Right below the rig picture, it shows a locator of where the rig is currently located. Looking for more investing ideas like this one? They are a public company looking for investors. 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. Under a new law proposed by House Republicans, that price would go up to more than $2.50. Metamaterial's stock is up around 36% since that report, while Torchlight's stock is down around 38% over the same period. I have no business relationship with any company whose stock is mentioned in this article. 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. 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. From the administrative proceeding: a common abuse found among certain small publicly held companies. According to Torchlight's 2012 10-K (and not mentioned in the other 10-Ks): Involvement in certain legal proceedings. Given this fact, the Companys current level of earnings seems very reasonable and in no way justify the fall in the price. 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. I have no business relationship with any company whose stock is mentioned in this article. 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 . The lessor can sell its share of the future income . Analysts are forecasting a further jump in the top-line but the stock continues to trade at just 80 cents a share. Adjacent leases still sale for $10/acre or less. If one wants to be very bullish on the asset, the $81.3 million value (from the notes payable conversion) can be used instead. We specialize in the technology and healthcare sectors. They operate through multiple subsidiaries such as Torchlight Energy Operating, LLC, a Texas limited liability company, and Hudspeth Oil Corporation, a Texas corporation. But in July, Plano, Texas-based Torchlight Energy Resources Inc. reported results from a comprehensive logging suite and 25 core samples out of its University Rich A-11 well, the companys 6,000-foot vertical Orogrande entrada. 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. 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. There is also the possibility that the Orogrande Project sells for less given that Torchlight paid a bit over $3 million for it back in 2014 (with $90 oil). However, there are no proved reserves and no commercial production associated with the Orogrande Project. The funds were used for the expansive drilling at Orogrande Basin. This change was likely made after the SEC issued a cease-and-desist order to Giamichael and Umbrella relating to the nature of their research and reports. Here is a snapshot from the website regarding Sendero Rig 11: As shown in the snapshot above, there is a picture of the same rig that was on the torchlight.com website. The second big point is the positive gross margin. (10.72% of the property will not be operated on.) 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. Personally I find the valuation (via either stock) to be too high for what is still mostly a development company with limited product revenues. He noted that the 3.678 billion barrel estimate touted by the company is actually referring only to possible reserves. The Permian will steadily increase production by about 19% each year through 2026, based on $55/bbl prices. Right now, the average price for a loaf of bread is, approximately, $1.87. View 11 photos, read details, and contact the seller. Those horizontal efforts have grown to encompass the Bone Spring in the Delaware Basin and the Spraberry in the Midland Basin. So tantalizingly closethats the word on the Orogrande Basin wildcat in Hudspeth County, Texas, 40 miles east of El Paso. This required Mr. Brda to file an affidavit describing his involvement in the American Pallet Leasing ("APL") scheme: Source: John Brda Affidavit, accessed via PACER, The two individuals Mr. Brda did business with at APL were Craig Medoff and Curt Kramer. The former operator of the Orogrande Project sold its 9.5% working interest in the assets for $2.5 million in 2018, which gives a better idea of the potential worth of Orogrande Basin assets. Within Radius. 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. As noted above, the former operator of the Orogrande Project sold its stake at a price that would point to a $17.5 million value for Torchlight's current stake. Information about your device and internet connection, like your IP address, Browsing and search activity while using Yahoo websites and apps. There is little doubt over the fact that Torchlight is being underfollowed and undervalued by the market. The Orogrande Basin is a geologic province in southern New Mexico and western Texas.It includes Doa Ana, Sierra, Socorro, Lincoln, and Otero Counties in New Mexico and El Paso County, Texas. He does, however, list the following experience: While Mr. Brda likely had employment between his graduation from SIU in 1988 and his term at iMedia in 2005, we assume that he would have listed any impressive experience on his LinkedIn page. Diamondback Energy's approximately $3 billion in recent acquisitions involved mostly Martin County acreage, with a small amount of Andrews County acreage as well. 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. 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. 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. Before, Torchlight was looking to participate in drilling activities. February 27, 2020. TRCH has little cash with increasing debt, and if it cannot sell the Orogrande, we believe the company is finished. With over 20 years of investment banking experience, including 5 years as a fund manager, prior to becoming a consultant, Mr. Brda has the knowledge and experience to execute and ensure success for his client companies. The list of high value Permian deals mentions counties such as Midland, Martin and Howard quite often. separate Wall Street Journal investigation. 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. For more information, please see our Except for the historic data launched herein, points talked about on this text embody forward-looking statements which might be matter to certain risks and uncertainties that may set off exact outcomes to differ materially from any future outcomes, effectivity or achievements expressed or implied by such statements. Torchlight Energy has an enterprise value of over $130M. 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. 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"). Core samples, logs and oil and gas shows while drilling demonstrate the presence of hydrocarbons and are now itemized in a 22-item checklist in the companys July 2015 investor presentation. 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. We believe this news could really change the market perception and send the stock skyrocketing. company with a market cap of over $120 million. Some of the history behind the Orogrande Basin assets also points to it having limited value. In Arizona, the price is about . 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. and our The Journal states: Newer shale wells drilled close to older wells are generally pumping less oil and gas than the older wells, according to early corporate results. As time passes by, land value around Los Lunas will likely skyrocket. He had not heard of Torchlight prior to looking over the project and has no financial interest in the company. 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. We believe that while shareholders are hoping that Torchlight will sell its Orogrande acreage, the company will instead do another equity raise soon. In the case of Torchlight, despite having a float of 53.91 million shares, its daily volume is relatively low at around 170,000. "In the Orogrande, if only 60% of the 172,000 acres are productiveand we have vertical . ROTH rates the company a Buy. 6. The moves could potentially cause permanent damage and lower the overall amount recovered from a reservoir. As explained in the recent 10-K, Torchlight acquired the Orogrande Project on 8/7/14. In April 2019, TRCH said it will sell its Orogrande Project, but we dont believe that will ever happen. One of the positive aspects about the Midland basin is that all field services are available within very close proximity to the acreage including oil and gas pipelines. This gives a total value of $30.35 million (or approximately $0.20 per share) for the special dividend. We did our due diligence on this rig. 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. 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. Orogrande which is comparatively their largest project, has not seen any development and is the big game changer. Said former Torchlight COO Will McAndrew on the deal: "This new asset gives us the opportunity to prove up and develop the western most section of the Permian Basin". There was zero reported production in December 2020 and historical production before that has been pretty minimal too. This high desert ranch country is punctuated by volcanic intrusions and uplifts that give it a distinctly western landscape. 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. However, analysts are expecting to range from anywhere between $1 per share and $20 per share. By accepting all cookies, you agree to our use of cookies to deliver and maintain our services and site, improve the quality of Reddit, personalize Reddit content and advertising, and measure the effectiveness of advertising. Torchlight's Winkler Project sale involves a price of approximately $3,333 per net acre. 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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Orogrande Basin Lease was bought in 2014 for 850k shares at 3.5 dollars, with 100k in cash with 75% interest! 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. The Companys operations involve drilling and working interest programs within the United States. . Until recently, Torchlight's auditor was Calvetti Ferguson P.C. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Prices per acre can range from $10,000 to $60,000 in Texas. That's your value per acre. Some companies are off track by more than 50% in certain regions. 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. 10.72 % of the future, please enable Javascript and cookies in your browser no financial interest the. 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