Torchlight Energy Resources Inc. (NASDAQ: TRCH) plans to boost its ownership in its Midland Basin project in West Texas, the company said Nov. 10.

The company entered a letter of intent to acquire an additional 40.66% working interest in its Hazel Project in the Midland Basin from an entity owned and controlled by Greg McCabe, Torchlight's chairman.

The acquisition will increase Torchlight's working interest across all 12,000 gross acres of the Hazel Project to 74%, resulting in 8,880 net acres.

As part of the deal, Torchlight will pay McCabe about 3.3 million shares of the company's common stock. Concurrently, McCabe will cancel or cause to be cancelled about 3.3 million outstanding warrants.

The company estimates the purchase price is equivalent to about $663 per acre at its current stock price.

On Oct. 6, Torchlight said it had successfully completed its first vertical test well, the Flying B Ranch #1, on its Hazel Project acreage using a single stage frack and that the well was producing oil.

"After significantly de-risking the play recently by drilling our first test well, this transaction is timely and accretive," John Brda, Torchlight CEO, said in a statement.

Brda said the company expects the transaction to be finalized in the next few weeks.

The letter of intent is nonbinding, and entry into a definitive agreement and closing of the transaction will be subject to approval of Torchlight's board and a fairness letter which will be provided by a third party.