However, in recent years depending on those factors, many deals traded around $8,000 to $12,000 per acre. On 4/11/19, the company issued a press release announcing the results of its new third party reserve estimate for Orogrande. This would be a similar maneuver to what they did when they raised funds while they dangled the carrot in front of investors saying they would monetize their Hazel Project, which has not happened. Especially when all the infrastructure is already built. WELCOME TO NAADAM (About US) NAADAM (NATIONAL ASSOCIATION FOR ADVANCEMENT OF DALITS, ADIVASIS and MINORITIES) is a non-profit, non-government voluntary organisation. Prices for top E&P stocks and commodities. On June 12, 2018, Nobilis Health Corp. filed a malpractice lawsuit in Houston, Texas against Briggs & Veselka. The shales, frequently gypsiferous . With over 20 years of investment banking experience, including 5 years as a fund manager, prior to becoming a consultant, Mr. Brda has the knowledge and experience to execute and ensure success for his client companies. This info is straight from https://www.torchlightenergy.com/current-projects/orogrande-basin, https://www.torchlightenergy.com/current-projects/orogrande-basin. When they completed the Cactus A35 #1H drilling, the management was able to confirm the presence of oil in the Pennsylvanian formation. 72,727. More:$1.9 billion oil and gas merger targets Permian Basin amid growing energy prices All rights reserved. In 2018, Founders sold its 9.5% working interest for a total of $2.5 million. It could go either way at this point. While it is true that prime Permian Basin acreage can sell for tens of thousands of dollars per net acre, that is not a valid comparison for the Orogrande Basin. . Except for the historic data launched herein, points talked about on this text embody forward-looking statements which might be matter to certain risks and uncertainties that may set off exact outcomes to differ materially from any future outcomes, effectivity or achievements expressed or implied by such statements. 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. This report is a good example. I am not receiving compensation for it (other than from Seeking Alpha). 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. Diamondback to Acquire Permian E&P Firebird for $1.6B in Cash/Stock. That's your value per acre. As shown, #11 is nearby Midland and Odessa, TX. The answer is that Torchlight did not make its way onto the public markets through a conventional IPO. Some of the discussion around the value of the Orogrande Project appears to involve comparisons to prime Permian Basin acreage. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Carolyn, A lessor has zero control of the minerals leased. SECURITIES AND EXCHANGE COMMISSION. The company's entire perceived value is based on possible oil in its Orogrande Project. Shares even hit the $2 target on . Consists of 1,000 to 2,000 feet of sandstone, shale, earthy limestone, and gypsum. However, more tellingly, the cost per acre nearly halved with the median metric value declining from $20,449/acre in the July-October 2020 transactions to $10,482/acre in the post-October transactions. Core competencies include capital formation, equity and debt financings, strategic business development and securities regulation matters. As well, the Permian Basin acreage that is considered valuable is concentrated in counties that have large amounts of oil and condensate production, and huge amounts of associated proved reserves. 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. Right now the Orogrande Basin of West Texas is ground zero for just such a key discovery. Is this happening to you frequently? . The Hazel Project is located in Irion, Sterling and Tom Green counties. Is my math way off? 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. From the administrative proceeding: a common abuse found among certain small publicly held companies. Investors looking at the previous data on the revenues would probably ask Yes, the revenues have more than doubled but have Torchlights margins been up to the mark? The answer is Yes. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. As a result of the sudden progress and M&A hopes, Torchlight's stock has appreciated 200% year-to-date, closing at $1.59 per share on April 23, 2019. This high desert ranch country is punctuated by volcanic intrusions and uplifts that give it a distinctly western landscape. Now, the Company has a short float of 7.71% with a short interest ratio as high as 30.16. Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. Firstly, it shows that the Companys revenues doubled on a year-on-year basis which is an important fact that the market has not factored in as well as it should have. Complete this form to receive a Free copy of our Research on . He has a B.S. 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. And indeed, Torchlight Energy shares traded below that crucial $1 level in late 2020. 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. The lessor can sell its share of the future income . 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. That's a massive range for the special merger dividend that investors will have to hold out for. Shale development is just beginning in the Delaware. 6. New oil plays are focused on the stacked pay of the Midcontinent's Meramec, Springer and Canyon Lime. It doesnt end here. TRCH only paid $3.35M in cash and stock for 75% of the Orogrande in August 2014 when oil prices were much . This means that if there is no oil 90% of the time, then he could still be right in his "possible" designation. One Metamaterial share is around $3.00 USD and that gets you 3.3 Torchlight shares (around $0.91 USD per Torchlight share). Torchlight Energy Resources (TRCH) is heading towards its merger with Metamaterial (MMATF). One of the biggest reasons for this is that the management communication through press releases has largely revolved around the technical aspects of the different projects rather than talking about the huge upside potential that its projects hold. has pushed up prices. Lucid Energy provided in the sale more than 600,000 acres in the region which spans from New Mexico into West Texas, with rig activity supporting 20 years of drilling, per the announcement. Information about your device and internet connection, like your IP address, Browsing and search activity while using Yahoo websites and apps. Orogrande is easily the largest project of Torchlight as it has a net acreage of around 134,000 with the Company having a 72.5% working interest in the project. Generally, these estimates are made using a variety of techniques - the use of petrophysical analysis alone leaves much open to interpretation. Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. is in the process of . Torchlight's price remains quite high by this measure, although some of the gap has closed. 543 Acres M/L bordering over 25,000 Acres of Santa Fe National Forest. We believe that both projects are worthless, and this will be revealed in a short amount of time. Divide by the total land area. Using TRCH's stock price of $3.74 on 8/7/14, that equates to a total of $3.35M, or $19.47 per acre. Please disable your ad-blocker and refresh. While he did graduate with a B.S. Is this happening to you frequently? We, Yahoo, are part of the Yahoo family of brands. The second big point is the positive gross margin. 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. You can change your choices at any time by visiting your privacy controls. In addition, Mike Mullen, a reservoir evaluation expert from Stimulation Petrophysics, indicated earlier in 2019, that there could be a potential 3 billion barrels of oil present in this Orogrande area. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. I am not receiving compensation for it (other than from Seeking Alpha). 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. Orogrande Basin Lease was bought in 2014 for 850k shares at 3.5 dollars, with 100k in cash with 75% interest! Orogrande Basin Update. Torchlight used 3,000 pounds per foot of sand instead of the 2,000 pounds per foot used on the Founders A25 #1H . 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. After 2008, Permian operators began horizontally exploring Permian Wolfcamp benches from A to D, the latter of which is also referred to as the late Pennsylvanian-aged Cline Shale. PLANO, TX / ACCESSWIRE / May 21, 2019 / Torchlight Energy Resources, Inc. (NASDAQ: TRCH) ("Torchlight" or the "Company"), today provided an update regarding the Company's process addressing acquisition interest from industry majors in its Orogrande Basin Project. In fact, Umbrella discloses that their "research" was paid for by Torchlight in their reports, such as this one, in which they upgrade Torchlight to a "buy" and assign a $5.00 price target. 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. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. He was promoted to CEO in December of 2014 with the exit of our co-founder Tom Lapinski. Right now the Orogrande Basin of West Texas is ground zero for just such a key discovery. Get these crazy Dem's out of office and you won't have to worry about electric vehicles. 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. Torchlight's special dividend is likely to have limited value though. Database of selected U.S. and international exploration wells. Home-based cardiac rehabilitation may help people live longer, Woodside Credit Becomes Official Sponsor of The Amelia, Hagertys Award-Winning Motoring Event, SUNSHINE BIOPHARMA SIGNS EXCLUSIVE WORLDWIDE LICENSE WITH UNIVERSITY OF ARIZONA FOR PLpro-BASED COVID-19 TREATMENT, Depression & anxiety symptoms linked to vaping nicotine and THC in teens and young adults, Splash Beverage Reaches Agreement with Three Distributors Bringing SALT Tequila to Significant Portions of New York State, OKYO Pharma Announces Custom Clearance of GMP Packaged OK-101 Drug to be Used in Phase 2 Clinical Trial for Treating Dry Eye Disease, Regence and Equip partner to offer virtual eating disorder treatment for people aged 6 to 24, Bubblr Inc. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. Information on assets, buyers and sellers, deal values, and more. Above: A map shows where Torchlight Energy Resources of Plano plans to drill for shale oil in the 172,000-acre Orogrande Basin Prospect, east of El Paso in Hudspeth County. It's all about the price per acre, not by the amount of oil in the land. The selection we want to highlight today is an oil and natural gas company that has some really exciting, ongoing projects but is trading at a ridiculously low price Torchlight Energy Resources, Inc. (NASDAQ:TRCH). Gary_L_Hutchinson April 5, 2017, 9:22pm #5. Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. One Metamaterial share is around $3.00 USD and that gets you 3.3 Torchlight shares (around $0.91 USD per Torchlight share). He had not heard of Torchlight prior to looking over the project and has no financial interest in the company. History and geology appear to be in alignment for a new tight oil play. //www.accesswire.com . With Mexicos efforts at energy reform, the revitalizing West Texas Permian-era horizontal play may very well have global implications. Mr. Brda also has a checkered past. . . It is my understanding that this is misinformation. Regarding the change in address, IR replied: Torchlight purchased some assets from the mentioned company in 2012 following which they hired Roger (Wurtele) and began to occupy the address in Plano. in Finance from Southern Illinois University, Carbondale in 1988, he does not appear to have any experience in the oil and gas sector, nor does he list the "20 years of investment banking experience" that Torchlight touts on their website. Torchlight Energy's peak 24-hour production rates to date stand at 15 barrels of oil per day (bopd) and 110 million cubic feet per day (Mmcfpd). Value per acre is another metric that ranges based on numerous factors. If you have an ad-blocker enabled you may be blocked from proceeding. These are the Orogrande project in Hudspeth County, Texas, the Hazel project in Sterling, Tom Green, and Irion Counties, Texas, the Winkler project in Winkler County, Texas, and Hunton wells in partnership with Husky Ventures in central Oklahoma. 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 currently has interests in four oil and gas projects. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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. Wed, 09/24/2014 - 08:59 AM. Torchlight Energy has an enterprise value of over $130M. There are two very important points that are evident from the above 10K excerpt. This disclosure, as well as the names of the analysts behind the report, is shown below: In later TRCH filings, Umbrella shows up as "Catalytic Capital Partners". A tiny sum, also considering that oil prices were much higher back then. Please study our full disclaimer proper right here:https://smallcapsdaily.com/disclaimer/. For the Quarter Ended September 30, 2019 . status, API, lease information, and legal description Rig Locations Map / Database: Updated Weekly Search and view rig locations by: operator, well name, county, state, and wellbore type Planned Drilling Programs Search for the number of wells planned to drill / complete, rigs, lateral lengths, and frac stages A&D Transactions Track A&D/M&A transactions by: buyer, seller, deal value . So tantalizingly closethats the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. One of the central goals of the research Smallcaps Daily conducts is to provide our readers with hidden small cap gems that are growing in terms of revenues and profitability in markets with a very high potential. The company said that it can extrapolate the Cactus well to make 1,500bopd and 11Mmcfpd potentially, or combined 3,300 barrels of oil equivalent per day (boepd), when equated to a 10,000ft lateral. Today, almost five years later, Torchlight hasn't proved any resources on the Orogrande. Subscribe for free to our newsletters for the latest energy news. Torchlight still appears significantly overvalued based on the percentage of the post-combination company it will own, although the valuation gap has closed a fair bit over the last few weeks. 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. He graduated college in 1988 with a B.S. We have achieved all goals and are now ready to focus all efforts and capital into the Orogrande. @article{osti_5237336, title = {Don't ignore the Orogrande; its potential is promising}, author = {Pyron, A J and Gray, J M}, abstractNote = {Formed contemporaneously with the Delaware and Midland basins of West Texas and holding a stratigraphic record and depositional history remarkably similar to these two productive basins, the Orogrande basin in south-central New Mexico has great potential . Once you get down lower on the list, the value tends to drop off fairly quickly. In November 2007, Mr. Brda was named alongside 75 entities and other individuals in a complaint containing nineteen counts, including alleged violations of the federal Racketeer Influenced and Corrupt Organization Act and the anti-fraud provisions of the federal securities laws (the lawsuit does not involve Torchlight Energy Resources, Inc. in any way). Within Radius. Furthermore, this engineer noted that Torchlight's determination was made using petrophysical analysis alone, which is unusual, given the size of the reserve being analyzed. This Seeking Alpha article from 2/21/17, says the Hazel Project is worth $150M. . 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. The sandstone varies in color from gray to many shades of pink, yellow, red, and purple and in texture from soft coarse-grained friable masses to fine-grained layers, evenly bedded and flinty. However, that comparison shows a lack of understanding about oil and gas assets and is not that much more valid than using Manhattan land values to value a parcel in rural Nevada just because both areas are part of the United States. The Orogrande Basin Project & Its Big Breakthrough. 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. I was doing some math last night. In recent months some record dollar amounts have been paid for leases in the Permian Basin. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. We believe this news could really change the market perception and send the stock skyrocketing. I have no business relationship with any company whose stock is mentioned in this article. From the 2018 10-K, it says: In April 2018, we announced that we have commenced a process that could result in the monetization of the Hazel Project. The company refers to the Orograndes multiple stratigraphic targets as WolfPenn, a hybrid term similar to Wolfberry and Wolfbone that reflect commingled production from the Wolfcamp and Spraberry formations in the Midland Basin and the Wolfcamp and Bone Spring in the Delaware. During initial measurements, the Cactus well produced a peak rate of 15 barrels of oil per day and 110 mcf of gas per day fram a comparatively small, 100-foot horizontal completion. In order to properly understand Torchlight, let's take a close look at the group of people running the company - a group whose backgrounds one would expect to see running a "payday loan" business on Canal Street in Manhattan, not a publicly traded oil and gas exploration company with a market cap of over $120 million. Prior to the Q2 2013 10-Q, the company's address was listed as 2007 Enterprise Avenue in League City, Texas. In other words, the SEC charged Mr. Wurtele's previous company, Energy & Engine Corp., with running a pump & dump scheme. Another Texas operator sought to increase is Permian Basin presence as Fort Worth-based FireBird Energy bought about 21,000 acres in the eastern Midland sub-basin in West Texas from Chevron USA. Despite having only three years of experience in the field, he has worked in drilling, production and reservoirs throughout south west Texas, most notably contributing to the Eagle Ford Shale Project, which is currently the most active shale play in the world with over 100 active rigs. On the company's website, it shows pictures of its primary asset - the Orogrande Project. Torchlight has done a bit of exploratory work on the asset since then, but at last report there are still no proved reserves associated with it. Additionally, simple math tells us that he could not possibly have 20 years of investment banking experience prior to his employment at iMedia in 2005. Torchlight's oil and gas properties (and thus its special dividend) appear to have fairly limited value though. Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. For the transition period from _____ to _____. Mr. Wurtele has been Torchlight's CFO since September 2013. I've expressed my opinion about Torchlight's relatively high price compared to Metamaterial's given their relative stakes in the post-combination company. separate Wall Street Journal investigation. Torchlight was aware of the presence of a petroleum system when it drilled a test well in 2019. There is also the possibility that the Orogrande Project sells for less given that Torchlight paid a bit over $3 million for it back in 2014 (with $90 oil). Click Manage settings for more information and to manage your choices. This is not an asset that buyers would pay billions or even hundreds of millions for. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. 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. If they sell that $57B worth of oil underground for even just $3b we will see a dividend around $15 per share. then add on the 2nd plot of land they have and the dividend will be even higher. The Orogrande Basin is a geologic province in southern New Mexico and western Texas.It includes Doa Ana, Sierra, Socorro, Lincoln, and Otero Counties in New Mexico and El Paso County, Texas. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . This gives a total value of $30.35 million (or approximately $0.20 per share) for the special dividend. TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. The price per acre for the Midland Basin was about $17K. They leased the drill to Founders. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. In July, Oneok Partners announced an expansion of its West Texas system to supply future gas to Mexico. 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. Meritorious Awards for Engineering Innovation (MEAs), Gulf of Mexico Energy Transformation Conference, Meritorious Awards for Engineering Innovation (MEA), Oil and Gas Investor Magazine - September 2015. Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. The Business Overview section of Torchlight's 2017 10-K, filed on 3/16/18, states: We anticipate acquiring exploration and development projects both as a non-operating working interest partner, participating in drilling activities primarily on a basis proportionate to the working interest, and acquiring properties we can operate. Most people have it growing at about [a rate of] 800,000 barrels per year. Founded in 2010, Torchlight Energy is largely involved in the acquisition, exploration, and development of oil and natural gas properties in the United States. Until recently, Torchlight's auditor was Calvetti Ferguson P.C. If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. 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". 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. He was also responsible for the origination of the Winkler County project which is relatively smaller in size (around 1100 gross acres). Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. Torchlight has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial. o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934. Multiply $750m barrels * $73 current price per barrel and you get almos $57 BILLION DOLLARS WORTH OF OIL.

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