PLANO, TX–(Marketwired – March 11, 2016) –
Torchlight Energy Resources, Inc. (NASDAQ: TRCH) (“Torchlight” or the “Company”), today announced an update to its operations and financial outlook.
Marcelina Creek Project:
The Johnson #4 well produced a total of 2,920 barrels for the month of February 2016, compared to 169 barrels for the month of February 2015, representing a 1400% increase YOY. This production does not represent a full month of production and it also represents a reduction from potential recovery due to a “best practice” of choking the well back to maintain pressures as the well continues to clean up. Over the next ~30 days, Torchlight expects to optimize daily production thus maximizing sales and providing for increased well life. Torchlight also re-entered its Johnson #2 well and performed a seven stage acid procedure on the Buda formation, which had not been previously stimulated. Initial fluid entry is positive and the Company is currently having a down hole pump installed to maximize production capability. The Johnson #1 continues to produce 40 to 50 BOPD and provide sustained production for the Company.
Hunton Asset Sale:
With recent improvement to commodity prices and resulting acquisition activity, Torchlight has received an increase of inquiries and interest for the purchase of its Hunton assets. The Company is in final negotiations with prospective buyers and anticipates a purchase and sale agreement to be finalized during the calendar Second or Third Quarter 2016. In addition to providing cash for Torchlight, at closing the Company will retain assets in four additional AMIs to market for future sale.
Preparatory work is currently underway for the next Orogrande Project well, the Founders B19 #1. As previously announced and in line with timing expectations, the Company anticipates drilling to commence within the next 60 days.
“As many E&P Companies struggle with events marred by the recent commodity price fluctuations, Torchlight continues to maximum liquidity through its capital structure and limited exposure to debt,” stated John Brda, Torchlight Energy’s Chief Executive Officer. “We have reduced our overall long term debt to ~$3.5 million of subordinate notes and both of our preferred issues are due to convert by Q3 at a significant premium to current share price. Torchlight, through production, asset sales, and cost reimbursements, is and will continue to be able to generate sufficient cash to fund our operations and service interest expense. We remain opportunistic and risk adverse when looking at expansion plans. The Hunton sale and increased production in our South Texas asset, including the Johnson #4 lateral, continued production from Johnson #1 and expected results from the Johnson #2 re-entry and acid job will significantly improve our cash flow leading to a significant portion of our overhead being covered from existing production sales alone. Finally, as Founders Oil and Gas continues to move forward in the Orogrande Project, Torchlight will receive payment of $500,000 per well for each of the next 8 wells and through the Farm In agreement the Orogrande project is fully capitalized for development over the next two years.”
“We expect continued expansion of the South Texas and Kansas Projects by forming partnerships on currently owned assets. These existing and new partnerships would provide Torchlight a carried interest as third parties pay for drilling and development of future wells. We are well poised for growth and remain opportunistic for distressed assets acquisition and the continued development of our existing assets.”
About Torchlight Energy
Torchlight Energy Resources, Inc. (TRCH), based in Plano, Texas, is a high growth oil and gas Exploration and Production (E&P) company with a primary focus on acquisition and development of highly profitable domestic oil fields. The Company currently holds interests in Texas, Kansas and Oklahoma where their targets are established plays such as the Wolf Penn, Eagle Ford Shale, Mississippi Limestone and Hunton Limestone trends. For additional information on the Company, please visit www.torchlightenergy.com.