Torchlight Stands on the Edge of Success
I have covered Torchlight Energy for about two and a half years (TRCH-NASDAQ). The first piece I ever wrote about them was in August of 2015 when the company did a deal with the University of Texas on a 168,000-acre field in way West Texas. And in April of 2016 I wrote about them picking up a land position in the Midland Basin and drilling the first vertical well in Orogrande.
Frankly it's taken the company a lot longer than it should have to get traction but finally they dug their heels in and are about to hit the jackpot. They did drill a well in Midland they call the Flying B Ranch #3H. It was producing 465 barrels of oil a day in December and 248 MCFPD . The production rate will increase as the load water is recovered and the well compares with similar wells in the Wolfcamp A zone with 5,000-foot laterals.
That's an excellent well. The market has pretty much ignored the news after being bored silly for so long.
All things change.
Torchlight 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.
Fracking will take place in mid to late March and numbers will be out a month to six weeks after that in the late April timeframe. In full development mode, the company would be doing 7,500 to 10,000 horizontal legs. Naturally production would increase proportionately.
Oil companies that aren't drilling are about as interesting to view as watching paint dry. Torchlight has been boring for a long time. But the news flow has started and the results from Orogrande could provide company-making numbers.
Torchlight is an advertiser. I have owned shares for over three years. Naturally I am biased. Do your own due diligence.
Torchlight Energy Resources