Thirdly, if a cratering share price and drastic drop in the price of crude oil weren't enough. I wrote this article myself, and it expresses my own opinions. 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. Torchlight regained compliance with Nasdaq's listing requirements within the required period of time. o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934. Prices per acre can range from $10,000 to $60,000 in Texas. Price Per Acre. is in the process of . 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. He pointed to Pioneer's $7.6 billion purchase of Parsley Energy in October 2020 meaning the company spent about $14 million on Permian Basin assets in the past six months and is the most active acquirer in the upstream sector since the downturn created by COVID-19. He noted that the 3.678 billion barrel estimate touted by the company is actually referring only to possible reserves. TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . By clicking Accept all you agree that Yahoo and our partners will process your personal information, and use technologies such as cookies, to display personalised ads and content, for ad and content measurement, audience insights, and product development. Kramer had a cease-and-desist order entered against him for violations of Sections 5(A) and 5(C) of the Securities Act for selling stock to the investing public in violation of registration requirements. 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. Lease Prices, Demystified. Now the cost of a barrel right now is $73 and it is increasing. 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. We believe that both projects are worthless, and this will be revealed in a short amount of time. I am not receiving compensation for it (other than from Seeking Alpha). 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. Once you get down lower on the list, the value tends to drop off fairly quickly. 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. 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. Reddit and its partners use cookies and similar technologies to provide you with a better experience. Metamaterial's stock is up around 36% since that report, while Torchlight's stock is down around 38% over the same period. 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. Privacy Policy. Mr. Wurtele has been Torchlight's CFO since September 2013. In Nevada, prices are between $4,000 and $5,500. 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 Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. 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. the court entered a default judgment against him in September 2012. 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. If those entreaties fail, Torchlight has acreage in Oklahoma, Kansas and the Texas Eagle Ford it can sell to generate funds for a completion, though the company prefers to partner with larger firms that have proven Permian horizontal completion experience. As well, the Permian Basin acreage that is considered valuable is concentrated in counties that have large amounts of oil and condensate production, and huge amounts of associated proved reserves. !, 21.3 acres in Fabens, Texas offered at $200. 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. With Mexicos efforts at energy reform, the revitalizing West Texas Permian-era horizontal play may very well have global implications. Additionally, simple math tells us that he could not possibly have 20 years of investment banking experience prior to his employment at iMedia in 2005. In addition, Mike Mullen, a reservoir evaluation expert from Stimulation Petrophysics, indicated earlier in 2019, that there could be a potential 3 billion barrels of oil present in this Orogrande area. Wed, 09/24/2014 - 08:59 AM. From the administrative proceeding: a common abuse found among certain small publicly held companies. . Is this happening to you frequently? 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. The Energy Report. February 27, 2020. The Orogrande basin is just 1 of the TRCH assets. Shale development is just beginning in the Delaware. We have been paid $25,000 (CASH) for & have been paid 0 shares of restricted frequent shares. Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. That rig was there on the Orogrande in early 2018. Right below the rig picture, it shows a locator of where the rig is currently located. Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. Torchlight Energy has an enterprise value of over $130M. Under a new law proposed by House Republicans, that price would go up to more than $2.50. Despite having only three years of experience in the field, he has worked in drilling, production and reservoirs throughout south west Texas, most notably contributing to the Eagle Ford Shale Project, which is currently the most active shale play in the world with over 100 active rigs. Washington, D.C. 20549 . 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 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. Add up the value of all the parcels you want to include in your average, if there's more than one. Can we trust Torchlights financial reporting? This is clearly the sign of a big investment opportunity in the stock. They leased the drill to Founders. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. 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. WTI crude prices have been well below $40 per barrel for most of the year. 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. Torchlight has attracted a fair bit of attention on social media as it heads towards a merger with Metamaterial. 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. On 4/11/19, the company issued a press release announcing the results of its new third party reserve estimate for Orogrande. Reproduction in whole or in part, in any form or medium without express written permission is prohibited. These calculations tend to mention the value of prime Permian Basin acreage when discussing Torchlight's Orogrande Basin acreage. Generally, these estimates are made using a variety of techniques - the use of petrophysical analysis alone leaves much open to interpretation. If you have an ad-blocker enabled you may be blocked from proceeding. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . 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. Core competencies include capital formation, equity and debt financings, strategic business development and securities regulation matters. Torchlight Energy Resources Inc. ( Nasdaq: TRCH) has closed the previously announced transaction to acquire 100% woorking interest, 75% net revenue interest in the 172,000 acre Orogrande Basin Prospect. Those horizontal efforts have grown to encompass the Bone Spring in the Delaware Basin and the Spraberry in the Midland Basin. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. 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. "Mr. Brda has been our President and Secretary and a member of the Board of Director since January 2012. 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 NASDAQ listing and additional cash on hand will improve Metamaterial's odds of achieving commercial success, but a $500 million USD market cap still seems quite elevated. 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. Most people have it growing at about [a rate of] 800,000 barrels per year. We did our due diligence on this rig. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. Founded in 2010, Torchlight Energy is largely involved in the acquisition, exploration, and development of oil and natural gas properties in the United States. 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. You can change your choices at any time by visiting your privacy controls. has pushed up prices. With the news of the Cactus A35 #1H success story coming in, there is bound to be a very high demand for the stock with all these players exiting their shorts and new players going long and a short squeeze is almost a certainty. Salesparq, LLC which ownsSmallcapsDaily.comisnt registered with any financial or securities regulatory authority and doesnt present nor claims to produce funding suggestion or recommendations to readers of this launch. 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. . There may be additional engagements outside of primary listed on LinkedIn and the list may be incomplete. Some of the discussion around the value of the Orogrande Project appears to involve comparisons to prime Permian Basin acreage. Please. Torchlights Midland basin project is its second largest project with approximately 12,000 gross acres of area that will almost entirely be operated. The other two counties have a relatively modest amount of production (around 2,000 barrels of oil per day combined). 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. I have no business relationship with any company whose stock is mentioned in this article. Disclosure: I am/we are short TRCH. Within Radius. Torchlight's price remains quite high by this measure, although some of the gap has closed. in Finance from Southern Illinois University, Carbondale, IL.". 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. 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. 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. TRCH only paid $3.35M in cash and stock for 75% of the Orogrande in August 2014 when oil prices were much higher than today. The Orogrande Basin Project & Its Big Breakthrough. 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. Source: Peter Krauth for Streetwise Reports 02/25/2020. However, this assumes that you have a certain . Any Yes No . Announces Strategic New Patent Filed With the U.S. Patent and Trademark Office, OKYO Pharma Announces Appointment of Dr. Jay S. 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