He has a B.S. Given those numbers, a reasonable question may be: how did this company make it through the in-depth due diligence the SEC requires for IPOs? NOG Acquires Northern Delaware/Permian Assets for $157 Million. 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. Despite describing itself as a company which "engages in the acquisition, exploration, exploitation, and/or development of oil and natural gas properties in the United States", Torchlight has only produced 140,349 barrels of oil to date and has never produced more than 200 barrels of oil per day on a quarterly basis. Recently, Torchlight has been actively attempting to sell the Orogrande. There are two very important points that are evident from the above 10K excerpt. Adjacent leases still sale for $10/acre or less. 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. FORM 10-Q (Mark One) x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. 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. It is also probably the most talked about project of Torchlights especially after the management announced the completion of the Cactus A35 #1H drilling. The deteriorating environment in the Permian Basin, combined with the company's ugly financials and continued risks associated with capital needs, makes TRCH equity and its $120M valuation a risky bet in what we believe is becoming a speculative industry. 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. 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. View 11 photos, read details, and contact the seller. Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. Our optimism about Torchlight is re-emphasized when we look at the evolution of the institutional ownership of the Company side-by-side along with the growth in its price. Within Radius. 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. Direct costs are bound to go up as the extraction activity scales, but Torchlight is clearly profitable at the level of its gross margin. Orogrande Basin Update. discussed below). 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. However, this assumes that you have a certain . It doesnt end here. ROTH has a Buy rating and a $1.75 per share price target on Torchlight, whose share price is currently $1.17. Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. If you have an ad-blocker enabled you may be blocked from proceeding. . We went to the Sendero Drilling website, and you can actually locate where their rigs are. of oil per day and 110,000 cubic feet of gas per day Those horizontal efforts have grown to encompass the Bone Spring in the Delaware Basin and the Spraberry in the Midland Basin. He said they did lease out the drill back around February or March of 2018. . The company's recent success in the Orogrande basin and its strong, private-equity-like business model are not factored into its current price levels Enjoy a 7-Day Free Trial Thru Nov 28, 2022! As explained in the recent 10-K, Torchlight acquired the Orogrande Project on 8/7/14. In Arizona, the price is about . Salesparq, LLC, which ownsSmallcapsDaily.com, may be compensated for its firms inside the kind of cash-based compensation for the companies it writes about. . But in July, Plano, Texas-based Torchlight Energy Resources Inc. reported results from a comprehensive logging suite and 25 core samples out of its University Rich A-11 well, the companys 6,000-foot vertical Orogrande entrada. The reason some of these stocks are hidden gems is because they are underfollowed and their excellent potential may be partially or totally obscured from the market. Torchlight Energy has a net revenue (NRI) of 75%. 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. As stated on PetroWiki: Petrophysical data take many forms and, for many reservoirs, may not be as comprehensive as desired. Mr. Brda, who also co- founded the Company, has been the Managing Member of Brda & Company, LLC since 2002, which provides consulting services to public companies - with a focus in the oil and gas sector. In recent years, many such companies have hired stock promoters to tout their shares on stock-picking websites and through mass-mailed e-mail messages (commonly known as "spam"). 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 . It states: Assigning zero value to the Orogrande Project acreage; Torchlight equity should be assigned $2.50-3.00 in immediate-term value. !, 21.3 acres in Fabens, Texas offered at $200. Lease Prices, Demystified. So, v a = PPA. Texas had 242 rigs, Baker Hughes reported, adding three in the last week. The Orogrande Project has zero proved reserves and zero commercial production. Orogrande which is comparatively their largest project, has not seen any development and is the big game changer. Carolyn, A lessor has zero control of the minerals leased. 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". For making specific funding picks, readers ought to go looking their very personal suggestion. Reproduction in whole or in part, in any form or medium without express written permission is prohibited. //www.accesswire.com . 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. WTI crude prices have been well below $40 per barrel for most of the year. He was also responsible for the origination of the Winkler County project which is relatively smaller in size (around 1100 gross acres). The promoter is often compensated in the form of purportedly unrestricted shares of the company's common stock, which the promoter sells after its touting has attracted investor interest in the company. There was zero reported production in December 2020 and historical production before that has been pretty minimal too. Information on assets, buyers and sellers, deal values, and more. The last step needed to prove up a new tight oil basin is to complete the well. However, according to Mr. Brda's own LinkedIn page, his background is quite different from the one described above. 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. Several months later, Mr. Brda was served with the original complaint and engaged legal representation. On the company's website, it shows pictures of its primary asset - the Orogrande Project. Divide by the total land area. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any information furnished pursuant to Item 2.02 or Item 7.01, or any corresponding information furnished under Item 9.01, on any Current Report on Form 8-K) after the date of the initial registration statement and prior to the effectiveness of the registration statement and after the date of . 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. Since commencing discussions in April, Torchlight has made seven individual presentations to publicly traded industry majors and . It is the value of your property (v) divided by the number of acres (a). The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. We did our due diligence on this rig. Located in Winkler County, Texas, the project includes 640 gross (67.2 net) acres. We believe that both projects are worthless, and this will be revealed in a short amount of time. Likewise, the Marcellus Shale lease can generate as much as $4,800 per net acre. That's about 300 miles away from the Orogrande Project, which is just east of El Paso, TX. Privacy Policy. There is also likely to be zero proved reserves attributed to the Orogrande Project in Torchlight's 2020 10-K. Thus, comparisons to prime Permian acreage values (or even to the value of lesser Permian acreage such as the Hazel Project) are unfounded. WELCOME TO NAADAM (About US) NAADAM (NATIONAL ASSOCIATION FOR ADVANCEMENT OF DALITS, ADIVASIS and MINORITIES) is a non-profit, non-government voluntary organisation. Shares even hit the $2 target on . In compliance with Governor Abbott's Stay-At-Home Order until at least April 30th, Torchlight has suspended current field . You don't have to worry about squaring the measurement, because an acre is already considered to be a squared number. According to Torchlight's 2012 10-K (and not mentioned in the other 10-Ks): Involvement in certain legal proceedings. The Energy Report. Indeed, this property is a gem! Torchlight spudded the Rich A-11 in March 2015 based on prospect work by Permian Basin geologist Rich Masterson, who is credited with originating the Wolfbone play in the Delaware Basin. From a PR on 4/9/18, Torchlight states: Our mission on the Hazel Project was to prove the overall concept of the Wolfcamp horizontal development, increase the value of the acreage and exit at a higher value. They leased the drill to Founders. Cookie Notice 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. 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. Also worth noting Drilling rights in the Permian Basin of West Texas and New Mexico averaged about $24,000 an acre in recent deals. I wrote this article myself, and it expresses my own opinions. Before, Torchlight was looking to participate in drilling activities. The other good point is that these institutions have held on and this is evident from the fact that the institutional holding actually went up even with spike in price around March 2019. 10,588. 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. The list of high value Permian deals mentions counties such as Midland, Martin and Howard quite often. This is clearly the sign of a big investment opportunity in the stock. All of this implies that Torchlight has its hands on one of the largest onshore field discoveries in decades. Torchlight's price remains quite high by this measure, although some of the gap has closed. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. New information updated about the Orogrande Basin. 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. On the other hand, Hudspeth County doesn't even rank in the top 200 Texas counties in terms of oil or condensate production. AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. PLANO, TX / ACCESSWIRE / April 6, 2020 / Torchlight Energy Resources, Inc. (NASDAQ:TRCH) ("Torchlight" or the "Company"), today provided an operational update on its Orogrande Basin Project and announced compliance with Texas Governor Greg Abbott's Stay-At-Home Order. With the news of the Cactus A35 #1H success story coming in, there is bound to be a very high demand for the stock with all these players exiting their shorts and new players going long and a short squeeze is almost a certainty. Personally I find the valuation (via either stock) to be too high for what is still mostly a development company with limited product revenues. Torchlight has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial. The initial test was earmarked as a $1.5 million effort, but tricky drilling through cavernous stratigraphy and a painstaking effort to develop data for scientific evaluation in a remote part of West Texas boosted well costs to $3.5 million. . Subscribe for free to our newsletters for the latest energy news. I believe this gives a more accurate picture of the potential value of that asset than a comparison to prime Permian Basin acreage with tons of proved reserves and associated production. The Orogrande basin is just 1 of the TRCH assets. In April 2018, TRCH said it would sell its Hazel Project, but never did, and raised equity instead. Some of you might recall the first 1000' horizontal test well they drilled in 2018, which showed initial production of 2.2 million cubic feet of natural gas per day, and had a sustained rate of 1.2 . 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. Just east of El Paso, TX two very important points that are evident from the Project! 242 rigs, Baker Hughes reported, adding three in the top Texas. Buy rating and a $ 1.75 per share price target on Torchlight, whose share price is $... 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