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After initiating discovery efforts into the “announcement of the partner’s identity” – of course this is regarding Torchlight Energy’s (TRCH) announcement that it has moved its LOI with its Farm-In partner to a definitive agreement, we have positive results to report back to the public.
A source close to us (the source has elected to remain anonymous) has discovered through a process of investigation, using sources of public information, that Torchlight’s partner is in fact D.R. Horton (DHI). Yes, that D.R. Horton.
As in $11 billion market cap, has no other visible energy exposure D.R. Horton. While this new information is peculiar to say the least – what is an ~$11 billion name brand home builder doing investing $50 million over a two year span in an unproven energy play – it is indeed good news. Should the results of the initial efforts (being facilitated through D.R. Horton subsidiary Founders Oil & Gas, LLC) prove out to be fruitful D.R. Horton has the funding/borrowing capacity to essentially get as deep into Torchlight as it deems opportunistic. In fact, depending on why D.R. Horton is getting involved in energy – D.R. Horton is large enough to buy Torchlight outright even assuming a healthy uptick to share price as the Orogrande play solidifies itself in monetization opportunity. As we stated yesterday in a research note, we viewed and continue to view Torchlight’s Farm-In Agreement as positioning the E&P intimately close to a natural acquirer. Knowing that “Founders Oil & Gas” is really D.R. Horton we are even more confident in our belief.
That said, with this news going public and I’m sure into wide distribution we also believe that Torchlight will likely receive an inflow of newly interested inquiries over the coming months. We believe that having a marquee partner like D.R. Horton should validate the potential of the Orogrande asset for those still unsure and should bring a source of immediate credibility to the claims being made by the company. Torchlight has been very transparent in presenting its findings and data regarding its Orogrande play and has frequently updated its investor deck located on the company IR website. Torchlight consulting geologist Rich Masterson has also made himself readily available for data presentations as well as Q&A analysis – to which I have participated.
Without further delay – here is the definitive proof that D.R. Horton is in fact the Torchlight Farm-In partner:
Founders Oil & Gas was originally filed with the Texas Secretary of State 6/29/2015 – it filed its physical address as 301 Commerce Street, STE 500, Fort Worth, TX, 76102:
Founders Oil & Gas President Brian M Sirgo’s LinkedIn profile matches the date of formation for the LLC very cleanly:
Founders Oil & Gas LLC lists its “Governing Person” as DRH Oil & Gas, Inc. – which also lists its physical address as 301 Commerce Street, STE 500, Fort Worth, TX, 76102:
D.R. Horton, which shares the same initials as DRH Oil & Gas, Inc., also lists its physical address as 301 Commerce Street, STE 500, Fort Worth, TX, 76102:
Again, we continue to view Torchlight’s Farm-In Agreement as positioning the E&P intimately close to a natural acquirer and easily accessible in-house funding source should the Orogrande play prove out to be a fraction of the potential with which it is currently being projected. Knowing that “Founders Oil & Gas” is really D.R. Horton we are even more confident in our belief.
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