The Energy Report

Source: Streetwise Reports   05/16/2018

An independent small-cap Texas oil company moves forward with oil production in the Orogrande and continues to grow by adding property in the Delaware Basin.

Torchlight Energy Resources Inc. (TRCH:NASDAQ) announced at the end of April that the University Founders A25 #1H horizontal well in the Orogrande project has undergone a successful stimulation. Altogether, six stages underwent fracture stimulation at 60 bpm using 2.4 million pounds of sand. Flow testing was initiated and stage plugs have been drilled. Also, within the Penn formation, evaluation of the ~1000-foot lateral interval has begun.

John Brda, CEO of Torchlight Energy, stated, “We are very pleased that all six stages of the stimulation were delivered according to plan. The well treated as expected and the entire proppant package of each stage was placed as designed. Matrix fracture stimulation was accomplished, and we believe this to be a first in the Orogrande Basin.”

“I think we’re going to see a much bigger payoff as the company releases more well results.” – Keith Kohl, Pure Energy Trader

The Orogrande project is located in the Permian Basin, and is the flagship project for Torchlight. The company is also planning to drill two vertical wells in the Orogrande project, one in the northern section and the other in the southern, to further explore the geology of the area.

Bob Moriarty wrote in 321 Gold, Torchlight Energy “has just finished drilling the first horizontal test well in the all-important Orogrande field where the company holds a 67.5% working interest. The University Founders A25 1H well was drilled to 5,500 feet vertical and the company has finished a 1,000-foot lateral. The company is not trying to maximize the production from the well. If they wanted to do that, they would do a 10,000-foot lateral. They want to use the 1,000-foot lateral as a benchmark.”

“A similar well in the Midland Basin would produce 100 BOEPD. The same well in the Delaware Basin would produce 200 BOEPD. Torchlight hopes to hit in between the Midland numbers and the Delaware numbers. Well pressure is higher than expected and that’s a good sign,” Moriarty added.

Keith Kohl wrote in Pure Energy Trader on May 3, “I can’t stress the potential of the Orogrande Basin enough. The company owns a 67.5% working interest in approximately 133,000 net acres, and the play’s primary pay zone is the Pennsylvanian, which can be found between 5,200′ and 6,100′. Let’s assume for a moment that 100,000 acres were prospective, we’d be looking at about 156 sections for the project. And based on similar Midland Basin EURs, we’re talking about 4 to 6 million barrels per section.”

“Even though the stock has lost a little bit of ground since mid-March, I think we’re going to see a much bigger payoff as the company releases more well results,” Kohl concluded.

Torchlight also announced that its partner on the Winkler project in the Delaware Basin, MECO IV, has begun to drill the first well, the UL 21 War-Wink 47 #2H. According to the company, “the plan is to evaluate the various potential zones for a lateral leg to be drilled once logging is completed. The company expects the most likely target to be the Wolfcamp A interval.” This well is being drilled on 320 acres that offset the original leasehold Torchlight acquired in December 2017.

Torchlight’s carried interest is being applied to this new well and will “allow MECO IV to drill and produce potential revenues sooner than originally planned. The primary leasehold is a 320-acre block directly west of the current position and will allow for 5000-foot lateral wells to be drilled.”

CEO Brda stated, “We are excited to be entering the Delaware basin with our technically strong operating partner MECO IV out of Denver. The well is in an excellent area with premier offset operators making excellent wells in multiple pay zones. We look forward to MECO executing on the technical and scientific aspects of the project, ultimately delivering a 5000′ lateral in the best pay zone identified.”

Late last month, Torchlight closed an underwritten public offering of 5,750,000 million shares at $1.15 per share, resulting in net proceeds of approximately $6 million. ROTH Capital Partners was the sole manager of the offering. The company stated that it intends to use the proceeds “primarily to meet its drilling obligations at its Hazel Project and Orogrande Project and for general corporate purposes.”

Torchlight has about 69 million shares outstanding, of which approximately 20% are closely held. Its market cap is around $82 million.

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Disclosure:
1) Jake Richardson compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Torchlight Energy. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Torchlight Energy. Please click here for more information.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Torchlight Energy, a company mentioned in this article.

Disclosures from 321 Gold, Torchlight Energy, Feb. 27, 2018

Torchlight is an advertiser. I have owned shares for over three years. Naturally I am biased. Do your own due diligence.

Pure Energy Trader, Torchlight Energy, May 3, 2018

Neither the publisher nor the editors are registered investment advisors; nor have either publisher or editors been compensated for this publication, or ongoing coverage. Keith Kohl owns shares of Torchlight Energy.

( Companies Mentioned: TRCH:NASDAQ,
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