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Texas Oil & Gas Company in Orogrande Basin Looks to Sell or Partner

Streetwise Reports
0 Comments|April 5, 2019

A ROTH Capital Partners note found the timing of the strategy "propitious."

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In an April 2 research note, analyst John White reported that ROTH Capital Partners raised its target price on Torchlight Energy Resources Inc. (TRCH:NASDAQ) to $2.70 per share from $1.75 after the company announced its intention to seek a strategic transaction. In comparison, Torchlight is trading now at around $1.46 per share. ROTH rates the company a Buy.

Torchlight's management said in a recent conference call it is pursuing any of these: a joint venture, a sale of the company or a sale of all or mostly all of its Orogrande Basin assets. The reason they cited is that "positive drilling and testing results to date warrant this move," White noted.

In fact, all of the company's exploration wells drilled in H2/19 and 2019 tested positive for the presence of oil and gas and/or showed direct signs of them. "Torchlight prudently executed a wide array of electric logs and core samples to further evaluate the petroleum systems encountered and further reduce risk," noted White.

To generate some potential acquirers or joint venture partners, Torchlight will market itself, initially circulate an initial document to major oil entities and large exploration and production (E&P) companies.

White described the timing of this endeavor of Torchlight as "propitious," particularly since ExxonMobil and Chevron both recently announced they intend to significantly bolster their onshore U.S. activity, particularly in the Permian Basin, which is near the Orogrande. Further, high-potential exploration opportunities are few. "We believe numerous major oil companies and large capitalization E&P companies will express interest," he added.

While marketing, Torchlight will continue to analyze and interpret the geological and geophysical data but will not conduct any drilling.


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