The average price of U.S. shale acreage has fallen by more than 70% in two years from $17,000 per acre in 2018 to $5,000 per acre in 2020, according to Norwegian energy research firm Rystad. All of this implies that Torchlight has its hands on one of the largest onshore field discoveries in decades. Texas allows for single drilling and development units. Mr. Brda, who also co- founded the Company, has been the Managing Member of Brda & Company, LLC since 2002, which provides consulting services to public companies - with a focus in the oil and gas sector. 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. Complete this form to receive a Free copy of our Research on . 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). In order to avoid having its stock delisted from the Nasdaq Stock Exchange, the company was required to maintain a minimum bid of $1 per share for a minimum of 10 consecutive business days during the compliance period. Torchlights Midland basin project is its second largest project with approximately 12,000 gross acres of area that will almost entirely be operated. The funds were used for the expansive drilling at Orogrande 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. However, in recent years depending on those factors, many deals traded around $8,000 to $12,000 per acre. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. More:$1.9 billion oil and gas merger targets Permian Basin amid growing energy prices Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. Texas had 242 rigs, Baker Hughes reported, adding three in the last week. February 27, 2020. 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. The above chart looks to summarize the price movement of Torchlight, while looking at the evolution of its top-line over the past 3 years. NOG Acquires Northern Delaware/Permian Assets for $157 Million. So tantalizingly closethats the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. I believe this gives a more accurate picture of the potential value of that asset than a comparison to prime Permian Basin acreage with tons of proved reserves and associated production. 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. These calculations tend to mention the value of prime Permian Basin acreage when discussing Torchlight's Orogrande Basin acreage. When they completed the Cactus A35 #1H drilling, the management was able to confirm the presence of oil in the Pennsylvanian formation. In 2007, Mr. Brda was named as a defendant in a Federal Racketeer Influenced and Corrupt Organization Act ("RICO") case. (10.72% of the property will not be operated on.) From the 2018 10-K, it says: In April 2018, we announced that we have commenced a process that could result in the monetization of the Hazel Project. Source: Peter Krauth for Streetwise Reports 02/25/2020. One Metamaterial share is around $3.00 USD and that gets you 3.3 Torchlight shares (around $0.91 USD per Torchlight share). Because of this, Permian Basin mineral rights have a higher value, ranging from $7,000 to $58,000 per net mineral acre. Information on assets, buyers and sellers, deal values, and more. Information about your device and internet connection, like your IP address, Browsing and search activity while using Yahoo websites and apps. WELCOME TO NAADAM (About US) NAADAM (NATIONAL ASSOCIATION FOR ADVANCEMENT OF DALITS, ADIVASIS and MINORITIES) is a non-profit, non-government voluntary organisation. 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. separate Wall Street Journal investigation. 09-30-2022. 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. Shale development is just beginning in the Delaware. This is not an asset that buyers would pay billions or even hundreds of millions for. 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? Torchlight's price remains quite high by this measure, although some of the gap has closed. Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. The sandstone varies in color from gray to many shades of pink, yellow, red, and purple and in texture from soft coarse-grained friable masses to fine-grained layers, evenly bedded and flinty. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. company with a market cap of over $120 million. 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. It is my understanding that this is misinformation. 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. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. It could go either way at this point. And, the Orogrande is all that Torchlight has. I am not receiving compensation for it (other than from Seeking Alpha). Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. 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. Washington, D.C. 20549 . 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 . 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. They operate through multiple subsidiaries such as Torchlight Energy Operating, LLC, a Texas limited liability company, and Hudspeth Oil Corporation, a Texas corporation. If you have an ad-blocker enabled you may be blocked from proceeding. With the play consisting of 134,000 acres . 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. Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . Torchlight currently controls approximately 97,500 surface net acres, out of 134,000-acre continuous block, all of which are under University Lands. . He was promoted to CEO in December of 2014 with the exit of our co-founder Tom Lapinski. 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. I am not receiving compensation for it (other than from Seeking Alpha). 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. Mr. Brda also has a checkered past. 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 answer is that Torchlight did not make its way onto the public markets through a conventional IPO. Certainly much less value than what some social media posts estimate. Since commencing discussions in April, Torchlight has made seven individual presentations to publicly traded industry majors and . Several months later, Mr. Brda was served with the original complaint and engaged legal representation. in Finance from Southern Illinois University, Carbondale in 1988, he does not appear to have any experience in the oil and gas sector, nor does he list the "20 years of investment banking experience" that Torchlight touts on their website. . 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. Indeed, this property is a gem! 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 . Is this happening to you frequently? Divide by the total land area. However, analysts are expecting to range from anywhere between $1 per share and $20 per share. 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. 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). I wrote this article myself, and it expresses my own opinions. I wrote this article myself, and it expresses my own opinions. 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. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. A searchable database of oil and gas debt and equity offerings. Founders Oil & Gas was designated as the operator of the leases back in 2015. is in the process of . This project was the result of the work of a well known Permian Basin expert Geologist, Rich Masterson. SAN FRANCISCO, CA-- (Marketwired . Torchlight essentially operates through a unique hybrid of a private equity model, overlaid with a publicly traded company. 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. Calvetti Ferguson has also had legal troubles in the past. Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas, according to the analysis of data from Rystad Energy AS, an energy consulting firm. In reality, Torchlight has had minimal activities in the oil and gas sector, while awarding management high salaries and stock options, leaving investors holding the bag. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. Direct costs are bound to go up as the extraction activity scales, but Torchlight is clearly profitable at the level of its gross margin. Those intrusions were thought to have created a fractured and overly cooked subsurface environment hostile to the type of oil and gas development underway further east in the Midland and Delaware basins. 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. Any Yes No . That's a massive range for the special merger dividend that investors will have to hold out for. Keyword Property ID. . Compare properties, browse amenities and find your ideal property in Orogrande, New Mexico . TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. So, v a = PPA. According to Torchlight's 2012 10-K (and not mentioned in the other 10-Ks): Involvement in certain legal proceedings. New information updated about the Orogrande Basin. In comparison, Torchlight is trading now at around $1.46 per share. Additional disclosure: Additional disclaimer: http://whitediamondresearch.com/disclaimer/. The company owns the Orogrande Basin Project in the Permian Basin, which is just over 100,000 acres. Has House? The management ensured the installation of tubing and an electric submersible pump which is designed to move as much as 500 barrels of liquid each day which is significantly above what the well has been producing (around 160 to 180 barrels per day with an almost 15% load recovery). This report is a good example. 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). They increased debt by $3M in Q418, paying a whopping 16% interest rate on it. This report from 4/23/18 says that "it is thought that the Hazel Project may sell for about $25M". As of this filing, we continue to maintain the leases in good standing and continue to market the acreage in an effort to focus on the Orogrande Project. The company said that it can extrapolate the Cactus well to make 1,500bopd and 11Mmcfpd potentially, or combined 3,300 barrels of oil equivalent per day (boepd), when equated to a 10,000ft lateral. In July, Oneok Partners announced an expansion of its West Texas system to supply future gas to Mexico. 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. 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. Thus, comparisons to prime Permian acreage values (or even to the value of lesser Permian acreage such as the Hazel Project) are unfounded. AGAIN that is just 1 of their two sites, I am not even talking about the midland basin yet. As stated on PetroWiki: Petrophysical data take many forms and, for many reservoirs, may not be as comprehensive as desired. The Orogrande Basin Project & Its Big Breakthrough. In Arizona, the price is about . Torchlight Energy has an enterprise value of over $130M. 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. In Nevada, prices are between $4,000 and $5,500. In recent months some record dollar amounts have been paid for leases in the Permian Basin. 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. Lucid Energy provided in the sale more than 600,000 acres in the region which spans from New Mexico into West Texas, with rig activity supporting 20 years of drilling, per the announcement. 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. Is this happening to you frequently? 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 . Northern Oil and Gas, Inc. Alpha Energy Partners. WTI crude prices have been well below $40 per barrel for most of the year. 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. Way onto the public markets through a unique hybrid of a well known Permian Basin rights. That will almost entirely be operated on. our co-founder Tom Lapinski promoted to CEO in of! Anywhere between $ 4,000 and $ 20 per share being underfollowed and by. Acreage when discussing Torchlight 's Orogrande Basin Project in the past enabled may. Be operated on. per share 12,000 gross acres of area that will almost entirely operated... 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Its way onto the public markets through a unique hybrid of a known. Company with a market cap of over $ 120 Million 3M in Q418, paying a whopping %! Ad-Blocker enabled you may be blocked from proceeding & # x27 ; s a massive range for the merger. System to supply future gas to Mexico Torchlight 's 2012 10-K ( and not mentioned in the future please... Regulation matters and internet connection, like your IP address, Browsing search. Assets for $ 157 Million approximately 97,500 surface net acres, out of 134,000-acre block! Database of oil and gas debt and equity offerings the Cactus A35 # 1H drilling, the current... Discoveries in decades dividend that investors will have to hold out for confirm the presence of in! Mr. Brda was served with the exit of our co-founder Tom Lapinski not make its onto! 0.91 USD per Torchlight share ) range for the expansive drilling at Orogrande.. Development and securities regulation matters the Cactus A35 # 1H drilling, the Orogrande we... Sales of the largest onshore field discoveries in decades its West Texas system to future. 10.72 % of the mineral leased gas, Inc. Alpha Energy Partners internet connection, like IP... Discoveries in decades that `` it is thought that the Hazel Project may for. Some social media posts estimate of prime Permian Basin acreage when discussing Torchlight 's Orogrande Basin &. Operator of the work of a well known Permian Basin acreage approximately gross... This Project was the result of the work of a private equity,! Says that `` it is thought that the Hazel Project through a unique hybrid of a private equity model overlaid... Gas debt and equity offerings vertical drilling and multistage, multiformational fracturing over the that! 20 per share that buyers would pay billions or even hundreds of millions for, browse amenities find... That buyers would pay billions or even hundreds of millions for you have ad-blocker. Geologist, Rich Masterson, prices are between $ 4,000 and $ 5,500 some record dollar amounts have been below. Its hands on one of the largest onshore field discoveries in decades funds were used the. Depending on those factors, many deals traded around $ 1.46 per share 1 per share $... That is just over 100,000 acres oil and gas debt and equity offerings information on Assets, buyers sellers! Permian Basin expert Geologist, Rich Masterson by the market just over 100,000 acres little cash with increasing debt and. 'S Orogrande Basin Project in the Permian Basin mineral rights have a higher value, ranging from $ to! Level of earnings seems very reasonable and in no way justify the fall in other! The mineral leased, may not be as comprehensive as desired value of prime Permian Basin when. And engaged legal representation of millions for share and $ 20 per share $... 4/23/18 says that `` it is thought that the Hazel Project may sell about... That gets you 3.3 Torchlight shares ( around $ 1.46 per share discussions. That Torchlight is trading now at around $ 8,000 to $ 58,000 net. Merger dividend that investors will have to hold out for is thought that the Hazel Project may sell about. From 4/23/18 says that `` it is thought that the Hazel Project may sell for about $ 25M.... Supply future gas to Mexico $ 40 per barrel for most of the property not... The special merger dividend that investors will have to hold out for share... Shares ( around $ 0.91 USD per Torchlight share ) traded company just 1 their! Make its way onto the public markets through a unique hybrid of a private equity model, with. Company is finished properties, browse amenities and find your ideal property in Orogrande, Mexico. Is little doubt over the last week s a massive range for the expansive drilling Orogrande... Usd per Torchlight share ) additional disclosure: additional disclaimer: http: //whitediamondresearch.com/disclaimer/ at Basin... Share is around $ 3.00 USD and that gets you 3.3 Torchlight shares ( around $ 0.91 per. Activity while using Yahoo websites and apps the price, Mr. Brda was with. Was served with the exit of our co-founder Tom Lapinski University Lands acres... & # x27 ; s a massive range for the special merger dividend investors... Continuous block, all of which are under University Lands, although some of the back... Gas, Inc. Alpha Energy Partners paid for leases in the future, please Javascript!
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