Published: April 6, 2016 |

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Torchlight Energy Resources, Inc. has signed a definitive agreement to purchase a 66.66 percent working interest and take over operations in ~12,000 acres (19 sections) in the Midland Basin from McCabe Petroleum Corporation. The acreage was previously acquired by McCabe through a farm-out. Renowned geologist Rich Masterson has worked closely with McCabe to develop this prospect and the company expects Masterson will reside as the project geologist throughout its development.

Terms of the agreement are as follows:

•  ~12,000 gross acres (7,999 net acres), 100 percent of which will be operated

•  75 percent net revenue interest

•  19 contiguous sections with a potential of as many as 300 horizontal drilling locations targeting the Wolfcamp A and B formations (pay zones currently being developed by operators in the Midland Basin)

•  Prospective for the Leonard and Dean formations providing upside

•  Continuous drilling clause on the lease starting in July of 2016; Torchlight is obligated to drill one well (vertical or horizontal) every six months to hold the entire ~12,000 acre block

McCabe will receive total consideration of 1,500,000 warrants to purchase Torchlight common stock with an exercise price of $1.00 and a back-in after payout of 25 percent working interest. The president of McCabe Petroleum Corporation is currently Torchlight’s largest shareholder.

The drilling plan set forth by Rich Masterson calls for initially drilling two vertical test or “science” wells. The vertical wells will be utilized to collect all of the data necessary to achieve optimum results. The company intends to perform a full suite of logs, including imaging, sonic logs and sidewall cores before setting pipe and completing the wells. Torchlight’s plan is to ultimately develop the field employing horizontal drilling, which is consistent with development by other Midland Basin operators also targeting the Wolfcamp A&B. The two initial vertical wells will be drilled with sufficient casing size to add lateral legs at a later date. Torchlight plans to drill its third well horizontally and quickly move to full scale development.

According to the work done by Masterson, the primary field objective will be the Wolfcamp A&B zones. Secondary horizontal targets include the Leonard and the Dean formations. Overall thickness in the Wolfcamp ranges from 150 feet to 350 feet, which could require multiple horizontal legs per bench to fully drain, as seen in analogous Wolfcamp formation wells in the Midland Basin. Potential EUR’s (estimated ultimate recoverable barrels) are over 100,000 per 1000 ft. of lateral and horizontal well costs are estimated at between $5.5 and $6.5 million. All field services are available within close proximity to the acreage including oil and gas pipelines.

The company will pursue a joint development partner, much like it did with the Orogrande Project, to provide for project capex funding. Torchlight plans to begin discussions with suitors immediately and will consider both operating and non-operating financial partners.

“Torchlight continues to create value for our shareholders by executing on initiatives that are cost conscious, reward weighted and return oriented. We continue to leverage our network of strategic partners, McCabe Petroleum Corporation being a primary example, to find opportunities that because of size and maturation profile likely would not have been presented otherwise. Torchlight remains focused on the development of our existing assets but will continue to be opportunistic when presented with accretive opportunities or those that value the company at forward looking prices,” said John Brda, CEO of Torchlight Energy.

About Torchlight Energy
Torchlight Energy Resources, Inc., 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.

To stop by Torchlight Energy’s website, CLICK HERE

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