Torchlight Energy Resources Inc (NASDAQ:TRCH) reported that it has finalized a Letter of Intent to increase its stake to 74% amongst 12,000 gross acres leading to 8,880 net acres in Midland Basin Wolfcamp play.
In the last month, the holders of Torchlight Energy’s Series ‘C’ Preferred shares chose to convert into Working stake in the firm’s Hazel Project, reducing company’s stake to 33.33% Working Interest. Upon completion of the transactions anticipated by the Letter of Intent, the company would get further 40.66% Working Interest from a firm owned and managed by its Chairman, Mr. Greg McCabe, increasing firm’s total stake to 74%.
In the mentioned transaction, which is contingent to a definitive deal, Torchlight would compensate McCabe around 3.301 million shares of TRCH common stock and simultaneously therewith McCabe would scratch or cause to be annulled nearly 3.301 million outstanding warrants, hence resulting in a non-dilutive event for company and a purchase cost equivalent to nearly $663 per acre.
Torchlight would be accountable for related expenses and costs at closing. The LOI is nonbinding, and finalization into a definitive deal and completion of the transaction will be dependent on the approval of Torchlight’s Board and a fairness letter which will be offered to the firm by a third party.
John Brda, the CEO, said that they are extremely thrilled to enhance working interest in the Hazel area. After considerably de-risking the play lately by drilling first test well, this deal is accretive and timely. The Chairman has developed remarkable confidence in firm as shown in this and also in previous deals with him.
McCabe has been a notable source of expertise and they appreciate the prospects provided to the company. This deal, like the others Torchlight have implemented with Greg (including the initial Hazel acquisition and Orogrande), offers increased access for company into one of the most thrilling plays in the nation. They anticipate the deal to be finalized in the coming few weeks.