Torchlight Energy Resources has signed a letter of intent to acquire Orogrande project in Hudspeth County, Texas, US.
With the signing, Torchlight has received an earnest money deposit in the amount of $100,000. Under the Farm-In, Torchlight’s new partner would be required to spend $50 million over the next couple of years to earn a 50% Working Interest in the project. Torchlight will be reimbursed for its capex to date of approximately $5 million and will be carried through the first $45 million spent on the project at which time the two companies would participate on future development on an equal cost or "heads up" basis. The letter of intent is subject to the execution of a definitive agreement which is expected to be finalized before the end of September at which time the exact terms will be announced.
"We are very excited to achieve this milestone for Torchlight and the development of our potentially most significant asset," stated John Brda, CEO of Torchlight. "After working through discussions with many qualified and interested parties we have selected a group that brings extensive experience and financial resources to our efforts in the Orogrande Basin. This group is an oil and gas specific subsidiary of a larger public company whose management has a deep understanding of the project and development needs including over 30 years of E&P experience and a relationship with our consulting geologist Rich Masterson. The partnership approach is appealing to us as we maintain involvement in every aspect of this undertaking. Most importantly, we incur zero development expenses during the initial phase of the project and expect cash flow to be generated from new wells as they are brought into production. This partnership represents further transition of our company toward our core focus on the Orogrande Project."