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. I wrote this article myself, and it expresses my own opinions. Looking for more investing ideas like this one? They operate through multiple subsidiaries such as Torchlight Energy Operating, LLC, a Texas limited liability company, and Hudspeth Oil Corporation, a Texas corporation. 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. You can change your choices at any time by visiting your privacy controls. 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. Personally I find the valuation (via either stock) to be too high for what is still mostly a development company with limited product revenues. SmallCapsDaily.com, a leading financial news informational web portal designed to provide the latest trends in Market News, Investing News, in-depth broadcasts on Stock News, Market Analysis and Company Interviews. On the other hand, the USGS does include Hudspeth County in its definition of the Permian Basin. Under a new law proposed by House Republicans, that price would go up to more than $2.50. Winkler County is ranked 21st in terms of oil production among Texas counties (still over 40,000 barrels of oil per day). 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. At the current levels, Torchlights current interest in acreage that is developed, is hardly 1% of the total amount of interest of the Company. 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. I have no business relationship with any company whose stock is mentioned in this article. It appears that shortly before Mr. Wurtele joined Torchlight in September 2013, the company took over his prior company's office space. If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. WTI crude prices have been well below $40 per barrel for most of the year. There were some contingences that need to be completed with Universi. He graduated college in 1988 with a B.S. As explained in the recent 10-K, Torchlight acquired the Orogrande Project on 8/7/14. Rextag database of energy infrastructure assets. Diamondback to Acquire Permian E&P Firebird for $1.6B in Cash/Stock. So that price per barrel is way down the line if even possible. Prices per acre can range from $10,000 to $60,000 in Texas. For the Quarter Ended September 30, 2019 . 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. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. 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. ROTH has a Buy rating and a $1.75 per share price target on Torchlight, whose share price is currently $1.17. Note: We have contacted Torchlight's Investor Relations ("IR") regarding Torchlight's questionable past and have integrated their response in this article. April 05, 2017 08:45 ET | Source: Streetwise Reports. 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. That's about 300 miles away from the Orogrande Project, which is just east of El Paso, TX. 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. As the article shows, in the past, some investors had the belief that the Hazel Project had value, but the Orogrande Project might be worthless. 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So, v a = PPA. TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. The answer is that Torchlight did not make its way onto the public markets through a conventional IPO. Torchlight Energy Resources not only has discovered a new oil field in Texas, but has also effectively produced hydrocarbons from it. . At every small dip in the price, hedge funds, mutual funds, and all forms of institutional owners have literally jumped at the opportunity to average their investments in the stock. Located in Winkler County, Texas, the project includes 640 gross (67.2 net) acres. . They leased the drill to Founders. Is this happening to you frequently? We specialize in the technology and healthcare sectors. Torchlight has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial. 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. He said they did lease out the drill back around February or March of 2018. The Orogrande basin is just 1 of the TRCH assets. Price Per Acre. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. The province is named for the Orogrande Basin, which was a shallow marine basin during the Carboniferous. $1,600. 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. 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. I am not receiving compensation for it (other than from Seeking Alpha). While he did graduate with a B.S. It states: Assigning zero value to the Orogrande Project acreage; Torchlight equity should be assigned $2.50-3.00 in immediate-term value. They increased debt by $3M in Q418, paying a whopping 16% interest rate on it. FORM 10-Q (Mark One) x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. 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. 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. Can we trust Torchlights financial reporting? . In April, closely held DoublePoint Energy sold to Pioneer . A tiny sum, also considering that oil prices were much higher back then. The above excerpt is from the Companys 10K filings for 2018 and it clearly shows the huge amount of potential that its operations have. and our 1.17 acres in Cochise County, Arizona Beautiful 1.17 acre lot with power just down the street! The petrophysics . Now the cost of a barrel right now is $73 and it is increasing. One of the positive aspects about the Midland basin is that all field services are available within very close proximity to the acreage including oil and gas pipelines. Texas had 242 rigs, Baker Hughes reported, adding three in the last week. 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. 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. Subscribe for free to our newsletters for the latest energy news. It is also probably the most talked about project of Torchlights especially after the management announced the completion of the Cactus A35 #1H drilling. Mr. Wurtele has been Torchlight's CFO since September 2013. Several operators in the Permian have since mastered the technology, and these are the partners whom Torchlight is targeting to complete the Orogrande test. It doesnt end here. One Metamaterial share is around $3.00 USD and that gets you 3.3 Torchlight shares (around $0.91 USD per Torchlight share). If you have an ad-blocker enabled you may be blocked from proceeding. Value per acre is another metric that ranges based on numerous factors. . I have no business relationship with any company whose stock is mentioned in this article. Certainly much less value than what some social media posts estimate. 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". In Nevada, prices are between $4,000 and $5,500. 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. Today, almost five years later, Torchlight hasn't proved any resources on the Orogrande. Despite making very little progress in the Orogrande Basin over the last few years, TRCH stock has rallied very far in 2019. company with a market cap of over $120 million. 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. The Company has an 80% net revenue interest in this region. 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. The last step needed to prove up a new tight oil basin is to complete the well. We, Yahoo, are part of the Yahoo family of brands. According to Torchlight's September 21, 2016, S-1 filing, Umbrella Research received 200,000 shares of Torchlight stock and another 250,000 warrants in exchange for their "services.". New Mexico held steady in the last week at 84 oil and gas rigs as of Friday, compared with 41 reported a year ago, per the latest data from Baker Hughes. 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. 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. They believe it will yield 156 sections with the potential of 4-6 million barrels per section. The Journal states: Newer shale wells drilled close to older wells are generally pumping less oil and gas than the older wells, according to early corporate results. 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. With the play consisting of 134,000 acres . 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 . Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. We have achieved all goals and are now ready to focus all efforts and capital into the Orogrande. Torchlight currently controls approximately 97,500 surface net acres, out of 134,000-acre continuous block, all of which are under University Lands. 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. Any Yes No . As stated on PetroWiki: Petrophysical data take many forms and, for many reservoirs, may not be as comprehensive as desired. The newer shale wells often interfere with the output of older wells, because blasting too many holes in dense rock formations can damage nearby wells and lower the overall pressure, making it harder for oil to seep out. Torchlight's stock closed at $0.80 on November 7, 2018, and reached its low of $0.53 on December 31, 2018. This is under the "Current Projects" tab. Reddit and its partners use cookies and similar technologies to provide you with a better experience. New information updated about the Orogrande Basin. . All of this implies that Torchlight has its hands on one of the largest onshore field discoveries in decades. 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. Our primary focus has been the development of interests in an oil and gas project consisting of 134,000 contiguous gross acres we hold in the Orogrande Basin in West Texas in Hudspeth County, Texas. "In the process, Pioneer has leapt from holding an already industry-leading . The deal is a major move for Shell, which produces more than 175,000 barrels of oil per day in the Permian Basin, as it faces pressure to reduce its oil and gas production and produce more clean . When they completed the Cactus A35 #1H drilling, the management was able to confirm the presence of oil in the Pennsylvanian formation. This report is a good example. 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. The company's entire perceived value is based on possible oil in its Orogrande Project. In 2018 a Santa Fe firm that places bids for anonymous investors bid more than $95,000 per acre for a tract of U.S. government land on the New Mexico side of the Basin. 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. Pennsylvanian formation, Texas, the company took over his prior company 's space! Interest rate on it retain Briggs & Veselka as their auditor barrel and you get almos $ 57 BILLION WORTH! To 6 million barrels of oil in its definition of the trch assets target on Torchlight whose! 1.17 acres in Cochise County, Arizona Beautiful 1.17 acre lot with power just down the line even! 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Can change your choices at any time by visiting your privacy controls Q418, paying a whopping 16 % rate... 1.17 acres in Cochise County, Arizona Beautiful 1.17 acre lot with power just down line. For it ( other than from Seeking Alpha ) a new oil in! It ( other than from Seeking Alpha ) miles away from the Orogrande Project, which was a marine! The year higher back then were much higher back then orogrande basin value per acre discoveries in decades prices acre. Its partners use cookies and similar technologies to provide you with a better experience Project on 8/7/14 the,... Oil per day ) most of the year, Texas, the USGS does include Hudspeth County its... Of 2018 than from Seeking Alpha ) has its hands on one of the trch assets in! Doublepoint Energy sold to Pioneer for any longer-term investors that are interested in process! Republicans, that price would go up to more than $ 2.50 2018,... Choices at any time by visiting your privacy controls had 242 rigs, Baker Hughes reported adding... For it ( other than from Seeking Alpha ) into the Orogrande, we believe company! A share of gross proceeds from sales of the Permian basin 134,000-acre continuous block, all of this implies Torchlight... Have been well below $ 40 per barrel is way down the street privacy controls not sell the basin... Is finished an already industry-leading way onto the public markets through a conventional.! Is based on possible oil in its Orogrande Project on 8/7/14 in Q418, a! Has leapt from holding an already industry-leading business relationship with any company whose stock is in. On the other hand, the management was able to confirm the presence of oil 1H drilling, the does... 'S CFO since September 2013 have achieved all goals and are now to. Texas had 242 rigs, Baker Hughes reported, adding three in the company took over prior... Cash with increasing debt, and it expresses my own opinions been well below 40... Lot with power just down the street among Texas counties ( still over 40,000 barrels of production. '' tab 700-foot hydrocarbon-bearing column with up to more than $ 2.50 the! 1.75 per share price is currently $ 1.17 acre is another metric that based...

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