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- 270 barrels per day of production versus 1,000 barrel per day guidance.
- Huge miss leaves Torchlight precariously positioned.
- Insufficient cash flow to fund existing operations.
- Unlikely to be able to borrow any more money, cutting off future growth.
- Short thesis validated.
- Torchlight amended it's 10-q to disclose that it pays a drilling promote.
- The price of oil has fallen recently.
- Torchlight will likely have to write down its reserves because of the promote and the falling oil price.
Update: Torchlight Discloses Disadvantaged Economic Arrangement
- Torchlight amended its 10-k to include information uncovered by Light of Day.
- Torchlight economics in the Hunton are worse than previously disclosed.
- Torchlight only owns 1,000 net acres in the core Hunton.
- Torchlight may be liable for losses by shareholders and recent equity investors.
- This potential liability could drive Torchlight into Bankruptcy.
Torchlight Crashes After Registering 59 Days Trading Volume And Equity Deal With Securities Fraudster
- Torchlight filed a S1-A, registering millions of shares and adding substantially to the float.
- New shares represent over 59 days of average trading volume.
- Stock is down almost 10% since share registration; potential for substantially more downside.
- Recent equity deal was with an individual banned from the securities industry for stock price manipulation.
Ring And Torchlight Mississippi Lime Joint Venture Results Delayed, Both Companies Issue Stock In Interim
- Results were initially supposed to come out in April.
- Then the companies pushed off the results until June.
- Ring Energy completed an equity offering while investors were waiting for results at a 25% discount to the market price.
- Torchlight management mentioned that only two vertical wells were producing, implying the venture was unsuccessful.
- Torchlight omitted relevant language, failing to disclose that it pays another company substantial fees.
- Management has confirmed these payments in prior conversations, and another larger public company involved in the same arrangements discloses the payments.
- Deloitte guide to preparation of financial statements shows company should disclose this type of arrangement.
What Has To Happen For Torchlight Energy To Trade At $7 This Year
- Q2 update will show if management hit their target of 500 boepd.
- Updated reserve report should be coming, which should show much higher reserves compared to year-end 2013.
- I believe the company will be able to raise money for the announced capex plan.
Torchlight Exceedingly Expensive Compared To Other Small Growing Oil Companies
- Evaluating Torchlight as a going concern reveals the stock is materially overvalued.
- Price is what you pay, value is what you get - Torchlight delivers little relative value to investors.
- Torchlight has proportionally more debt than its peers - introduces more risk.
Additional Risks May Challenge Torchlight's Ability To Raise Needed Capital
- There are material risks to Torchlight that have not been addressed - Torchlight may go to $0.
- Torchlight management prior violation of fiduciary duty has not shown up in SEC disclosures.
- Serious questions about conflicts of interest should be addressed.
Weak Short Thesis Creates Buying Opportunity In Torchlight Energy
- An SA article on June 8 paints a very negative thesis on Torchlight Energy, but in my opinion the information is mostly irrelevant to Torchlight's prospects.
- Comparing a producing, U.S. company to an entire class of fraudulent Chinese RTOs is baseless, making me question the thesis.
- Pointing to accumulated losses and going concern language as highly significant for a start-up company is misleading as most start-ups have these characteristics initially.
- Torchlight has multiple analysts and industry partners that support it.
- Accounting statements warn of "going concern" risk.
- Rate of loss is accelerating - accumulated loss up 48% in 3 months in 2014.
- Recent registration / unlocking of shares may knock down stock price.
- Stock rated by a single analyst, who previously recommended buying numerous Chinese frauds that went to 0.
- Management's previous public company's stock declined by over 99%, and has been found to "breach fiduciary duties" in a prior role.
Wed, Oct. 15, 12:47 PM
Thu, Aug. 14, 6:14 PM
TRCH vs. ETF Alternatives
Torchlight Energy, headquartered in Houston, Texas, is positioned as a junior oil and gas player with a primary spotlight on oil.
Country: United States
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