Torchlight Energy Inks Drilling And Development Agreement With University Lands

In March, Torchlight announced it had begun the flowback and cleanup stage of testing on the Flying B Ranch #2 well in the Hazel project in the Midland Basin. According to the company, "Next steps toward bringing the well into production will be to flow back frac fluid from the upper stage and drill out the bridge plug that was set above the Wolfcamp B formation. Subsequently, the well will be flowed back and tested. Once completion fluids are removed, an oil cut and production will be measured to provide Initial Production (IP) figure and viability for horizontal field development. This testing will begin immediately and the well monitored over the coming weeks. Additional testing may be done on the upper zones to validate further pay zones at a later date."

In February, Salazar established a baseline value for Torchlight Energy equity. In an analysis he published on Seeking Alpha, Salazar wrote, "Based on comparable transaction analysis [for acreage comparable to Torchlight's Hazel Project acreage—via analysis of logs and cores showing pay potential], based on third-party valuation of the geographical positioning of Torchlight's Hazel Project assets [by geologists and by Land Men], based on projected EURs [estimated ultimate recoveries] and IRRs [rates of return specific to production], based on analysis of Hazel Project specific drilling obligations [i.e., securitization risk assigned to the acreage], and assigning zero value to Torchlight's Orogrande Project acreage—Torchlight equity should be assigned $2.50-$3.00 in immediate-term value. . .This equity pricing analysis effectively assigns ~$150 million in equity value to Torchlight's Hazel Project at its current iteration."

Torchlight is currently trading around $1.40.

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Disclosure:

1) Dallas Salazar: I own, or members of my immediate household or family or my ...

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