Bob Moriarty of 321 Energy disects Torchlight Energy Resources’ latest play in the Permian Basin.
Much of the last week has been tied up in one way or another with comments and commentary about the meaning of the election. Most pundits don’t get it. Donald Trump may be our President Elect but he didn’t win the November 8th election for President. Actually Clinton lost it and there is a world of difference between the two.
You never know how much power you have until you actually use it. But such an attempt to use power often discloses that perhaps you never had any power in the first place. The New York Times, Washington Post, Wall Street Journal, USA Today, even such minor sites as the Huffington Post, Business Insider and Veterans Today, went on an orgy of Trump Hatred. All of them utterly dropped any pretense at presenting the news and attacked Trump at every opportunity. They studied his every pore with a 3000-power microscope.
Every word they said was true. Trump is a loud mouth fool and a boor. But what none of those sites bothered mentioning was that Hillary Clinton is everything wrong with the country today. It’s hard to even imagine someone more corrupt at every turn. The Clinton Global Initiative was nothing less than a money laundering crime cartel. Leaked emails showed stolen elections, leaked debate questions and illegal activities at every level.
Hillary Clinton stole the Democratic nomination from Bernie Sanders and made every effort to steal the election from Trump. The head of the DNC got caught rigging the primaries for Clinton all the while pretending to represent the Democratic Party. She resigned her position under pressure and was promptly hired by Clinton’s campaign as a sop. Her replacement felt it necessary to help Clinton rig the debates by feeding her softball questions from CNN that a 10 year old could have answered correctly. She got fired from CNN but for now has kept her position as leader of the DNC.
The American people, that is to say the 99%, the deplorables, the ignorant and often jobless are angry. They didn’t as much adopt Trump as reject the Democrats, the Mainstream Media and all the polling “Experts” and “Gurus” who got it 100% wrong and were proven to be wrong all along. By attempting to use their power and failing utterly they also destroyed their credibility.
Hillary never read Nobody Knows Anything. If she had and I would have sent her a signed copy if she had only asked, she would have realized there are no experts. This time it’s not the King who is naked, it’s all the fools pontificating on behalf of Hillary Clinton in an echo chamber. They didn’t have a clue and by advertising their bias and stupidity, they have blown their power for all time. When I wrote NKA, I was mainly talking about the slew of financial Experts who know nothing at all. But much of what I said in the book is perfects true of all the other Experts and Gurus and fools.
Everyone. Has. A. Bias.
And if you don’t understand what their bias is and what their agenda is, you will be as foolish as they are. Buy the book; it has some great advice in it that applies just as much to presidential elections as investing.
Someday I’m going to post a piece about Torchlight Energy Resources Inc. (TRCH:NASDAQ) in 75-point type when their stock hits $15. I’m going to say, “I TOLD YOU SO,” in bold writing. They have been doing everything right and their shares have drifted down from $1.75 in August to a low of $0.67 in mid-October. That’s very funny.
They did completion testing in Orogrande that was highly positive and reported on it in late October. The report is highly technical but it says they brought oil to the surface and that’s the biggie. They intended to drill a horizontal leg but a drill bit got stuck and required them to sidetrack the well. That meant they were limited to a 4.5 in casing and they couldn’t lower the drill rods that would take the well horizontal. It’s one of those technical glitches that come under the “shit happens” rule.
Back in the Midland Basin, Torchlight and their partner Maverick Oil and Gas drilled a vertical well called the Flying B Ranch #1. On October 6th they announced completion. The well is producing oil and bringing it to surface. On the 10th of November the company announced even more important news. Their deal with Maverick Oil would have reduced their interest in the 12,000-acre field to 33.33%. They did a deal with the Chairman of Torchlight to exchange common shares for a greater percentage of the land position. So now Torchlight has a 74% working interest in the 12,000 acres results in 8,880 net acres. That’s a big deal. They are exchanging 3.3 million shares for the additional 40.66% interest but canceling an offsetting 3.3 million warrants. That means an increase in ownership without a corresponding increase in shares outstanding.
The cost to Torchlight is about $663 per acre at the price of shares when the deal was agreed to. Right now, the Permian Basin is hot. A really interesting piece by Keith Schaffer dated November 10th was titled, “Occidental just paid record Permian prices-but remember the Bakken?” In the article Keith said something significant, “I’d Rather Own The Companies That Had The Acreage Before It Got Hot.”
The article pointed out that Occidental was paying an average of $50,000 an acre after discounting for the actual production. Compare that $50,000 to the miniscule $663 that Torchlight is paying for similar ground in the same basin. But before we accept Keith’s number and conclusions, perhaps we should do more research. What else is happening in the Permian?
The answer to that was in the Sunday November 13th edition of the Houston Chronicle that I just happened to pick up. On the front page above the fold was a great piece called, “The Rush Is On In Permian Basin” and the author concludes that one third of all the exploration and development deals done in the US in 2016 were in the Permian compared to a tiny 2% ten years ago. Clearly the Permian is hot. So far this year, land prices in the Basin are averaging $30,000 an acre.
Torchlight has 8,880 net acres in the Permian. Ignore their 168,000 acres in Orogrande in West Texas totally. They believe the land is worth $12,000 an acre; other similar land is going for $30,000 to $60,000 an acre. You can do the math. Others can’t and the short interest in Torchlight is back at high levels. Any new buying is going to blast the shares higher as shorts struggle to cover.
Torchlight has plans for drilling another well in Midland but with a horizontal leg in January of 2017. Their partner with the $50 million commitment in Orogrande is going to do another well in Q-1 of 2017 to test horizontal production.
Torchlight will not be around long enough to spend all of the $50 million exploration money from Founders. Someone will take them out long before then and it won’t be at $0.97. They own 8,880 acres in Midland and 47,500 net acres in Orogrande that meets or beats Midland technical. You have a calculator, use it.
I have owned Torchlight shares since they were $4 apiece. I have participated in private placements, they are an advertiser and I am biased, naturally. Do your own due diligence.
Torchlight Energy Resources
TRCH-NASDAQ $.97 (Nov 14, 2016)
50 million shares
Torchlight Energy website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 14 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 820 missions in Vietnam. He holds 14 international aviation records.
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1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Torchlight Energy Resources Inc. The following companies are advertisers on 321 Gold: Torchlight Energy Resources Inc. I determined which companies would be included in this article based on my research and understanding of the sector.
2) Torchlight Energy Resources Inc. is a billboard sponsor of Streetwise Reports. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
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( Companies Mentioned: TRCH:NASDAQ, )