Shares of an American exploration and production company Torchlight energy resources (NASDAQ: TRCH) fell 26% in March, according to data from S&P Global Market Intelligence. That said, at one point they were actually about 15% higher. The mood turned negative when an update on the company’s proposed merger began to filter through.
In mid-December 2020, Torchlight Energy and Metamaterial announced its intention to merge. It’s a complex deal that is basically a back door for Canada-based Metamaterial to get listed in the United States. In fact, once completed, the energy assets now owned by Torchlight are expected to be scrapped, with the combined company focusing on specialty materials. Still, there are incentives for Torchlight investors here, and a reason to be happy with the somewhat unusual deal.
That said, in mid-March, Torchlight announced that the planned merger is expected to be completed in the second quarter. This materially pushes back the use date, which investors didn’t seem to like very much. In fact, the stock has fallen steadily after the news broke. Given the delay, some investors might be concerned that the acquisition process is not going as smoothly as originally hoped.
Torchlight Energy is no longer just a store of energy. It really is a game of special situations, which is a space that is probably only suitable for more aggressive investors. The delay here could just be a timing issue or more, but for most investors it would be best to sit on the sidelines until the deal is done. Or, if what you are really looking for is energy exposure, ignore torch energy altogether.
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