Torchlight had 99.3 million outstanding shares as of November 9, 2020. ![]() It is much more uncertain how per foot production rates from a 100' or 1,000' lateral will hold up when moving to 5,000 to 10,000' laterals. However, while many companies have demonstrated relatively stable production levels (per lateral foot) while increasing lateral lengths, those typically involved much longer laterals (such as an increase from 5,000' to 7,500'). Torchlight noted that the initial production rates were strong on a per foot basis. The second horizontal well was a 100' lateral with peak 24 hour production of 33 BOEPD (45% oil). The first horizontal well was a 1,000' lateral that had peak 24 hour production of 2.2 MMCF per day of gas with minimal liquids. It has drilled six vertical test wells and two horizontal wells. The challenge for Torchlight is that its Orogrande acreage is largely unproven in terms of being commercially viable at $50s oil. This area is located west of the Delaware Basin, near El Paso. Torchlight's largest asset (in terms of size) is its Orogrande Basin project, which consists of 134,000 gross acres (72.5% working interest) in Hudspeth County, Texas. The Hazel Project is located in a relatively fringe area (Irion, Sterling and Tom Green counties) of the Midland Basin and thus appears less valuable on a per net acre basis compared to the Winkler Project. This sales would potentially result in $12.4 million in proceeds for 9,600 net acres, or $1,300 per net acre. ![]() Torchlight also has entered into an agreement to sell its Hazel Project. This translates into a price of $3,333 per net acre for this non-operated asset. This was probably the best of Torchlight's assets in terms of quality, although Torchlight's position was small at 135 net acres. Torchlight had a 12.5% working interest (non-operated) for 1,080 gross acres in Winkler County. ![]() In November 2020, Torchlight announced the sale of its interest in the Delaware Basin Winkler Project for $0.45 million. Source: Metamaterial Legacy Oil & Gas Assets Metamaterial believes that it has a very large market opportunity, although the challenge will be to translate scientific advancements into commercial success. So far most of its revenues have been from customer-funded development programs. Metamaterial is primarily a development company at this stage (with around US$1.3 million in revenues during the last four quarters), but has been making moves to scale up production. Torchlight shareholders (as of a yet-to-be-determined record date prior to the closing of the combination) are also expected to receive the net proceeds from the sale of its oil and gas assets. Upon closing of the business combination, Metamaterial shareholders are expected to own 75% of the combined company, while Torchlight shareholders will own 25%. From a relative valuation perspective, it appears much cheaper to bet on Metamaterial directly through its stock than through Torchlight though, as Torchlight's current stock price appears to imply a large amount of value attributed to its largely unproven Orogrande Basin assets. Metamaterial has interesting products, although the challenge will be to achieve commercial success with them. The combined company will focus on Metamaterial's business going forward, while attempting to sell Torchlight's oil and gas assets. It has signed a business combination agreement with Metamaterial ( MMATF), which is basically a reverse takeover so that Metamaterial ("a developer of high-performance functional materials and nanocomposite products") can gain improved access to capital markets with a NASDAQ listing. ![]() Torchlight Energy Resources ( TRCH) has seen its shares surge in recent weeks.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |