resources Inc said on Tuesday it struck oil and gas at one of its development wells in the Orogrande basin in West Texas. Now, it appears that investors believe that the Hazel Project might be worthless, but the Orogrande Project has value. Permian Basin is the only . Torchlight's price remains quite high by this measure, although some of the gap has closed. The company owns the Orogrande Basin Project in the Permian Basin, which is just over 100,000 acres. Is my math way off? As the company discloses in an 8-K filing with the SEC, Torchlight was given 180 days to regain compliance with Listing Rule 5550(A)(2), which requires the company to maintain a minimum bid of $1 per share. The Energy Report. In Arizona, the price is about . Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. Right after it announced it was looking to monetize the Hazel Project, on 4/23/18, Torchlight announced it had sold 5.75M shares of common stock at $1.15 per share. View 11 photos, read details, and contact the seller. He is currently ranked in the top 2% of analysts by TipRanks. In its 2018 10-K, Torchlight reported selling 22,887 barrels of oil for the year, which is an average of only 62.7 barrels per day. At the current levels, Torchlights current interest in acreage that is developed, is hardly 1% of the total amount of interest of the Company. What we interpret Torchlight's above statement to mean is it has done all it can with its other projects, nothing came from them, and now, the only worthwhile project it has left to devote its effort and capital to is the Orogrande. This project was the result of the work of a well known Permian Basin expert Geologist, Rich Masterson. The company paid $100K in cash and 868,750 shares of stock for a 75% revenue interest in the property. 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). . Please disable your ad-blocker and refresh. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Torchlight essentially operates through a unique hybrid of a private equity model, overlaid with a publicly traded company. When they completed the Cactus A35 #1H drilling, the management was able to confirm the presence of oil in the Pennsylvanian formation. Unique insight into distressed opportunities to target outsized returns. Even if viewed from a conservative perspective, if 100,000 out of the 134,000 net acreage prove prospective, it would result in 156 sections with each section yielding 4 to 6 million barrels of oil in the Penn formation only. Disclosure: I am/we are short TRCH. The average price of U.S. shale acreage has fallen by more than 70% in two years from $17,000 per acre in 2018 to $5,000 per acre in 2020, according to Norwegian energy research firm Rystad. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . Add up the value of all the parcels you want to include in your average, if there's more than one. Orogrande Basin Update. We see a drop in the earnings per share in early 2019 but the number climbed back up during the course of the following 12 months. Engineers warn the new wells could produce as much as 50% less in some circumstances. Database of selected U.S. and international exploration wells. However, in recent years depending on those factors, many deals traded around $8,000 to $12,000 per acre. Right now the Orogrande Basin of West Texas is ground zero for just such a key discovery. In Nevada, prices are between $4,000 and $5,500. The above chart looks to summarize the price movement of Torchlight, while looking at the evolution of its top-line over the past 3 years. Certainly much less value than what some social media posts estimate. Under a new law proposed by House Republicans, that price would go up to more than $2.50. (10.72% of the property will not be operated on.) New technologies, such as diverting agents, microfracturing, coil-tipping fracks, and digitalization can increase production in the Permian. The NASDAQ listing and additional cash on hand will improve Metamaterial's odds of achieving commercial success, but a $500 million USD market cap still seems quite elevated. That's your value per acre. He pointed to Pioneer's $7.6 billion purchase of Parsley Energy in October 2020 meaning the company spent about $14 million on Permian Basin assets in the past six months and is the most active acquirer in the upstream sector since the downturn created by COVID-19. One piece of machinery that the company shows quite a bit in the Orogrande Project section, is a rig with the name: "Sendero Rig 11" on it. 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". We know they are the same entity as a result of the disclosure below, which names Umbrella "analysts" Dmitriy Shapiro and Joe Giamichael as the controllers of voting and investment power for Catalytic. is in the process of . Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. Masterson looked at four previous wells surrounding Torchlights Orogrande test and surmised that industry descriptions reflecting water-saturated formations were incorrect, leading to the thesis that the central Orogrande is a petrological peer to the Delaware and Midland basins and underwent the same alternating episodes of filling and re-submergence during Permian times that created the individual Wolfcamp benches from A through D now under development further east. 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. He said they did lease out the drill back around February or March of 2018. Northern Oil and Gas, Inc. Alpha Energy Partners. separate Wall Street Journal investigation. Because of this, Permian Basin mineral rights have a higher value, ranging from $7,000 to $58,000 per net mineral acre. Wed, 09/24/2014 - 08:59 AM. Announces Strategic New Patent Filed With the U.S. Patent and Trademark Office, OKYO Pharma Announces Appointment of Dr. Jay S. 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This would make it very easy for the Company to transport the oil and gas from the facility and would reduce transportation costs. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. Today, almost five years later, Torchlight hasn't proved any resources on the Orogrande. There were some contingences that need to be completed with Universi. . Torchlight Energy Resources Inc. ( Nasdaq: TRCH) has closed the previously announced transaction to acquire 100% woorking interest, 75% net revenue interest in the 172,000 acre Orogrande Basin Prospect. He does, however, list the following experience: While Mr. Brda likely had employment between his graduation from SIU in 1988 and his term at iMedia in 2005, we assume that he would have listed any impressive experience on his LinkedIn page. This implies that players exiting from their short positions would take almost a month to exit from their short positions which is a very long time. The Orogrande Basin Project & Its Big Breakthrough. The last step needed to prove up a new tight oil basin is to complete the well. Once you get down lower on the list, the value tends to drop off fairly quickly. $23,529. I am not receiving compensation for it (other than from Seeking Alpha). The above excerpt is from the Companys 10K filings for 2018 and it clearly shows the huge amount of potential that its operations have. We believe that both projects are worthless, and this will be revealed in a short amount of time. Has House? In other words, there will soon be a number of disappointed investors and the ability to raise capital for projects in this geographic location may dwindle. 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. . 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. 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. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. Only 60 % of analysts by TipRanks a private equity model, overlaid with a cap... New tight oil Basin is to complete the well doesnt happen in the.! 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