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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Disclosures from ROTH Capital Partners, Torchlight Energy Resources Inc., Company Note, April 2, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Within the last twelve months, ROTH has received compensation for investment banking services from Torchlight Energy Resources, Inc.
ROTH makes a market in shares of Torchlight Energy Resources, Inc. Callon Petroleum Company, Earthstone Energy, Inc., Diamondback Energy, Inc. and Ring Energy, Inc. and as such, buys and sells from customers on a principal basis.
A Research Analyst and/or a member of the Analyst's household own(s) debt or equity securities of Torchlight Energy Resources, Inc. stock.
Shares of Torchlight Energy Resources, Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
Within the last twelve months, ROTH has managed or co-managed a public offering for Torchlight Energy Resources, Inc.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.