We believe this news could really change the market perception and send the stock skyrocketing. 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. 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". He had not heard of Torchlight prior to looking over the project and has no financial interest in the company. It states: Assigning zero value to the Orogrande Project acreage; Torchlight equity should be assigned $2.50-3.00 in immediate-term value. We believe that both projects are worthless, and this will be revealed in a short amount of time. Note: We have contacted Torchlight's Investor Relations ("IR") regarding Torchlight's questionable past and have integrated their response in this article. In addition to Umbrella, 321 Gold Ltd., run by Robert Moriarty, has also been a consistent supporter of Torchlight in "research" reports published on his website, 321gold.com. Direct costs are bound to go up as the extraction activity scales, but Torchlight is clearly profitable at the level of its gross margin. 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. However, in recent years depending on those factors, many deals traded around $8,000 to $12,000 per acre. The funds were used for the expansive drilling at Orogrande Basin. In compliance with Governor Abbott's Stay-At-Home Order until at least April 30th, Torchlight has suspended current field . And, the Orogrande is all that Torchlight has. 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. 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. It is only a matter of time before the management starts divesting the projects which implies a huge jump in the top-line with a minimal increase in direct and indirect expenses so it seems like the Company will soon have a strong return on equity. 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. If you have an ad-blocker enabled you may be blocked from proceeding. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. . Get them exclusively at Distressed Value Investing. This will, therefore, increase Torchlight's interest in Orogrande, one of its three oil and gas projects, where it is pursuing development of the sizable land package. For the Quarter Ended September 30, 2019 . . Core competencies include capital formation, equity and debt financings, strategic business development and securities regulation matters. 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. Under a new law proposed by House Republicans, that price would go up to more than $2.50. 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. Much of south-central New Mexico hosts a Paleozoic basin that formed concurrently with the Delaware and Midland basins of southeastern New Mexico and West Texas. Analysts are forecasting a further jump in the top-line but the stock continues to trade at just 80 cents a share. Compare properties, browse amenities and find your ideal property in Orogrande, New Mexico . The Orogrande Basin Project & Its Big Breakthrough. If you do the math on that it lands somewhere around $750m barrels total. The valuation gap between Torchlight's shares and Metamaterial's shares (based on the business combination) remains substantial, although narrowed from a few weeks ago. Texas allows for single drilling and development units. So tantalizingly closethat's the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. All rights reserved. The list of high value Permian deals mentions counties such as Midland, Martin and Howard quite often. separate Wall Street Journal investigation. 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. Price Per Acre. Value per acre is another metric that ranges based on numerous factors. The Hazel Project is located in Irion, Sterling and Tom Green counties. Prior to the Q2 2013 10-Q, the company's address was listed as 2007 Enterprise Avenue in League City, Texas. 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. The Orogrande Project is a speculative play that hasn't been proved out (zero proved reserves as of Torchlight's 2019 10-K). Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. 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. Especially when all the infrastructure is already built. Based on an analysis by Mike Mullen, president and founder of Stimulation Petrophysics Consulting, the Orogrande basin has a recoverable reserves estimate of 3.7 billion barrels of oil equivalent, the Plano, Texas-based company said. Calvetti Ferguson has also had legal troubles in the past. 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. I have no business relationship with any company whose stock is mentioned in this article. This would result in a value of $0.62 per share for the oil and gas assets. Likewise, the Marcellus Shale lease can generate as much as $4,800 per net acre. 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. 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. 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. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. 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. We, Yahoo, are part of the Yahoo family of brands. It's all about the price per acre, not by the amount of oil in the land. has pushed up prices. How much do you think $57 billion dollars of oil underground will sell for to an oil company. 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. 1.17 acres in Cochise County, Arizona Beautiful 1.17 acre lot with power just down the street! This would make it very easy for the Company to transport the oil and gas from the facility and would reduce transportation costs. 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. 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. We have achieved all goals and are now ready to focus all efforts and capital into the Orogrande. Shale development is just beginning in the Delaware. You can change your choices at any time by visiting your privacy controls. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. Torchlight essentially operates through a unique hybrid of a private equity model, overlaid with a publicly traded company. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. 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. The second big point is the positive gross margin. This is not an asset that buyers would pay billions or even hundreds of millions for. Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. 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. 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. Instead of selling or monetizing the Hazel Project last year, Torchlight did an equity raise. It currently has interests in four oil and gas projects. 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 average price of land listings and ranches for sale here is $96,515. FORM 10-Q (Mark One) x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. The sale could be for part or all of Shell's about 260,000 acres in the Permian Basin, located mostly in Texas. This is under the "Current Projects" tab. 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. For more information, please see our SAN FRANCISCO, CA-- (Marketwired . This high desert ranch country is punctuated by volcanic intrusions and uplifts that give it a distinctly western landscape. There appears to be some highly inflated expectations floating around social media about this. They believe it will yield 156 sections with the potential of 4-6 million barrels per section. Please. Torchlight is currently running low on cash and living off credit. Washington, D.C. 20549 . is in the process of . In April 2019, TRCH said it will sell its Orogrande Project, but we dont believe that will ever happen. On a 10-20 acre producing in the Midland basin what could I expect the value per acre to be? 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. . 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". I wrote this article myself, and it expresses my own opinions. They increased debt by $3M in Q418, paying a whopping 16% interest rate on it. In 2018, Founders sold its 9.5% working interest for a total of $2.5 million. I have no business relationship with any company whose stock is mentioned in this article. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. On June 12, 2018, Nobilis Health Corp. filed a malpractice lawsuit in Houston, Texas against Briggs & Veselka. 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. 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. All of this implies that Torchlight has its hands on one of the largest onshore field discoveries in decades. This means that if there is no oil 90% of the time, then he could still be right in his "possible" designation. 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! The other two counties have a relatively modest amount of production (around 2,000 barrels of oil per day combined). o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934. /property/Oro_Grande_x5-4654244/ Nelle Ave Orogrande, NM, 88342 Indeed, this property is a gem! Is this someone you would want to invest your capital with? Prices for top E&P stocks and commodities. Thirdly, if a cratering share price and drastic drop in the price of crude oil weren't enough. 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. 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 . We specialize in the technology and healthcare sectors. 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