Torchlight Deal Is One Of The Single Most Accretive Energy Complex Transactions

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With the execution of a letter of intent between the company and the chairman of its board, Torchlight Energy will essentially double its working interest in the Hazel Project in the Midland Basin, says Dallas Salazar of ATLAS Consulting, calling the deal one of the single most accretive energy complex transactions dating back to the beginning of the current commodity pricing crisis.

Torchlight Energy's Hazel Prospect

Torchlight Energy's Hazel Prospect

Torchlight Energy Resources Inc. (TRCH) has announced that it has entered into a Letter of Intent (LOI; a document outlining substantially what is expected to be an immediate-term agreement) to essentially double its ownership (i.e., working interest) in its Midland Basin Wolfcamp assets, also known as the Hazel Project.

Given that the LOI would bring Torchlight Energy's working interest to ~74% across 12,000 gross acres, if ultimately consummated, this would result in the exploration and production company (E&P) owning a pro forma 8,800 net acres the play. This transaction, if ultimately consummated (and considering the structuring of the transaction), would definitively be one of the single most accretive energy complex transactions dating back to the beginning of the current commodity pricing crisis.

In October 2016, owners of Torchlight Energy's "Series C Preferred" shares elected to convert into working interest in the newly acquired Hazel Project development play, thus removing them from the capital structure at the E&P and reducing Torchlight Energy's ownership to ~33.33% working interest. If consummated—and it should be noted that the transaction counter parties engaged are intimately vested in Torchlight Energy's ultimate success—Torchlight Energy would obtain an additional 40.66% working interest from an entity owned and controlled by its chairman of the board of directors, Mr. Greg McCabe. This, in consummation, would increase the E&P's total ownership to ~74% across 12,000 acres.

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Disclosure:

1) Dallas Salazar: I own, or members of my family or household or my company (ATLAS ...

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