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. 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. Orogrande Basin Lease was bought in 2014 for 850k shares at 3.5 dollars, with 100k in cash with 75% interest! Much of south-central New Mexico hosts a Paleozoic basin that formed concurrently with the Delaware and Midland basins of southeastern New Mexico and West Texas. 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. Can we trust Torchlights financial reporting? If you do the math on that it lands somewhere around $750m barrels total. 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. 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. 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. 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 deal closed on Dec. 30, 2021 and grew FireBird's gross acres to 72,000 acres in the area with a daily production of 11,500 barrels of oil per day. 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. Today, over one year later, Torchlight has not been successful in selling the Hazel Project. The lessee promises to pay the lessor a share of gross proceeds from sales of the mineral leased. Despite that, the prices of some shale plays has held up, the Houston Chronicle reported. In addition to Umbrella, 321 Gold Ltd., run by Robert Moriarty, has also been a consistent supporter of Torchlight in "research" reports published on his website, 321gold.com. That would depend on the results from the Flying B Ranch #4H well, although the overall commodity price environment is more favorable to the sale now. Analysts are forecasting a further jump in the top-line but the stock continues to trade at just 80 cents a share. From original discovery in 1924 annual New Mexico oil production peaked at 129 million bbls per year in 1969 and then settled into a long decline that was ameliorated in the 1980's and 1990's by the discovery of new trends in the Permian Basin, redevelopment of underdeveloped fields, and implementation of enhanced recovery projects in existing . 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. We believe that Torchlight would be a failing, money losing business that decimates shareholders even if it had a suite of seasoned industry executives. Cookie Notice 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. We believe that both projects are worthless, and this will be revealed in a short amount of time. NOG Acquires Northern Delaware/Permian Assets for $157 Million. . !, 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. Disclosure: I am/we are short TRCH. Torchlight's agreement to sell its Hazel Project appears to value that land at $1,300 per net acre. Some companies are off track by more than 50% in certain regions. Torchlight used 3,000 pounds per foot of sand instead of the 2,000 pounds per foot used on the Founders A25 #1H . New information updated about the Orogrande Basin. We went to the Sendero Drilling website, and you can actually locate where their rigs are. PLANO, TX / ACCESSWIRE / April 6, 2020 / Torchlight Energy Resources, Inc. (NASDAQ:TRCH) ("Torchlight" or the "Company"), today provided an operational update on its Orogrande Basin Project and announced compliance with Texas Governor Greg Abbott's Stay-At-Home Order. Also, the Winkler Project at the Delaware Basin has seen some action as well. He is currently ranked in the top 2% of analysts by TipRanks. Any Yes No Irrigated? Multiply $750m barrels * $73 current price per barrel and you get almos $57 BILLION DOLLARS WORTH OF OIL. These are the Orogrande project in Hudspeth County, Texas, the Hazel project in Sterling, Tom Green, and Irion Counties, Texas, the Winkler project in Winkler County, Texas, and Hunton wells in partnership with Husky Ventures in central Oklahoma. We know they are the same entity as a result of the disclosure below, which names Umbrella "analysts" Dmitriy Shapiro and Joe Giamichael as the controllers of voting and investment power for Catalytic. Shares even hit the $2 target on . Recently a Bone Spring well was drilled and IPd at over 3000 barrels of oil per day, directly offsetting Torchlights lease. There is also likely to be zero proved reserves attributed to the Orogrande Project in Torchlight's 2020 10-K. I am not receiving compensation for it (other than from Seeking Alpha). Added to that would be any proceeds from an Orogrande Basin sale. People think it will actually hit $100 this year. The Company has an 80% net revenue interest in this region. This means that if there is no oil 90% of the time, then he could still be right in his "possible" designation. 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. Wed, 09/24/2014 - 08:59 AM. Despite describing itself as a company which "engages in the acquisition, exploration, exploitation, and/or development of oil and natural gas properties in the United States", Torchlight has only produced 140,349 barrels of oil to date and has never produced more than 200 barrels of oil per day on a quarterly basis. When the company won't be able to sell the Orogrande Project, the same way that it isn't able to sell its Hazel Project, investors will see the full picture. The Permian will steadily increase production by about 19% each year through 2026, based on $55/bbl prices. Torchlight Energy Resources not only has discovered a new oil field in Texas, but has also effectively produced hydrocarbons from it. 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. As shown, #11 is nearby Midland and Odessa, TX. Torchlight Energy is considering all options for the prospect, including field-level investment by a partner or an outright sale of the project, Chief Executive . 2023 Hart Energy. Torchlight's special dividend is likely to have limited value though. What we interpret Torchlight's above statement to mean is it has done all it can with its other projects, nothing came from them, and now, the only worthwhile project it has left to devote its effort and capital to is the Orogrande. PLANO, TX / ACCESSWIRE / May 21, 2019 / Torchlight Energy Resources, Inc. (NASDAQ: TRCH) ("Torchlight" or the "Company"), today provided an update regarding the Company's process addressing acquisition interest from industry majors in its Orogrande Basin Project. 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. Now the cost of a barrel right now is $73 and it is increasing. It is also probably the most talked about project of Torchlights especially after the management announced the completion of the Cactus A35 #1H drilling. 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. April 05, 2017 08:45 ET | Source: Streetwise Reports. But they didn't work with Torchlight directly. 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. We are currently offering a free two-week trial to Distressed Value Investing. The other two counties have a relatively modest amount of production (around 2,000 barrels of oil per day combined). 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. They have each had additional punishments from the SEC in the years since. discussed below). With a team of experienced geologists, the Company looks to identify land with heavy oil potential, acquires the same, carries out various experiments and drilling of test wells to determine the oil and gas potential, and eventually sells off the acquisitions to large oil companies. Information on assets, buyers and sellers, deal values, and more. Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. 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. Salesparq, LLC, which ownsSmallcapsDaily.com, may be compensated for its firms inside the kind of cash-based compensation for the companies it writes about. Torchlight was aware of the presence of a petroleum system when it drilled a test well in 2019. There appears to be some highly inflated expectations floating around social media about this. Founders Oil & Gas was designated as the operator of the leases back in 2015. In the Permian . I am not receiving compensation for it (other than from Seeking Alpha). Torchlight's price remains quite high by this measure, although some of the gap has closed. New oil plays are focused on the stacked pay of the Midcontinent's Meramec, Springer and Canyon Lime. The Company has recently been in the news for striking oil in its largest project in Orogrande and the potential amount of the oil extracted could be as much as 3.678 billion barrels. . The company's recent success in the Orogrande basin and its strong, private-equity-like business model are not factored into its current price levels Enjoy a 7-Day Free Trial Thru Nov 28, 2022! Northern Oil and Gas, Inc. Alpha Energy Partners. 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. 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. With the play consisting of 134,000 acres . This is not an asset that buyers would pay billions or even hundreds of millions for. There are . These calculations tend to mention the value of prime Permian Basin acreage when discussing Torchlight's Orogrande Basin acreage. 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. You can change your choices at any time by visiting your privacy controls. UNITED STATES. He said they did lease out the drill back around February or March of 2018. Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. We are currently offering a free two-week trial to Distressed value Investing 100 this.! And this will be revealed in a short amount of time not compensation. 2014 for 850k shares at 3.5 dollars, with 100k in cash with 75 interest... Source: Streetwise Reports off track by more than 50 % in regions! 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