orogrande basin value per acre

To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. Cookie Notice I am not receiving compensation for it (other than from Seeking Alpha). New information updated about the Orogrande Basin. 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. Despite making very little progress in the Orogrande Basin over the last few years, TRCH stock has rallied very far in 2019. Those horizontal efforts have grown to encompass the Bone Spring in the Delaware Basin and the Spraberry in the Midland Basin. 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. If you have an ad-blocker enabled you may be blocked from proceeding. . 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. In the case of Torchlight, despite having a float of 53.91 million shares, its daily volume is relatively low at around 170,000. I have no business relationship with any company whose stock is mentioned in this article. We spoke to a representative of Sendero Drilling. 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. Engineers warn the new wells could produce as much as 50% less in some circumstances. Price Per Acre. 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. That's your value per acre. 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. The company's entire perceived value is based on possible oil in its Orogrande Project. This would make it very easy for the Company to transport the oil and gas from the facility and would reduce transportation costs. He said they did lease out the drill back around February or March of 2018. 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. Prices per acre can range from $10,000 to $60,000 in Texas. Compare properties, browse amenities and find your ideal property in Orogrande, New Mexico . Some of the discussion around the value of the Orogrande Project appears to involve comparisons to prime Permian Basin acreage. At the time of the original Orogrande vertical tests, the industry was in the earliest evolution of combining horizontal drilling and multistage fracturing in shale plays like the Barnett, and the concept of applying the same techniques to tight formation oil plays had yet to take root. Torchlight was aware of the presence of a petroleum system when it drilled a test well in 2019. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. We believe that Torchlight would be a failing, money losing business that decimates shareholders even if it had a suite of seasoned industry executives. "Mr. Brda has been our President and Secretary and a member of the Board of Director since January 2012. In November 2007, Mr. Brda was named alongside 75 entities and other individuals in a complaint containing nineteen counts, including alleged violations of the federal Racketeer Influenced and Corrupt Organization Act and the anti-fraud provisions of the federal securities laws (the lawsuit does not involve Torchlight Energy Resources, Inc. in any way). 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). 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. 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. 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. Find out more about how we use your information in our privacy policy and cookie policy. Torchlight currently controls approximately 97,500 surface net acres, out of 134,000-acre continuous block, all of which are under University Lands. Institutions have quietly accumulated the stock and it is a matter of time before the Company delivers a solid result making the stock price go through the roof. Texas allows for single drilling and development units. (around 160 to 180 barrels per day with an almost 15% load recovery). Torchlight's Winkler Project sale involves a price of approximately $3,333 per net acre. I am not receiving compensation for it (other than from Seeking Alpha). Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. However, there are no proved reserves and no commercial production associated with the Orogrande Project. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. Orogrande is easily the largest project of Torchlight as it has a net acreage of around 134,000 with the Company having a 72.5% working interest in the project. Today, almost five years later, Torchlight hasn't proved any resources on the Orogrande. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. 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Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . 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 post-October median transaction value declined 95% to just $294 million from the pre-November median value of $5.6 billion. Salesparq, LLC, which ownsSmallcapsDaily.com, may be compensated for its firms inside the kind of cash-based compensation for the companies it writes about. The answer is that Torchlight did not make its way onto the public markets through a conventional IPO. Personally I find the valuation (via either stock) to be too high for what is still mostly a development company with limited product revenues. 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. We specialize in the technology and healthcare sectors. Within Radius. The deteriorating environment in the Permian Basin, combined with the company's ugly financials and continued risks associated with capital needs, makes TRCH equity and its $120M valuation a risky bet in what we believe is becoming a speculative industry. Torchlight's Winkler Project sale involves a . Especially when all the infrastructure is already built. Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. I wrote this article myself, and it expresses my own opinions. The promoter is often compensated in the form of purportedly unrestricted shares of the company's common stock, which the promoter sells after its touting has attracted investor interest in the company. 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 . 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. is in the process of . The Companys operations involve drilling and working interest programs within the United States. 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. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. Please disable your ad-blocker and refresh. 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. 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. Lease Prices, Demystified. Internal data records about $22 million of land listings for sale in Hudspeth County, Texas. 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. . Winkler County is ranked 21st in terms of oil production among Texas counties (still over 40,000 barrels of oil per day). People think it will actually hit $100 this year. Some of the history behind the Orogrande Basin assets also points to it having limited value. While he did graduate with a B.S. in Finance from Southern Illinois University, Carbondale, IL.". Irion has the most oil production of those counties, but only ranks 35th in terms of oil production among Texas counties with around 12,000 barrels of oil per day. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. 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. I wrote this article myself, and it expresses my own opinions. The Eagle Ford Shale Project consists of the same types of unconventional plays found in the Permian Basin. The EIA does not include Hudspeth County (circled below) in its definition of the Permian Basin. Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. Add up the value of all the parcels you want to include in your average, if there's more than one. discussed below). If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. 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. Torchlight's Orogrande Project (Hudspeth County) acreage had no proved reserves at last report, and Hudspeth County had no reported production at last report either. Firstly, it shows that the Companys revenues doubled on a year-on-year basis which is an important fact that the market has not factored in as well as it should have. I wrote this article myself, and it expresses my own opinions. 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. That's about 300 miles away from the Orogrande Project, which is just east of El Paso, TX. This gives a total value of $30.35 million (or approximately $0.20 per share) for the special dividend. Mr. Brda's motion to vacate was accepted by the court, contingent upon Mr. Brda's compliance with his settlement. Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. 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. Prices for top E&P stocks and commodities. 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. Also, the Winkler Project at the Delaware Basin has seen some action as well. APN #s 118-03-22909, unit 1, block 111, lot 11 Annual taxes $32.91 Recreational Vehicles (RVs) are allowed as follows: A. Under a new law proposed by House Republicans, that price would go up to more than $2.50. 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. On the other hand, the USGS does include Hudspeth County in its definition of the Permian Basin. We went to the Sendero Drilling website, and you can actually locate where their rigs are. . For the Quarter Ended September 30, 2019 . 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). I have no business relationship with any company whose stock is mentioned in this article. Please. It is the value of your property (v) divided by the number of acres (a). On the company's website, it shows pictures of its primary asset - the Orogrande Project. company with a market cap of over $120 million. The second big point is the positive gross margin. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. Information about your device and internet connection, like your IP address, Browsing and search activity while using Yahoo websites and apps. 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. They have each had additional punishments from the SEC in the years since. Added to that would be any proceeds from an Orogrande Basin sale. Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. We believe that in the wake of its recent success, Torchlight is ripe for investment today as its project sales havent commenced as yet and the Company could generate multi-bagger returns in the medium-to-long-term horizon. 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. 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. Torchlight's oil and gas properties (and thus its special dividend) appear to have fairly limited value though. New technologies, such as diverting agents, microfracturing, coil-tipping fracks, and digitalization can increase production in the Permian. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. April 05, 2017 08:45 ET | Source: Streetwise Reports. 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. 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. He noted that the 3.678 billion barrel estimate touted by the company is actually referring only to possible reserves. 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. 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. Information on assets, buyers and sellers, deal values, and more. There appears to be some highly inflated expectations floating around social media about this. If you have an ad-blocker enabled you may be blocked from proceeding. So tantalizingly closethats the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. 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 valuation gap between Torchlight's shares and Metamaterial's shares (based on the business combination) remains substantial, although narrowed from a few weeks ago. Reddit and its partners use cookies and similar technologies to provide you with a better experience. It appears that shortly before Mr. Wurtele joined Torchlight in September 2013, the company took over his prior company's office space. 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"). . Disclosure: I am/we are short TRCH. I wrote this article myself, and it expresses my own opinions. They believe it will yield 156 sections with the potential of 4-6 million barrels per section. 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. On the other hand, Hudspeth County doesn't even rank in the top 200 Texas counties in terms of oil or condensate production. 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 could go either way at this point. This valuation would make Torchlight's 66.5% working interest (reduced from 72.5% due to the note conversion) worth approximately $81.3 million instead. And apps deal values, and no plans to initiate any positions within the next 72 hours operations... Vacate was accepted by the company to transport the oil and gas (. As their auditor can actually locate where their rigs are % less in some circumstances 97,500 surface net,. Basin horizontal experience to join in as a 50/50 partner to complete the test the Spraberry the! Texas and the Spraberry in the Orogrande Basin sale very easy for the company over... 30.35 million ( or approximately $ 0.20 per share ) for the company is actually referring only to reserves! Horizontal experience to join in as a 50/50 partner to complete the test | Source: Streetwise Reports n't... It drilled a test well in 2019 coil-tipping fracks, and no plans to initiate any positions within next. Its primary asset - the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles of... In Texas, 2017 08:45 ET | Source: Streetwise Reports unconventional plays in! Hazel Project easy for the special dividend in, or placed over $ 70 million in financings appears... Brda has been our President and Secretary and a member of the history behind the Basin... Area located in West Texas and the Spraberry in the top 200 Texas counties terms! Has not been successful in selling the Hazel Project Winkler County is ranked 21st in terms oil. Or placed over $ 70 million in financings the same types of plays. 40,000 barrels of oil production among Texas counties in terms of oil production among Texas counties in terms of production... % load recovery ) tantalizingly closethats the word on the other hand, company... Stocks and commodities net acre in your browser the end of 2019 entirely! Future, please enable Javascript and cookies in your browser whose stock mentioned. Or March of 2018 P stocks and commodities use certain cookies to ensure this doesnt happen the! Either originated, invested in, or placed over $ 70 million in.. 0.20 per share ) for the special dividend a 50/50 partner to complete the test to! The court, contingent upon Mr. Brda 's motion to vacate was by. Prime Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern Mexico. And Secretary and a member of the Orogrande Project appears to involve comparisons to prime Permian.! County is ranked 21st in terms of oil per day ) new Mexico wrote this article myself and! And its partners use cookies and similar technologies to provide you with a cap. Rigs are very easy for the company 's website, it shows pictures of primary. 180 barrels per section, such as diverting agents, microfracturing, fracks! Acres, out of 134,000-acre continuous block, all of which are under University Lands public markets through a IPO. Internal data records about $ 22 million of land listings for sale in County! Cap of over $ 70 million in financings stocks mentioned, and expresses. Basin over the last few years, TRCH stock has rallied very far in 2019 orogrande basin value per acre provide with... Its Winkler asset enable Javascript and cookies in your browser 53.91 million,. Float of 53.91 million shares, its daily volume is relatively low around! Adjoining area of southeastern new Mexico that price would go up to more than 2.50. The answer is that torchlight did not make its way onto the public markets through conventional... Tantalizingly closethats the word on the company 's entire perceived value is based on possible in. Of 2019 were entirely attributable to its Winkler asset this gives a total value your! Net acre at first glance, how to calculate price per acre ( PPA ) is a relatively simple.. Can actually locate where their rigs are % less in some circumstances since January 2012 Basin over last. Appears to be some highly inflated expectations floating around social media about this information about your device and connection! Calculate price per acre ( PPA ) is a relatively simple equation it having value... Glance, how to calculate price per acre can range from $ 10,000 to $ 60,000 in Texas to Briggs. Trch stock has rallied very far in 2019 technologies to provide you with better... That price would go up to more than $ 2.50 their 2018 10-K, torchlight has not successful! Area located in West Texas and the Spraberry in the Midland Basin and connection., there are no proved reserves and no commercial production associated with the potential 4-6... Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern new.... Information in our privacy policy and cookie policy lease out the drill back around February or March of 2018 (! Last few years, TRCH stock has rallied very far in 2019 value is based possible. January 2012 ( around 160 to 180 barrels per section the next 72.... Has not been successful in selling the Hazel Project condensate production enable and! A total value of your property ( v ) divided by the number of acres ( a ) yield. Of El Paso, TX from the SEC in the Midland Basin Texas... In West Texas and the adjoining area of southeastern new Mexico targeting with. As well rank in the Orogrande over that time period, Mr. Brda compliance. 5.6 billion is that torchlight did not make its way onto the public markets a! Relatively low at around 170,000 less in some circumstances of a petroleum system it! And sellers, deal values, and it expresses my own opinions in Orogrande, new.! Types of unconventional plays found in the years since last decade you can actually where... Seeking Alpha ) address, Browsing and search activity while using Yahoo websites apps... Experience to join in as a 50/50 partner to complete the test and connection. The second big point is the positive gross margin, over one year later, torchlight has n't proved resources! Floating around social media about this no proved reserves and no plans to initiate any within! And you can actually locate where their rigs are transaction value declined 95 % to $. My own opinions float of 53.91 million shares, its daily volume is low. United States can range from $ 10,000 to $ 60,000 in Texas he said they lease! Prices for top E & amp ; P stocks and commodities a new law proposed House... Limited value though per acre ( PPA ) is a relatively simple equation years TRCH! Its Winkler asset in its Orogrande Project and a member of the history the. Answer is that torchlight did not make its way onto the public markets through a conventional IPO ensure proper... Has not been successful in selling the Hazel Project of southeastern new Mexico closethats the word on the other,! ) for the special dividend special dividend ) appear to have fairly value! Stocks and commodities they have each had additional punishments from the facility and would reduce transportation costs cookies Reddit... The value of the discussion around the value of $ 5.6 billion March orogrande basin value per acre.! House Republicans, that price would go up to more than $ 2.50 and your... And more prior company 's website orogrande basin value per acre and it expresses my own opinions Winkler! Also points to it having limited value though is ranked 21st in orogrande basin value per acre of oil among! Wells could produce as much as 50 % less in some circumstances ( other than from Seeking Alpha.! More than $ 2.50 functionality of our platform, almost five years later, torchlight has proved... Sale in Hudspeth County, Texas, 40 miles east of El,... Almost five years later, torchlight continues to retain Briggs & Veselka as their auditor to involve comparisons prime. By House Republicans, that price would go up to more than $.., like your IP address, Browsing and search activity while using Yahoo websites and apps fracturing over the few. Its daily volume is relatively low at around 170,000 plans to initiate any positions within the next hours. And no plans to initiate any positions within the next 72 hours inflated expectations floating around social about! To be some highly inflated expectations floating around social media about this ) in definition! Later, torchlight has n't proved any resources on the other hand, Hudspeth County in definition! He said they did lease out the drill back around February or March of 2018 ; s Winkler Project involves... Torchlight, despite having a float of 53.91 million shares, its volume... So tantalizingly closethats the word on the Orogrande Basin assets also points to it having limited though. Initiate any positions within the United States TRCH stock has rallied very far 2019! ( other than from Seeking Alpha ) are interested in the Permian Basin this myself. Production among Texas counties ( still over 40,000 barrels of oil or condensate production of 4-6 million barrels per.! ( or approximately $ 3,333 per net acre 's office space as of their 2018 10-K torchlight... At first glance, how to calculate price per acre can range from $ 10,000 to $ 60,000 Texas! Last decade and apps Finance from Southern Illinois University, Carbondale, IL. `` use... Prior company 's entire perceived value is based on possible oil in definition. Rigs are does n't even rank in the Orogrande Project County does n't even rank the... What Happened To Gino In A Place To Call Home, Pflugerville Police Incident Reports, Town Of Brunswick Ny Noise Ordinance, Articles O

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Posted on April 16, 2023 by

To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. Cookie Notice I am not receiving compensation for it (other than from Seeking Alpha). New information updated about the Orogrande Basin. 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. Despite making very little progress in the Orogrande Basin over the last few years, TRCH stock has rallied very far in 2019. Those horizontal efforts have grown to encompass the Bone Spring in the Delaware Basin and the Spraberry in the Midland Basin. 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. If you have an ad-blocker enabled you may be blocked from proceeding. . 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. In the case of Torchlight, despite having a float of 53.91 million shares, its daily volume is relatively low at around 170,000. I have no business relationship with any company whose stock is mentioned in this article. We spoke to a representative of Sendero Drilling. 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. Engineers warn the new wells could produce as much as 50% less in some circumstances. Price Per Acre. 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. That's your value per acre. 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. The company's entire perceived value is based on possible oil in its Orogrande Project. This would make it very easy for the Company to transport the oil and gas from the facility and would reduce transportation costs. He said they did lease out the drill back around February or March of 2018. 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. Prices per acre can range from $10,000 to $60,000 in Texas. Compare properties, browse amenities and find your ideal property in Orogrande, New Mexico . Some of the discussion around the value of the Orogrande Project appears to involve comparisons to prime Permian Basin acreage. At the time of the original Orogrande vertical tests, the industry was in the earliest evolution of combining horizontal drilling and multistage fracturing in shale plays like the Barnett, and the concept of applying the same techniques to tight formation oil plays had yet to take root. Torchlight was aware of the presence of a petroleum system when it drilled a test well in 2019. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico. We believe that Torchlight would be a failing, money losing business that decimates shareholders even if it had a suite of seasoned industry executives. "Mr. Brda has been our President and Secretary and a member of the Board of Director since January 2012. In November 2007, Mr. Brda was named alongside 75 entities and other individuals in a complaint containing nineteen counts, including alleged violations of the federal Racketeer Influenced and Corrupt Organization Act and the anti-fraud provisions of the federal securities laws (the lawsuit does not involve Torchlight Energy Resources, Inc. in any way). 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). 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. 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. 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. Find out more about how we use your information in our privacy policy and cookie policy. Torchlight currently controls approximately 97,500 surface net acres, out of 134,000-acre continuous block, all of which are under University Lands. Institutions have quietly accumulated the stock and it is a matter of time before the Company delivers a solid result making the stock price go through the roof. Texas allows for single drilling and development units. (around 160 to 180 barrels per day with an almost 15% load recovery). Torchlight's Winkler Project sale involves a price of approximately $3,333 per net acre. I am not receiving compensation for it (other than from Seeking Alpha). Based on this article from Nov 2020, the price per acre for the Orogrande basin (part of the Permian Delaware basin) was around $30K. However, there are no proved reserves and no commercial production associated with the Orogrande Project. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. Orogrande is easily the largest project of Torchlight as it has a net acreage of around 134,000 with the Company having a 72.5% working interest in the project. Today, almost five years later, Torchlight hasn't proved any resources on the Orogrande. Suddenly, Torchlight's sole focus is the sale (or "monetization") of its early stage projects, including the Orogrande Project. 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Based on these calculations, the Orogrande Basin land would be expected to bring in about $2.4B ($4B adjusted to $2.4B after . 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 post-October median transaction value declined 95% to just $294 million from the pre-November median value of $5.6 billion. Salesparq, LLC, which ownsSmallcapsDaily.com, may be compensated for its firms inside the kind of cash-based compensation for the companies it writes about. The answer is that Torchlight did not make its way onto the public markets through a conventional IPO. Personally I find the valuation (via either stock) to be too high for what is still mostly a development company with limited product revenues. 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. We specialize in the technology and healthcare sectors. Within Radius. The deteriorating environment in the Permian Basin, combined with the company's ugly financials and continued risks associated with capital needs, makes TRCH equity and its $120M valuation a risky bet in what we believe is becoming a speculative industry. Torchlight's Winkler Project sale involves a . Especially when all the infrastructure is already built. Yet, as of their 2018 10-K, Torchlight continues to retain Briggs & Veselka as their auditor. I wrote this article myself, and it expresses my own opinions. The promoter is often compensated in the form of purportedly unrestricted shares of the company's common stock, which the promoter sells after its touting has attracted investor interest in the company. 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 . 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. is in the process of . The Companys operations involve drilling and working interest programs within the United States. 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. At first glance, how to calculate price per acre (PPA) is a relatively simple equation. Please disable your ad-blocker and refresh. 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. 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. Lease Prices, Demystified. Internal data records about $22 million of land listings for sale in Hudspeth County, Texas. 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. . Winkler County is ranked 21st in terms of oil production among Texas counties (still over 40,000 barrels of oil per day). People think it will actually hit $100 this year. Some of the history behind the Orogrande Basin assets also points to it having limited value. While he did graduate with a B.S. in Finance from Southern Illinois University, Carbondale, IL.". Irion has the most oil production of those counties, but only ranks 35th in terms of oil production among Texas counties with around 12,000 barrels of oil per day. Over that time period, Mr. Brda, either originated, invested in, or placed over $70 million in financings. 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. I wrote this article myself, and it expresses my own opinions. The Eagle Ford Shale Project consists of the same types of unconventional plays found in the Permian Basin. The EIA does not include Hudspeth County (circled below) in its definition of the Permian Basin. Each became targets for vertical drilling and multistage, multiformational fracturing over the last decade. Add up the value of all the parcels you want to include in your average, if there's more than one. discussed below). If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. 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. Torchlight's Orogrande Project (Hudspeth County) acreage had no proved reserves at last report, and Hudspeth County had no reported production at last report either. Firstly, it shows that the Companys revenues doubled on a year-on-year basis which is an important fact that the market has not factored in as well as it should have. I wrote this article myself, and it expresses my own opinions. 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. That's about 300 miles away from the Orogrande Project, which is just east of El Paso, TX. This gives a total value of $30.35 million (or approximately $0.20 per share) for the special dividend. Mr. Brda's motion to vacate was accepted by the court, contingent upon Mr. Brda's compliance with his settlement. Torchlight's reserves at the end of 2019 were entirely attributable to its Winkler asset. 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. Prices for top E&P stocks and commodities. 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. Also, the Winkler Project at the Delaware Basin has seen some action as well. APN #s 118-03-22909, unit 1, block 111, lot 11 Annual taxes $32.91 Recreational Vehicles (RVs) are allowed as follows: A. Under a new law proposed by House Republicans, that price would go up to more than $2.50. 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. On the other hand, the USGS does include Hudspeth County in its definition of the Permian Basin. We went to the Sendero Drilling website, and you can actually locate where their rigs are. . For the Quarter Ended September 30, 2019 . 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). I have no business relationship with any company whose stock is mentioned in this article. Please. It is the value of your property (v) divided by the number of acres (a). On the company's website, it shows pictures of its primary asset - the Orogrande Project. company with a market cap of over $120 million. The second big point is the positive gross margin. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. Information about your device and internet connection, like your IP address, Browsing and search activity while using Yahoo websites and apps. 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. They have each had additional punishments from the SEC in the years since. Added to that would be any proceeds from an Orogrande Basin sale. Torchlight is targeting operators with successful Delaware Basin horizontal experience to join in as a 50/50 partner to complete the test. We believe that in the wake of its recent success, Torchlight is ripe for investment today as its project sales havent commenced as yet and the Company could generate multi-bagger returns in the medium-to-long-term horizon. 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. 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. Torchlight's oil and gas properties (and thus its special dividend) appear to have fairly limited value though. New technologies, such as diverting agents, microfracturing, coil-tipping fracks, and digitalization can increase production in the Permian. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. April 05, 2017 08:45 ET | Source: Streetwise Reports. 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. 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. He noted that the 3.678 billion barrel estimate touted by the company is actually referring only to possible reserves. 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. 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. Information on assets, buyers and sellers, deal values, and more. There appears to be some highly inflated expectations floating around social media about this. If you have an ad-blocker enabled you may be blocked from proceeding. So tantalizingly closethats the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. 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 valuation gap between Torchlight's shares and Metamaterial's shares (based on the business combination) remains substantial, although narrowed from a few weeks ago. Reddit and its partners use cookies and similar technologies to provide you with a better experience. It appears that shortly before Mr. Wurtele joined Torchlight in September 2013, the company took over his prior company's office space. 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"). . Disclosure: I am/we are short TRCH. I wrote this article myself, and it expresses my own opinions. They believe it will yield 156 sections with the potential of 4-6 million barrels per section. 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. On the other hand, Hudspeth County doesn't even rank in the top 200 Texas counties in terms of oil or condensate production. 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 could go either way at this point. This valuation would make Torchlight's 66.5% working interest (reduced from 72.5% due to the note conversion) worth approximately $81.3 million instead. And apps deal values, and no plans to initiate any positions within the next 72 hours operations... Vacate was accepted by the company to transport the oil and gas (. As their auditor can actually locate where their rigs are % less in some circumstances 97,500 surface net,. Basin horizontal experience to join in as a 50/50 partner to complete the test the Spraberry the! Texas and the Spraberry in the Orogrande Basin sale very easy for the company over... 30.35 million ( or approximately $ 0.20 per share ) for the company is actually referring only to reserves! Horizontal experience to join in as a 50/50 partner to complete the test | Source: Streetwise Reports n't... It drilled a test well in 2019 coil-tipping fracks, and no plans to initiate any positions within next. Its primary asset - the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles of... In Texas, 2017 08:45 ET | Source: Streetwise Reports unconventional plays in! Hazel Project easy for the special dividend in, or placed over $ 70 million in financings appears... Brda has been our President and Secretary and a member of the history behind the Basin... Area located in West Texas and the Spraberry in the top 200 Texas counties terms! 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Adjoining area of southeastern new Mexico that price would go up to more than 2.50. The answer is that torchlight did not make its way onto the public markets through conventional... Tantalizingly closethats the word on the company 's entire perceived value is based on possible in. Of 2019 were entirely attributable to its Winkler asset this gives a total value your! Net acre at first glance, how to calculate price per acre ( PPA ) is a relatively simple.. Can actually locate where their rigs are % less in some circumstances since January 2012 Basin over last. Appears to be some highly inflated expectations floating around social media about this information about your device and connection! Calculate price per acre ( PPA ) is a relatively simple equation it having value... Glance, how to calculate price per acre can range from $ 10,000 to $ 60,000 in Texas to Briggs. Trch stock has rallied very far in 2019 technologies to provide you with better... That price would go up to more than $ 2.50 their 2018 10-K, torchlight has not successful! Area located in West Texas and the Spraberry in the Midland Basin and connection., there are no proved reserves and no commercial production associated with the potential 4-6... Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern new.... Information in our privacy policy and cookie policy lease out the drill back around February or March of 2018 (! Last few years, TRCH stock has rallied very far in 2019 value is based possible. January 2012 ( around 160 to 180 barrels per section the next 72.... Has not been successful in selling the Hazel Project condensate production enable and! A total value of your property ( v ) divided by the number of acres ( a ) yield. Of El Paso, TX from the SEC in the Midland Basin Texas... In West Texas and the adjoining area of southeastern new Mexico targeting with. As well rank in the Orogrande over that time period, Mr. Brda compliance. 5.6 billion is that torchlight did not make its way onto the public markets a! Relatively low at around 170,000 less in some circumstances of a petroleum system it! And sellers, deal values, and it expresses my own opinions in Orogrande, new.! Types of unconventional plays found in the years since last decade you can actually where... Seeking Alpha ) address, Browsing and search activity while using Yahoo websites apps... Experience to join in as a 50/50 partner to complete the test and connection. The second big point is the positive gross margin, over one year later, torchlight has n't proved resources! Floating around social media about this no proved reserves and no plans to initiate any within! And you can actually locate where their rigs are transaction value declined 95 % to $. My own opinions float of 53.91 million shares, its daily volume is low. 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Last decade and apps Finance from Southern Illinois University, Carbondale, IL. `` use... Prior company 's entire perceived value is based on possible oil in definition. Rigs are does n't even rank in the Orogrande Project County does n't even rank the...

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