GEO Investing

Source: Umbrella Research

Torchlight provided an update on its current operations and CapEx plans in the Hunton Formation. The company announced that the Boeckman 1-14H well, which was completed in September of this year, is currently producing 175 bopd and 700 MCF of gas per day and has grossed over $2mm in total well revenue during the first 90 days of production. The newest well in the area was put into production three weeks ago and is currently producing 733 bopd and 669 MCF of gas per day while production continues to increase as the well is cleaned up. This makes it the 6th producing well for Torchlight overall and the 2nd producing well in the Hunton. To remind investors, last month the company increased its assets in the Hunton Play by purchasing an additional 15.3% working interest in 5,110 acres in a Hunton Limestone development drilling project operated by Husky Ventures in exchange for 558,357 restricted common shares. Torchlight now controls a 15% working interest in 8,910 gross acres in the region, which includes more than 40 potential drilling locations. TRCH’s Hunton assets are operated by Husky Ventures, which is now a top 15 oil producer in Oklahoma, having successfully drilled 23 horizontal wells in Central Oklahoma in the past 5 years, and is expected to become a top 10 producer by the end of Q1 2014.

Near-Term CapEx Plans in the Hunton Play. TRCH is currently participating in an additional 5 wells at different stages of drilling and completion in the Hunton play with another 2 locations planned to be spudded this quarter. The next well in this region is currently being fracked and should be in production by mid-November, according to the company. This well is an immediate offset to the over 1,000 bopd producing well, which makes it Husky Ventures’ biggest Hunton producer to date. Drilling of another new well has just been completed and a frac procedure is scheduled to be performed during November, with production expected in early December. These wells are expected to take 60 to 70 days to reach optimal production before a normal decline commences. In 2014, TRCH plans to participate in 7-8 new wells per quarter as Husky accelerates to a 4-rig drilling program beginning in Q1. This should add approximately 30 new wells in the Hunton play in 2014. These horizontal wells will be drilled to a total depth of over 12,500 feet, including over 4,000 feet of lateral section, and expected to cost $4.3mm to $4.9mm gross per well. TRCH owns 15% WI across the projects; however, the actual interest on a per well basis may range from 0.5% to 20% depending on forced pooling and non-consent partners.

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