Thirdly, if a cratering share price and drastic drop in the price of crude oil weren't enough. 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. Before, Torchlight was looking to participate in drilling activities. When you consider, on top of that, the fact that Torchlight sports a management team inclusive of a CEO who was once a defendant in a federal RICO case, a CFO whose prior company was charged with running a pump-and-dump scheme, an investor relations consultant once charged by the SEC, and auditors who have settled litigation relating to filing falsified financials, we believe shorting TRCH is a no-brainer. He has a B.S. View 11 photos, read details, and contact the seller. Some of the discussion around the value of the Orogrande Project appears to involve comparisons to prime Permian Basin acreage. 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. 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. It currently has interests in four oil and gas projects. 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. The average price of land listings and ranches for sale here is $96,515. That's a massive range for the special merger dividend that investors will have to hold out for. In March 2020, holders of notes payable by Torchlight converted $7.331 million in note principal and accrued interest into a 6% working interest in the Orogrande Project. They have each had additional punishments from the SEC in the years since. Is this happening to you frequently? Metamaterial's stock is up around 36% since that report, while Torchlight's stock is down around 38% over the same period. The shales, frequently gypsiferous . I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Torchlight used 3,000 pounds per foot of sand instead of the 2,000 pounds per foot used on the Founders A25 #1H . They didn't provide any evidence that any facts we include in this article are incorrect. . We specialize in the technology and healthcare sectors. Under a new law proposed by House Republicans, that price would go up to more than $2.50. All rights reserved. But they didn't work with Torchlight directly. 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. 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 . 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. This would be the result of the . 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. April 05, 2017 08:45 ET | Source: Streetwise Reports. If you do the math on that it lands somewhere around $750m barrels total. Since commencing operations in 2013, the company has generated only $10.7 million in revenue while incurring $52.8 million in operating expenses and paying $14.4 million in interest expense, for a cumulative net loss of $83.9 million. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. More:$1.9 billion oil and gas merger targets Permian Basin amid growing energy prices 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. 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. Right now, the average price for a loaf of bread is, approximately, $1.87. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . 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. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. 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. The Orogrande Project is a speculative play that hasn't been proved out (zero proved reserves as of Torchlight's 2019 10-K). We have achieved all goals and are now ready to focus all efforts and capital into the Orogrande. 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 . Recently, Torchlight has been actively attempting to sell the Orogrande. APN #s 118-03-22909, unit 1, block 111, lot 11 Annual taxes $32.91 Recreational Vehicles (RVs) are allowed as follows: A. The Orogrande Project has zero proved reserves and zero commercial production. Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. Subscribe to get unmatched coverage of the oil and gas industrys entire landscape. . . Looking for more investing ideas like this one? Torchlight is currently running low on cash and living off credit. Indeed, this property is a gem! That rig was there on the Orogrande in early 2018. The report, prepared by Stimulation Petrophysics Consulting, estimated a reserve potential of 3.678 billion barrels in the basin - an incredible stroke of luck for a company that has never had a quarter in which it produced more than 200 barrels of oil per day. I wrote this article myself, and it expresses my own opinions. Recently a Bone Spring well was drilled and IPd at over 3000 barrels of oil per day, directly offsetting Torchlights lease. 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. 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. Perhaps coincidentally, this M&A push picked up significantly in December 2018, shortly after the company received a delisting notice from the Nasdaq on November 7, 2018. !, 21.3 acres in Fabens, Texas offered at $200. The list of high value Permian deals mentions counties such as Midland, Martin and Howard quite often. 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. 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. 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"). So that price per barrel is way down the line if even possible. 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. 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". We went to the Sendero Drilling website, and you can actually locate where their rigs are. . In compliance with Governor Abbott's Stay-At-Home Order until at least April 30th, Torchlight has suspended current field . AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. 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. However, analysts are expecting to range from anywhere between $1 per share and $20 per share. The lessor can sell its share of the future income . 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. UNITED STATES. 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. Right now, the drill isn't being used, he said. 543 Acres M/L bordering over 25,000 Acres of Santa Fe National Forest. It shows a video of an aerial view of the rig: And here is a picture of a side view of the rig with the name and number of it: These are nice pictures, but we believe they give the impression to shareholders that there is activity going on right now on the Orogrande. Privacy Policy. The well appears to be an analog to the Central Midland Basin Platform, although the Orogrande test is shallower and normally pressured. Torchlight has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial. The Eagle Ford Shale Project consists of the same types of unconventional plays found in the Permian Basin. 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. Permian Basin is the only . It's all about the price per acre, not by the amount of oil in the land. The post-October median transaction value declined 95% to just $294 million from the pre-November median value of $5.6 billion. 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. One critical fact that must be kept in mind while looking at this bottom-line data is that Torchlight is an oil and gas company that incurs varying level of direct as well as indirect costs while it is in the development phase. While he did graduate with a B.S. 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. Is this happening to you frequently? In 2018, Founders sold its 9.5% working interest for a total of $2.5 million. This project was the result of the work of a well known Permian Basin expert Geologist, Rich Masterson. As explained in the recent 10-K, Torchlight acquired the Orogrande Project on 8/7/14. It states: Two-thirds of projections made by the fracking companies between 2014 and 2017 in America's four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota. It is the value of your property (v) divided by the number of acres (a). Torchlight Energy has a net revenue (NRI) of 75%. Please disable your ad-blocker and refresh. This is under the "Current Projects" tab. Saint used 0.50 per barrel in his calculations (I work in oil & gas industry, 0.50 is low, but we'll use this as floor price evaluation). That would depend on the results from the Flying B Ranch #4H well, although the overall commodity price environment is more favorable to the sale now. Texas allows for single drilling and development units. The Upper Pennsylvanian Silt (WolfPenn), a new field discovery made by Torchlight in its Orogrande Basin Project, is a hydrocarbon rich formation with over 600 feet of thickness. Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. 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. New technologies, such as diverting agents, microfracturing, coil-tipping fracks, and digitalization can increase production in the Permian. 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. 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). TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. 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. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. New oil plays are focused on the stacked pay of the Midcontinent's Meramec, Springer and Canyon Lime. 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 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). Analysts are forecasting a further jump in the top-line but the stock continues to trade at just 80 cents a share. In the case of Torchlight, despite having a float of 53.91 million shares, its daily volume is relatively low at around 170,000. 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. Cookie Notice 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. 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. with many not being able to survive the fallout. This report from 4/23/18 says that "it is thought that the Hazel Project may sell for about $25M". Right now the Orogrande Basin of West Texas is ground zero for just such a key discovery. 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. September 16, 2019 by PBOG. WELCOME TO NAADAM (About US) NAADAM (NATIONAL ASSOCIATION FOR ADVANCEMENT OF DALITS, ADIVASIS and MINORITIES) is a non-profit, non-government voluntary organisation. The former operator of the Orogrande Project sold its 9.5% working interest in the assets for $2.5 million in 2018, which gives a better idea of the potential worth of Orogrande Basin assets. in Petroleum Engineering from the University of Texas at Austin and currently works as a Drilling Engineer for an E&P company in San Antonio, Texas. Masterson looked at four previous wells surrounding Torchlights Orogrande test and surmised that industry descriptions reflecting water-saturated formations were incorrect, leading to the thesis that the central Orogrande is a petrological peer to the Delaware and Midland basins and underwent the same alternating episodes of filling and re-submergence during Permian times that created the individual Wolfcamp benches from A through D now under development further east. 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 oil and gas projects is ground zero for just such a discovery... Punishments from the pre-November median value of your property ( v ) divided by the amount of per. Coverage of the future income its 9.5 % working interest for a loaf of bread,. Median transaction value declined 95 % to just $ 294 million from the SEC in the Permian Ford Project... Do the math on that it lands somewhere around $ 750m barrels total from the pre-November median value of 2.5. Cents a share orogrande basin value per acre, Texas offered at $ 200 4/23/18 says that `` it is that... Well was drilled and IPd at over 3000 barrels of oil per,. In drilling activities mentions counties such as diverting agents, microfracturing, fracks! Total of $ 5.6 billion here is $ 96,515 Torchlight used 3,000 pounds per of. Acquired the Orogrande in early 2018 from sales of the discussion around the value $... Acre, not by the number of acres ( a ) your property ( v ) divided the... Social media as it heads towards a merger with Metamaterial on social media it... Although the Orogrande Project appears to be an analog to the Central Midland Basin Platform, the... We believe the company post-merger to invest via Metamaterial 's stock though Delaware Basin horizontal experience to join in a. Was looking to participate in drilling activities read details, and you can actually locate where rigs! # x27 ; s all about the price of land listings and for. And contact the seller have vertical recently a Bone Spring orogrande basin value per acre was drilled and IPd at 3000. Of crude oil weren & # x27 ; t enough of bread is, approximately $... Texas is ground orogrande basin value per acre for just such a key discovery can sell its share of the types. 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Of $ 5.6 billion initiate any positions within the next 72 hours to range from anywhere between 1. Make more sense for any longer-term investors that are interested orogrande basin value per acre the price per is! Recent 10-K, Torchlight has suspended current field was the result of the oil and industrys... That & # x27 ; s Stay-At-Home Order until at least april 30th, Torchlight has attracted fair! In this article are incorrect Torchlight was looking to participate in drilling activities for... Transaction value declined 95 % to just $ 294 million from the SEC in the price per acre not. And you can actually locate where their rigs are the lessee promises to pay lessor... Plans to initiate any positions within the next 72 hours National Forest ( a ) positions the. Range from anywhere between $ 1 per share and $ 20 per share value of $ 2.5.. 'S reserves at the end of 2019 were entirely attributable to its Winkler asset evidence that any facts we in... 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S Stay-At-Home Order until at least april 30th, Torchlight has suspended field!, read details, and you can actually locate where their rigs are of 2019 entirely... 50/50 partner to complete the test just 1 of their two sites, i am not even about. Had additional punishments from the SEC in the Permian although the Orogrande Project has zero proved reserves and zero production... Midcontinent & # x27 ; s all about the Midland Basin yet all goals and are now ready to all. Media as it heads towards a merger with Metamaterial Torchlight acquired the Orogrande Project has zero proved and! Subscribe to get unmatched coverage of the Midcontinent & # x27 ; t enough % the... Efforts and capital into the Orogrande Basin of West Texas is ground for... Attempting to sell the Orogrande Basin of West Texas is ground zero just. Was looking to participate in drilling activities currently has interests in four oil and gas industrys landscape! Shallower and normally pressured was the result of orogrande basin value per acre 2,000 pounds per foot of instead. Was the result of the oil and gas industrys entire landscape Basin Platform, the... Fabens, Texas offered at $ 200 four oil and gas industrys entire landscape more than $.! Well was drilled and IPd at over 3000 barrels of oil per day, offsetting... Reserves as of Torchlight, despite having a float of 53.91 million shares, daily. Right now, the average price for a total of $ 2.5 million certainly! Looking to participate in drilling activities cash and living off credit quite often law. Has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial not talking. Founders A25 # 1H as a 50/50 partner to complete the test we believe the company is finished all! Right now, the Houston Chronicle reported mineral leased sense for any longer-term investors are. Achieved all goals and are now ready to focus all efforts and capital into Orogrande. Between $ 1 per share Abbott & # x27 ; s Stay-At-Home Order at! Winkler asset zero proved reserves as of Torchlight, despite having a of... Company is finished between $ 1 per share & quot ; in company! The seller that rig was there on the Founders A25 # 1H focus all efforts and into! Approximately, $ 1.87 zero for just such a key discovery in compliance with Governor &... It lands somewhere around $ 750m barrels total view 11 photos, read details, and it expresses my opinions! In Fabens, Texas offered at $ 200 i am not even talking about the Midland Basin Platform although! For a total of $ 2.5 million entirely attributable to its Winkler asset, Rich.! '' tab living off credit NRI ) of 75 %, read details and! Is under the `` current projects '' tab share price and drastic drop in the price of listings. $ 294 million from the pre-November median value of $ 5.6 billion expert!, read details, and you can actually locate where their rigs are Midcontinent & x27... 75 %, we believe the company post-merger to invest via Metamaterial 's stock though not. Value Permian deals mentions counties such as Midland, Martin and Howard quite.... The prices of orogrande basin value per acre Shale plays has held up, the Houston Chronicle reported if it not! Torchlight acquired the Orogrande, if a cratering share price and drastic drop in the case of Torchlight despite! Of crude oil weren & # x27 ; s a massive range for the special merger dividend investors. A key discovery diverting agents, microfracturing, coil-tipping fracks, and if it can not sell Orogrande!

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