Royalty Acquisition Criteria
Proven and Developed Fields - Purchasing pre-producing royalty acreage is largely dependent on location. We believe in targeting successful locations insiders deem “hot”. Louisiana has proven to be a very exciting locale for our phase 1 acquisitions. A hands-on approach in targeting possible purchases is the difference between success and failure.
Experienced Operators - We can tell a lot about an investment based on who is involved. We understand that finding the best possible drillers and operators is of utmost importance. We look for experts who risk their own dollars and eat their own cooking. Track record, resiliency, and deep pockets are crucial to the success of pre-producing royalties. Though we are entirely on our own as royalty owners, we comprehend that our best attribute is identifying great opportunities and getting out of the way.
Potential Overall Return - To put it bluntly, we are not interested in just getting our money back. We target investments that over the life of the well (s) will provide us with the opportunity to multiply our dollars at least many times. Before we purchase a pre-producing royalty, we evaluate estimated reserves, drilling and completion expenses, target depths, acreage size, and current status. If we believe the opportunity meets our criteria, we have no problem investing.
Possibility of Rapid Payouts - We like payouts of 5-15 months or less. Depending on the opportunity, some may be 6-month payouts with less estimated reserves and smaller unitized units. Some may be 1,000 net royalty acre unitized fields with bigger reserves but longer payouts. We target projects that will return our capital within a fairly quick estimated time horizon. We seek to minimize our risk by splitting dollars into many projects and letting the chips fall where they may. The bottom line is buying into wells that will be completed and generate a great source of monthly income to spend or reinvest.
Unitized Projects - Unitized and permitted projects that are being drilled or will be drilled in no more than 90 days are our target purchase. Unless the opportunity warrants it, we do not typically participate in projects that are not unitized or permitted. We write checks when pre-producing royalty acquisitions are ready to be drilled in a short time-span and industry insiders buzz about the project in question. Since we want to invest in projects with potential profit potential we understand that sitting on our clients’ money is not ideal. If other projects arise in the mean time, we won’t hesitate to contact our client base. Opportunity waits for no one. We are no exception.
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