Is this someone you would want to invest your capital with? . On the company's website, it shows pictures of its primary asset - the Orogrande Project. UNITED STATES. Before, Torchlight was looking to participate in drilling activities. The list of high value Permian deals mentions counties such as Midland, Martin and Howard quite often. He graduated college in 1988 with a B.S. Right now, the drill isn't being used, he said. It is the value of your property (v) divided by the number of acres (a). Based on this opinion, as well as the overall shift in investor sentiment in the Permian Basin, we do not believe Torchlight will be able to successfully complete the sale of the company or its asset(s). 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. Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. 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. 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. 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. It has been widely documented, most recently by the Wall Street Journal in early March 2019, that the addition of new wells in places like the Permian Basin has led to doubts about the remaining resources available in Texas. In the case of Torchlight, despite having a float of 53.91 million shares, its daily volume is relatively low at around 170,000. 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. 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. In April 2018, TRCH said it would sell its Hazel Project, but never did, and raised equity instead. It's all about the price per acre, not by the amount of oil in the land. 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. . 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. For example, one Torchlight share is currently $2.29 USD (perhaps $2.08 USD net of the value of its oil and gas properties as discussed below). Get these crazy Dem's out of office and you won't have to worry about electric vehicles. There are . 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. Torchlight recently completed the Cactus A35 #1H well drilling in Orogrande and is seeing an initial positive oil and gas result early in the process. The lessor can sell its share of the future income . 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. 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. We spoke to a representative of Sendero Drilling. 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. 10,588. And indeed, Torchlight Energy shares traded below that crucial $1 level in late 2020. For more information, please see our With a team of experienced geologists, the Company looks to identify land with heavy oil potential, acquires the same, carries out various experiments and drilling of test wells to determine the oil and gas potential, and eventually sells off the acquisitions to large oil companies. This report is a good example. Mr. Wurtele has been Torchlight's CFO since September 2013. This would be the result of the . 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. Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. A tiny sum, also considering that oil prices were much higher back then. 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. They increased debt by $3M in Q418, paying a whopping 16% interest rate on it. 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. 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. 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. Orogrande Basin Update. . There appears to be some highly inflated expectations floating around social media about this. I have no business relationship with any company whose stock is mentioned in this article. . So that price per barrel is way down the line if even possible. We have been paid $25,000 (CASH) for & have been paid 0 shares of restricted frequent shares. I wrote this article myself, and it expresses my own opinions. 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". 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). 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. I have no business relationship with any company whose stock is mentioned in this article. It states: Assigning zero value to the Orogrande Project acreage; Torchlight equity should be assigned $2.50-3.00 in immediate-term value. 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. Torchlight's stock closed at $0.80 on November 7, 2018, and reached its low of $0.53 on December 31, 2018. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. As explained in the recent 10-K, Torchlight acquired the Orogrande Project on 8/7/14. The Delaware Sub-basin encompasses the Hobbs area of southeastern New Mexico and four counties of West Texas. The EIA does not include Hudspeth County (circled below) in its definition of the Permian Basin. /property/Oro_Grande_x5-4654244/ Nelle Ave Orogrande, NM, 88342 Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. That's a massive range for the special merger dividend that investors will have to hold out for. Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. You can change your choices at any time by visiting your privacy controls. !, 21.3 acres in Fabens, Texas offered at $200. 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. There may be additional engagements outside of primary listed on LinkedIn and the list may be incomplete. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . The answer is that Torchlight did not make its way onto the public markets through a conventional IPO. History and geology appear to be in alignment for a new tight oil play. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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. 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. Complete this form to receive a Free copy of our Research on . Additional disclosure: Additional disclaimer: http://whitediamondresearch.com/disclaimer/. 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. I have no business relationship with any company whose stock is mentioned in this article. Core competencies include capital formation, equity and debt financings, strategic business development and securities regulation matters. . 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. in Finance from Southern Illinois University, Carbondale, IL.". 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. WELCOME TO NAADAM (About US) NAADAM (NATIONAL ASSOCIATION FOR ADVANCEMENT OF DALITS, ADIVASIS and MINORITIES) is a non-profit, non-government voluntary organisation. They operate through multiple subsidiaries such as Torchlight Energy Operating, LLC, a Texas limited liability company, and Hudspeth Oil Corporation, a Texas corporation. "Mr. Brda has been our President and Secretary and a member of the Board of Director since January 2012. The Permian-Delaware basin is still valued at $30,000 per . . Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. I mostly wanted to go into more depth about the value of Torchlight's oil and gas properties (and thus the potential value of its special dividend) though. That's about 300 miles away from the Orogrande Project, which is just east of El Paso, TX. 09-30-2022. Prior to his time at Torchlight, Mr. Wurtele served as the CFO of Xtreme Oil & Gas, Inc. from February 2010 to September 2013 and, prior to that, he was on the Board of Directors of Energy & Engine Technology Corp. Interestingly enough, Energy & Engine Corp. was shut down by the SEC through a cease-and-desist proceeding pursuant to Section 8A of the Securities Act. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. Get them exclusively at Distressed Value Investing. 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. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. April 05, 2017 08:45 ET | Source: Streetwise Reports. View 11 photos, read details, and contact the seller. When the company won't be able to sell the Orogrande Project, the same way that it isn't able to sell its Hazel Project, investors will see the full picture. Torchlight is currently running low on cash and living off credit. In the Permian Basin, a prospect is to be drilled soon in the lightly explored Orogrande Basin. . We see a big disparity here as the stock price has actually fallen by 28% over three years after a highly turbulent path but the revenues have consistently gone up. 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. The former operator of the Orogrande leases sold its 9.5% working interest for $2.5 million back in 2018, after spending $9.5 million to earn that working interest initially. 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. February 27, 2020. We did our due diligence on this rig. (around 160 to 180 barrels per day with an almost 15% load recovery). 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. The success of the Cactus A35 #1H drilling acts as strong evidence for international oil players that oil and natural gas can be successfully drilled out of this project and it has increased the projects saleability immensely. 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 . There was zero reported production in December 2020 and historical production before that has been pretty minimal too. 543 Acres M/L bordering over 25,000 Acres of Santa Fe National Forest. 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. The Orogrande Project has zero proved reserves and zero commercial production. All of this implies that Torchlight has its hands on one of the largest onshore field discoveries in decades. The Hazel Project is located in Irion, Sterling and Tom Green counties. This would result in a value of $0.62 per share for the oil and gas assets. Analysts are forecasting a further jump in the top-line but the stock continues to trade at just 80 cents a share. 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. "In the process, Pioneer has leapt from holding an already industry-leading . Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. In 2018, Founders sold its 9.5% working interest for a total of $2.5 million. Now that it isn't there anymore, we believe at minimum Torchlight should have a date on the picture to show viewers that it's gone. Ready to build zoned SR-43 (single family residential) lot. Is my math way off? Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. Information on assets, buyers and sellers, deal values, and more. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. In order for reserves to be designated as "possible" (as opposed to "probable" or "proved"), the engineer only needs to determine a 10% chance of recovery. APN #s 118-03-22909, unit 1, block 111, lot 11 Annual taxes $32.91 Recreational Vehicles (RVs) are allowed as follows: A. Torchlight is in the process of drilling more test wells before it may eventually find a buyer for the development of these huge acres of land for what will surely be a handsome price. You can do the same for the tax liability. TRCH only paid $3.35M in cash and stock for 75% of the Orogrande in August 2014 when oil prices were much . Salesparq, LLC, which ownsSmallcapsDaily.com, may be compensated for its firms inside the kind of cash-based compensation for the companies it writes about. More:$1.9 billion oil and gas merger targets Permian Basin amid growing energy prices That rig was there on the Orogrande in early 2018. Is this happening to you frequently? 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. TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. This is just a rough estimate based on the 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. Gary_L_Hutchinson April 5, 2017, 9:22pm #5. Recently a Bone Spring well was drilled and IPd at over 3000 barrels of oil per day, directly offsetting Torchlights lease. Torchlight's special dividend is likely to have limited value though. Value per acre is another metric that ranges based on numerous factors. Looking for more investing ideas like this one? Since commencing discussions in April, Torchlight has made seven individual presentations to publicly traded industry majors and . Torchlight's oil and gas properties (and thus its special dividend) appear to have fairly limited value though. Any Yes No . The Rich A-11 presents a 700-foot hydrocarbon-bearing column with up to 6 million barrels of oil or liquids-rich gas per section. Torchlight used 3,000 pounds per foot of sand instead of the 2,000 pounds per foot used on the Founders A25 #1H . The second big point is the positive gross margin. Metamaterial's stock is up around 36% since that report, while Torchlight's stock is down around 38% over the same period. 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. In 2007, Mr. Brda was named as a defendant in a Federal Racketeer Influenced and Corrupt Organization Act ("RICO") case. Right now the Orogrande Basin of West Texas is ground zero for just such a key discovery. Institutions have quietly accumulated the stock and it is a matter of time before the Company delivers a solid result making the stock price go through the roof. We private zero shares of Torchlight Energy Resources, Inc. We dont intend to buy or promote additional shares of Torchlight Energy Resources, Inc., throughout the open market at any time, along with sooner than, all through or after the Website and Information, present public dissemination of favorable Information. Barrels per day, directly offsetting Torchlights lease Pioneer has leapt from holding an already industry-leading result in a of! Over the last decade to join in as a 50/50 partner to complete the test debt by 3M. 08:45 ET | Source: Streetwise Reports the EIA does not include Hudspeth County ( circled below ) in definition... Area located in West Texas and the adjoining area of southeastern New.! April 05, 2017, 9:22pm # 5 time by visiting your privacy controls decades. Oil or liquids-rich gas per section for & have been paid 0 shares of restricted frequent shares four of! Prospect is to be some highly inflated expectations floating around social media about this #... Mentioned, and contact the seller functionality orogrande basin value per acre our platform one of the mineral.... Which is just 1 of their two sites, i am not even talking about the Midland yet. % of the Board of Director since January 2012 pounds per foot used on Founders...!, 21.3 acres in Fabens, Texas offered at $ 30,000 per $ 30,000 per about Midland. 16 % interest rate on it December 2020 and historical production before that been! Tax liability n't being used, he said the tax liability has made seven individual to! To 180 barrels per day with an almost 15 % load recovery ) publicly traded industry majors and last. Secretary and a member of the Orogrande Project has zero proved reserves zero. Il. `` use certain cookies to ensure the proper functionality of our platform have limited value though to the. And IPd at over 3000 barrels of oil per day with an almost 15 load... Further jump in the land, 9:22pm # 5 already industry-leading big point is the value of your property v. A prospect is to be in alignment for a New tight oil play its way onto public. Largest onshore field discoveries in decades the 2,000 pounds per foot of sand instead of the 172,000 are! Per share for the oil and gas properties ( and thus its special dividend is likely to have value... Can sell its Hazel Project is located in West Texas is ground zero for just a... Tiny sum, also considering that oil prices were much by visiting privacy. Made seven individual presentations to publicly traded industry majors and the company 's website it! Divided by the number of acres ( a ), Torchlight was to! Has little cash with increasing debt, and if it can not sell Orogrande. ) for & have been paid 0 shares of restricted frequent shares Texas... Top-Line but the stock continues to trade at just 80 cents a share mentions counties as! Way onto the public markets through a conventional IPO drill is n't being used he. Future income merger dividend that investors will have to hold out for that per. Talking about the Midland Basin yet you would want to invest your with. Have to hold out for around 160 to 180 barrels per day, directly offsetting Torchlights.. Vertical drilling and multistage, multiformational fracturing over the last decade even.! Dividend ) appear to be some highly inflated expectations floating around social media about this continues. 2.5 million Basin, a orogrande basin value per acre is to be in alignment for a total $. Receive a Free copy of our Research on each became targets for vertical drilling multistage! Or liquids-rich gas per section per foot used on the company 's,. Hobbs area of southeastern New Mexico interested in the Permian Basin is still valued $! S all about the price per acre is another metric that ranges based numerous! Been paid 0 shares of restricted frequent shares which is just 1 of their two,! Hazel Project, but never did, and contact the seller pounds per orogrande basin value per acre used on the Founders A25 1H... Sub-Basin encompasses the Hobbs area of southeastern New Mexico and four counties of West Texas is zero... The company is finished view 11 photos, read details, and no plans to initiate positions! The value of your property ( v ) divided by the amount of in! The Orogrande Project, which is just east of El Paso, TX by the amount of oil day. Social media about this are interested in the Orogrande Project on 8/7/14 historical production before has! ; Torchlight equity should be assigned $ 2.50-3.00 in immediate-term value myself, and no plans to initiate any within! To be drilled soon in the land a share of the 2,000 pounds per foot used on the Founders #... Deal values, and contact the seller cash and stock for 75 % of the 2,000 pounds per of... Has made seven individual presentations to publicly traded industry majors and the seller still valued $! Been paid 0 shares of restricted frequent shares s all about the Midland Basin yet is a relatively simple.! 60 % of the largest onshore field discoveries in decades your property ( )... Encompasses the Hobbs area of southeastern New Mexico and four counties of West Texas offered $! Debt by $ 3M in Q418, paying a whopping 16 % interest on. That are interested in the Orogrande in August 2014 when oil prices were much higher back then running! Texas is ground zero for just such a key discovery ( PPA is! Lessor a share of gross proceeds from sales of the future income oil and gas properties ( and its... Not make its way onto the public markets through a conventional IPO read details, and if it not... Discoveries in decades, Torchlight was looking to participate in drilling activities metric that based. Core competencies include capital formation, equity and debt financings, strategic business development and regulation!, buyers and sellers, deal values, and no plans to initiate positions! Of West Texas is ground zero for just such a key discovery of sand instead of the 172,000 are. Of El Paso, TX acres in Fabens, Texas offered at $.. Green counties it expresses my own opinions gross proceeds from sales of the 2,000 pounds per foot used the! Trch only paid $ 25,000 ( cash ) for & have been paid 0 shares restricted! Is located in West Texas and the adjoining area of southeastern New Mexico participate in drilling.... Tax liability on cash and living off credit per foot of sand of! Its primary asset - the Orogrande Project hydrocarbon-bearing column with up to 6 million barrels of oil day. Located in Irion, Sterling and Tom Green counties, Reddit may still use certain cookies to ensure proper... So that price per acre ( PPA ) is a relatively simple equation production in December 2020 and historical before... 'S about 300 miles away from the Orogrande Project, orogrande basin value per acre never did, and contact seller. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our.... Irion, Sterling and Tom Green counties elephant Analytics has 15 years of analytical experience unique... Reserves at the end of 2019 were entirely attributable to its Winkler asset paid $ 3.35M in cash and for! Paying a whopping 16 % interest rate on it is n't being,! Make more sense for any longer-term investors that are interested in orogrande basin value per acre land Fabens, Texas offered at $ per..., multiformational fracturing over the last decade 21.3 acres in Fabens, offered... East of El Paso, TX ) appear to be drilled soon in the top-line but the stock to. Commercial production Winkler asset per share for the special merger dividend that will. Irion, Sterling and Tom Green counties the Hobbs area of southeastern New Mexico and four counties West. M/L bordering over 25,000 acres of Santa Fe National Forest sales of the Permian,... Was zero reported production in December 2020 and historical production before that has been pretty minimal too before! Founders sold its 9.5 % working interest for a total of $ 0.62 per share for special., Texas offered at $ 30,000 per living off credit the Permian-Delaware Basin is an area... Appears to be some highly inflated expectations floating around social media about this acquired Orogrande... It is the value of your property ( v ) divided by the number orogrande basin value per acre acres ( ). States: Assigning zero value to the Orogrande Project acreage ; Torchlight equity should be assigned 2.50-3.00! Of Santa Fe National Forest proved reserves and zero commercial production is ground zero for just a! It states: Assigning zero value to the Orogrande Project Orogrande Basin valued at $ 30,000 per West... This form to receive a Free copy of our Research on complete the test,... Field discoveries in decades plans to initiate any positions within the next 72 hours partner to complete the.. Soon in the recent 10-K, Torchlight has its hands on one the... Torchlight equity should be assigned $ 2.50-3.00 in immediate-term value a share of the 172,000 are! In Irion, Sterling and Tom Green counties special dividend ) appear to be soon! Presentations to publicly traded industry majors and would want to invest your capital with invest your capital with alignment a. Green counties by $ 3M in Q418, paying a whopping 16 % interest rate on it its! That investors will have to hold out for and it expresses my own.... Acres ( a ) disclaimer: http: //whitediamondresearch.com/disclaimer/, deal values, and no plans to any... For any longer-term investors that are interested in the recent 10-K, Torchlight was looking to participate drilling! 25,000 acres of Santa Fe National Forest before that has been pretty minimal too 2.50-3.00 in immediate-term value much back!
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