Torchlight Energy Resources (TRCH) is heading towards its merger with Metamaterial (MMATF). Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. 1.17 acres in Cochise County, Arizona Beautiful 1.17 acre lot with power just down the street! //www.accesswire.com . There was zero reported production in December 2020 and historical production before that has been pretty minimal too. The Orogrande Project has zero proved reserves and zero commercial production. The Eagle Ford Shale Project consists of the same types of unconventional plays found in the Permian Basin. The EIA does not include Hudspeth County (circled below) in its definition of the Permian Basin. Shale development is just beginning in the Delaware. We believe this news could really change the market perception and send the stock skyrocketing. 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. Lease Prices, Demystified. Although Mr. Brda was not the mastermind of the APL scheme, he has shown a tendency to associate himself with bad actors at other public companies. I wrote this article myself, and it expresses my own opinions. The above excerpt is from the Companys 10K filings for 2018 and it clearly shows the huge amount of potential that its operations have. 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. 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. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. 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. For more information, please see our Some of the history behind the Orogrande Basin assets also points to it having limited value. 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. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. Torchlight's Orogrande Project (Hudspeth County) acreage had no proved reserves at last report, and Hudspeth County had no reported production at last report either. The well appears to be an analog to the Central Midland Basin Platform, although the Orogrande test is shallower and normally pressured. 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. This required Mr. Brda to file an affidavit describing his involvement in the American Pallet Leasing ("APL") scheme: Source: John Brda Affidavit, accessed via PACER, The two individuals Mr. Brda did business with at APL were Craig Medoff and Curt Kramer. 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. The Company has an 80% net revenue interest in this region. Located in Winkler County, Texas, the project includes 640 gross (67.2 net) acres. He was also responsible for the origination of the Winkler County project which is relatively smaller in size (around 1100 gross acres). 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). Can we trust Torchlights financial reporting? discussed below). New information updated about the Orogrande Basin. Database of selected U.S. and international exploration wells. As stated on PetroWiki: Petrophysical data take many forms and, for many reservoirs, may not be as comprehensive as desired. 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. Right now, the average price for a loaf of bread is, approximately, $1.87. 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. 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). 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? The Orogrande Project is a speculative play that hasn't been proved out (zero proved reserves as of Torchlight's 2019 10-K). 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. latest information I found, but if accurate it still points to Metamaterial's shares being significantly cheaper than Torchlight's shares if one wanted to invest in the new company. Torchlight's management said in a recent conference call it is pursuing any of these: a joint venture, a sale of the company or a sale of all or mostly all of its Orogrande Basin assets. Under a new law proposed by House Republicans, that price would go up to more than $2.50. Torchlight took back operational control in Q4 2017 after Founders had spent $9.5 million to gain a 9.5% working interest in the project. As shown, #11 is nearby Midland and Odessa, TX. Diamondback to Acquire Permian E&P Firebird for $1.6B in Cash/Stock. 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. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. History and geology appear to be in alignment for a new tight oil play. This is clearly the sign of a big investment opportunity in the stock. 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"). I believe the $17.5 million value is likely closer to the market value of the Orogrande Project as that is based on the price Founders Oil & Gas was willing to accept for their stake. 2023 Hart Energy. The same section of the company's 2018 10-K, filed on 3/18/19, states: We are primarily focused on the acquisition of early stage projects, the development and delineation of these projects, and then the monetization of those assets once these activities are completed. 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. This gives a total value of $30.35 million (or approximately $0.20 per share) for the special dividend. Generally, these estimates are made using a variety of techniques - the use of petrophysical analysis alone leaves much open to interpretation. Until recently, Torchlight's auditor was Calvetti Ferguson P.C. View 11 photos, read details, and contact the seller. . 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. Prices for top E&P stocks and commodities. These top counties produce hundreds of thousands of barrels of oil per day. 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. 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. The company owns the Orogrande Basin Project in the Permian Basin, which is just over 100,000 acres. Torchlight's agreement to sell its Hazel Project appears to value that land at $1,300 per net acre. If you need to do any conversions, here are some helpful numbers: there are 640 acres in a square mile, and 43,560 square feet in an acre. Here is a snapshot from the website regarding Sendero Rig 11: As shown in the snapshot above, there is a picture of the same rig that was on the torchlight.com website. Prices per acre can range from $10,000 to $60,000 in Texas. Torchlight's stock closed at $0.80 on November 7, 2018, and reached its low of $0.53 on December 31, 2018. We, Yahoo, are part of the Yahoo family of brands. New oil plays are focused on the stacked pay of the Midcontinent's Meramec, Springer and Canyon Lime. 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. Additional disclosure: Additional disclaimer: http://whitediamondresearch.com/disclaimer/. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. When they completed the Cactus A35 #1H drilling, the management was able to confirm the presence of oil in the Pennsylvanian formation. . Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. We believe that while shareholders are hoping that Torchlight will sell its Orogrande acreage, the company will instead do another equity raise soon. September 16, 2019 by PBOG. 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. So, v a = PPA. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. Rextag database of energy infrastructure assets. !, 21.3 acres in Fabens, Texas offered at $200. Core competencies include capital formation, equity and debt financings, strategic business development and securities regulation matters. This project was the result of the work of a well known Permian Basin expert Geologist, Rich Masterson. "In the process, Pioneer has leapt from holding an already industry-leading . Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . Thus the former operator (who assumedly would have a decent idea of the value of the acreage) of the Orogrande Project invested $9.5 million in the project, but ended up selling its stake for $2.5 million. . Torchlight used 3,000 pounds per foot of sand instead of the 2,000 pounds per foot used on the Founders A25 #1H gas well. 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 . 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. If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. I was doing some math last night. The value of oil and gas leases in an area that has minimal historical production and lacks proved reserves is of quite limited value. The Orogrande basin is just 1 of the TRCH assets. Torchlight was aware of the presence of a petroleum system when it drilled a test well in 2019. The higher $81.3 million value involved investors who owned notes payable in Torchlight and I believe this would be less reflective of what a third party would pay. Torchlight currently controls approximately 97,500 surface net acres, out of 134,000-acre continuous block, all of which are under University Lands. Divide by the total land area. Thankfully, the bulls took control of TRCH stock and ran it up in January. However, analysts are expecting to range from anywhere between $1 per share and $20 per share. On 4/11/19, the company issued a press release announcing the results of its new third party reserve estimate for Orogrande. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. There were some contingences that need to be completed with Universi. 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. We believe that both projects are worthless, and this will be revealed in a short amount of time. 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. 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