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Torchlight Energy Reports Year End 2013 Earnings

Expect to Exit 2014 With 2000 to 2500 BOEPD

PLANO, TX--(Marketwired - March 31, 2014) - Torchlight Energy Resources, Inc. (NASDAQ: TRCH) ("Torchlight Energy" or "the Company"), a rapidly growing mid-continent oil and gas company, today reported its full year results for the twelve months ended December 31, 2013. The Company filed a 10-K with the U.S. Securities and Exchange Commission for fiscal 2013.

Full Year 2013 Highlights

  • Revenues increased 20% to $1.2 million revenues for full year 2013
  • 8 producing wells at December 31, 2013 with net 114 BOEPD
  • 1,566,455 BOE net proved reserves at December 31, 2013 vs. 417,500 at December 31, 2012
  • Completed drilling on Johnson #2H well in Marcelina Creek Project in Texas
  • Signed agreement with Ring Energy to acquire 50% working interest on 17,000 acres of prospective oil fields in Kansas
  • Purchased 15.3% to 25% working interest in 21,000+ acres in the Hunton Limestone AMI's operated by Husky Ventures with continued leasing in AMI's that total of 300,000 gross acres
  • Began trading on NASDAQ Capital Markets on December 16, 2013

"I am pleased with the tremendous progress we have made over the past twelve months," began Tom Lapinski, Chief Executive Officer of Torchlight Energy. "We significantly increased our acreage and diversified our asset base by securing agreements with proven operators such as Husky Ventures and Ring Energy. We also improved our corporate governance and trading liquidity by adding three new independent board directors and successfully uplisting to the NASDAQ. Our strategy of expanding production and reserves by drilling lower risk wells with multiple pay zones in highly prospective locations should continue to deliver solid returns for our shareholders."

The Company had $16.7 million of assets and $9.2 million shareholders' equity at December 31, 2013 compared to $4.5 million and $3 million, respectively, at December 31, 2012.

Business Updates

Torchlight Energy commenced drilling in its initial 5-well program in Southwest Kansas in February 2014. This program, which is part of a joint venture agreement with Ring Energy, Inc., entails drilling vertical wells in Mississippian targets. The Company expects to announce results from the first five wells in April 2014.

On January 31, 2014, the Company completed two private placements with net proceeds of $6.15 million. Torchlight sold 1,750,000 shares of restricted common stock and 437,541 warrants with an exercise price of $6.00 per share expiring December 31, 2018.

Outlook

On a combined basis in the South Texas, Hunton, and two Kansas plays, Torchlight has the potential to drill 90+ wells in 2014 (seventeen wells of which are either already producing, being fracked, or being drilled). The Company is partnered with excellent operators and every project is reviewed by these respective operators in their areas thereby giving Torchlight access to their entire team, engineers, geologist, landman, etc. at no additional cost to Torchlight. This allows for the aggressive drilling strategy and with nearly 1000 drilling locations, there is no shortage of wells to drill with Due Diligence already completed.

The Company is going to need to raise an additional $20 to $25 million in order to meet drilling capital needs for all of the programs. Torchlight is actively engaged in the pursuit of this financing. Looking beyond 2014 all future drilling needs should be met out of cash flow from continuing operations and/or borrowing capability on a reserve based line of credit.

Conference Call

Management will host a conference call at 4:30 p.m. ET on March 31, 2014 to discuss its 2013 earnings results.

Date: Monday, March 31, 2014  
Time: 4:30 pm ET  
Dial-in (US): 877-941-1427  
Dial-in (International): 480-629-9664  
Conference ID: 4675987  
Webcast: http://public.viavid.com/index.php?id=108447  

A replay of the call will be available from 7:30 pm ET March 31, 2014 to 11:59 pm ET April 14, 2014. To access the replay, use 877-870-5176 for U.S. callers and 858-384-5517 for international callers. The PIN number is 4675987.

About Torchlight Energy

Torchlight Energy Resources, Inc. (NASDAQ: TRCH), based in Plano, Texas, is a high growth oil and gas Exploration and Production (E&P) company with a primary focus on acquisition and development of highly profitable domestic oil fields. The company currently holds interests in Texas, Kansas and Oklahoma where their targets are established plays such as the Eagle Ford Shale, Mississippi Limestone and Hunton Limestone trends. For additional information on the company, please visit www.torchlightenergy.com.

Forward Looking Statement

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Such forward-looking statements involve known and unknown risks and uncertainties, including risks associated with the company's ability to obtain additional capital in the future to fund planned expansion, the demand for oil and natural gas, general economic factors, competition in the industry and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. The company is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

TORCHLIGHT ENERGY RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS

                                                 December 31,   December 31,
                                                     2013           2012    
                                                -------------  -------------
                     ASSETS                                                 
Current assets:                                                             
  Cash                                         $    1,811,713 $       63,252
  Accounts receivable                                 429,699         92,897
  Prepaid expenses                                      9,144          8,346
                                                -------------  -------------
    Total current assets                            2,250,556        164,495
Investment in oil and gas properties, net          13,038,751      3,461,686
Office equipment                                       11,604               
Debt issuance costs, net                              920,947        473,785
Goodwill                                              447,084        447,084
Other Assets                                           74,379               
                                                -------------  -------------
    TOTAL ASSETS                               $   16,743,321 $    4,547,050
                                                =============  =============
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
Current liabilities:                                                        
  Accounts payable                             $      985,123 $       89,247
  Accrued liabilities                                       -         62,055
  Related party payables                               90,000        768,648
  Notes payable                                       753,904         51,000
  Due to working interest owners                      580,484              -
  Interest payable                                    309,498         10,581
                                                -------------  -------------
    Total current liabilities                       2,719,009        981,531
                                                                            
                                                                            
Convertible promissory notes, net of discount                               
 of $5,500,462 and $521,864 at December 31,                                 
 2013 and December 31, 2012, respectively           4,802,711        580,636
Asset retirement obligation                            24,382         12,614
Commitments and contingencies                               -              -
Stockholders' equity:                                                       
  Preferred stock, no par value, 5,000,000                                  
   shares authorized; no share                              -              -
  Common stock, par value $0.001 per share;                                 
   70,000,000 shares authorized                                             
  16,141,765 issued and outstanding at                                      
   December 30, 2013                                   16,142         13,565
  13,564,815 issued and outstanding at                                      
   December 31, 2012                                                        
  Additional paid-in capital                       21,978,616      8,381,001
  Warrants outstanding                              3,043,420              -
  Accumulated deficit                            (15,840,959)    (5,422,297)
                                                -------------  -------------
    Total stockholders' equity                      9,197,219      2,972,269
                                                -------------  -------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   16,743,321 $    4,547,050
                                                -------------  -------------
                                                                            
                                                                            

TORCHLIGHT ENERGY RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

                                             YEAR                YEAR       
                                            ENDED               ENDED       
                                      DECEMBER 31, 2013   DECEMBER 31, 2012 
                                      -----------------   ----------------- 
Revenue                                                                     
  Oil and gas sales                  $        1,243,998  $        1,037,247 
  Royalties                                      51,501                   - 
                                                                            
Cost of revenue                                (434,119)           (500,053)
                                      -----------------   ----------------- 
                                                                            
Gross income                                    861,380             537,194 
                                                                            
Operating expenses:                                                         
  General and administrative                  6,682,377           2,430,884 
  Depreciation, depletion and                                               
   amortization                                 652,179             551,890 
                                      -----------------   ----------------- 
    Total operating expenses                  7,334,556           2,982,774 
                                                                            
Other income (expense)                                                      
  Forgiveness of debt                           660,000                   - 
  Interest income                                    59                  12 
  Interest and accretion expense             (4,605,545)           (363,235)
                                      -----------------   ----------------- 
    Total other income (expense)             (3,945,486)           (363,223)
                                                                            
Net loss before taxes                       (10,418,662)         (2,808,803)
                                                                            
Provision for income taxes                            -                   - 
                                      -----------------   ----------------- 
                                                                            
Net (loss)                           $      (10,418,662) $       (2,808,803)
                                      =================   ================= 
                                                                            
Loss per share:                                                             
Basic and Diluted                    $            (0.74) $            (0.21)
                                      -----------------   ----------------- 
Weighted average shares outstanding:                                        
Basic and Diluted                            14,016,240          13,564,815 
                                      -----------------   ----------------- 
                                                                            
                                                                            

TORCHLIGHT ENERGY RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

                                             YEAR                YEAR       
                                            ENDED               ENDED       
                                      December 31, 2013   December 31, 2012 
                                      -----------------   ----------------- 
Cash Flows From Operating Activities                                        
  Net (loss)                         $      (10,418,662) $       (2,808,803)
  Adjustments to reconcile net loss                                         
   to net cash from operating                                               
   activities:                                                              
    Stock based compensation                  4,331,143           1,268,216 
    Accretion of convertible note                                           
     discounts                                3,894,389             313,963 
    Depreciation, depletion and                                             
     amortization                               652,179             551,890 
    Forgiveness of debt income                 (660,000)                  - 
    Change in:                                                              
      Accounts receivable                      (336,803)            (75,623)
      Prepaid expenses                             (798)              7,921 
      Debt issuance costs                      (967,020)                  - 
      Other assets                              (74,379)                  - 
      Accounts payable and accrued                                          
       liabilities                              833,820             106,291 
      Related party payables                    (18,648)            509,898 
      Due to working interest owners            255,484                   - 
      ARO accretion                               1,360                   - 
      Interest payable                          245,299              (4,027)
                                      -----------------   ----------------- 
Net cash used in operating                                                  
 activities                                  (2,262,636)           (130,274)
                                      -----------------   ----------------- 
                                                                            
Cash Flows From Investing Activities                                        
  Investment in oil and gas                                                 
   properties                                (9,663,504)           (905,326)
  Proceeds from the sale of oil and                                         
   gas properties                                     -              74,571 
  Proceeds from sale of leases                1,076,400                   - 
                                      -----------------   ----------------- 
Net cash used in investing                                                  
 activities                                  (8,587,104)           (830,755)
                                      -----------------   ----------------- 
Cash Flows From Financing Activities                                        
  Proceeds from promissory notes             11,405,773           1,049,000 
  Repayment of promissory notes                (611,000)           (543,000)
  Proceeds from promissory notes                750,000                   - 
  Proceeds from warrant exercise                203,428                   - 
  Issuance of common stock                      850,000                   - 
                                      -----------------   ----------------- 
Net cash provided by financing                                              
 activities                                  12,598,201             506,000 
                                      -----------------   ----------------- 
                                                                            
Net increase (decrease) in cash               1,748,461            (455,029)
Cash - beginning of period                       63,252             518,281 
                                      -----------------   ----------------- 
                                                                            
Cash - end of period                 $        1,811,713  $           63,252 
                                      -----------------   ----------------- 
Supplemental disclosure of cash flow                                        
 information:                                                               
  Cash paid for interest expense       $          468,841 $          105,488
  Cash paid for income taxes           $                - $                -
                                                                            
  Non cash transactions:                                                    
    Common stock issued for leases     $        1,233,967 $                -
    Common stock issued in connection                                       
     with promissory notes             $        1,695,100 $           67,725
    Warrants issued in connection with                                      
     promissory notes                  $        2,531,321 $          791,376
    Warrants issued in connection with                                      
     common stock issuance             $          123,250 $                -
    Beneficial conversion feature on                                        
     promissory notes                  $        5,770,654 $          390,600
    Exchange of promissory notes       $                - $          412,500
    Retirement of common stock         $                - $            1,600
    Asset retirement obligation        $           10,407 $              693
    CV Note issued for debt issuance                                        
     costs                             $           40,000 $                -
    Liabilities assumed in purchase of                                      
     oil and gas properties            $        1,809,572 $                -
    Sale of oil and gas properties in                                       
     exchange for note receivable      $          990,000 $                -
    Capitalized interest cost          $           56,347 $                -
                                                                            

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