The low price of oil has meant that a lot of companies are going broke, but not so with Torchlight Energy. A subsidiary of D.R. Horton is spending $50 million, fully funding the development of Torchlight’s Orogrande project over the next 24 months.
Torchlight Energy Resources Inc. (TRCH:NASDAQ) is out with an update that comes roughly 30 days after the company updated venture investors that it had decided to move on from the successful drilling and data capture of its Rich A-11 well, up to that point its primary valuation-driving well in the all-important Orogrande project. This new update is more comprehensive; Torchlight Energy updated investors as to progress being made regarding its Marcelina Creek and Orogrande projects, as well as provided a merger-and-acquisition update regarding its Hunton assets, which are currently being marketed.
Regarding the Marcelina Creek Project:
Progress is being made on all fronts in the Marcelina, with Torchlight updating the Johnson #1, #2 and #4 wells. It’s important to keep in context Torchlight’s overall lack of maturity and overall lack of scale when reviewing the following updates. Put simply, Torchlight is able to continue to drive production—even into this commodity environment—in that it substantially has no production; well, not really.
In that Torchlight is so immature and still very much in its “pre-leveraged/pre-negative capital productivity phase” (basically it doesn’t yet have to balance out capex to debt capacity—a problem plaguing so many of its much more mature peers—because it’s so young and has such a clean balance sheet), Torchlight is entirely focused on driving production volumes for the future. Torchlight, and more importantly at this point its farm-in partner, aren’t focused on the commodity environment currently but the commodity environment of, say, 24 months from now. That’s when Torchlight should have enough production development to …read more