October 22, 2024 08:30 AM Eastern Daylight Time
DALLAS–(BUSINESS WIRE)–Spicewood Mineral Partners (“Spicewood”), a leading Dallas based mineral and energy investment firm, today announced an update on its new acquisitions in the Delaware Basin. In recent months, the company has been acquiring a selection of “tier 1” mineral assets in the Permian Basin. Spicewood’s acquisitions reflect a strategic blend of early-life and more mature assets, each offering varied cash flow profiles and operator diversity.
These recent investments showcase the company’s commitment to acquiring premium quality assets through a top-down basin analysis and bottom-up investment approach, which enables Spicewood to capitalize on market inefficiencies, strong seller relationships and the team’s deep basin expertise.
“These uncorrelated, low-volatility assets offer a senior secured status for cash flow, tax advantages, and inflation protection, representing an emerging institutional asset class,” said John Golden, Spicewood co-founder and partner. “Additionally, we expect these assets to provide meaningful quarterly distributions to our partners, underscoring our commitment to delivering consistent risk-adjusted returns.”
DEAL HIGHLIGHTS
Deal 1: Strategic acquisition of early-life, 90 percent undeveloped mineral tract in the Delaware Basin, offering the potential for significant upside through resource development and timing advantages. Recent activity includes Oxy filing a lease in the neighboring section and several operators (CP, BTA, Rio, Point Energy) farming-in nearby to accelerate timing and reserves.
Deal 2: Higher-yielding asset with mineral interests in the Delaware and Midland Basins, operated by Oxy and High Peak. The deal includes both production-ready assets and significant future development opportunities. Approximately 60 percent of the inventory remains, featuring a mix of sub-$40/Bbl opportunities and longer-term potential.
Deal 3: Mineral interests in Ward County, considered to have strong production potential, supported by proximity to key operators like COP and Oxy.
Deal 4: Mineral interests in Northern Reeves County, associated with BP. This unit is one of BP’s last remaining long-lateral developments in the core of the basin, indicating significant near-term development focus.
Deal 5: Mineral interests across the Delaware Basin with strong near-term cash flow and future development potential. Only 18 percent of the asset is in PDP, with the majority of inventory having break-evens below $35/Bbl.
STRATEGIC RATIONALE
Highest-Quality Mineral Assets
These assets fit the company’s existing portfolio of lowest break-even costs along with a “highest depth of resource” profile as compared to U.S. basins, which Spicewood believes will ensure future development from our operators.
Diversified Asset Maturity
Spicewood’s recent acquisitions include a mix of undeveloped tracts and mature assets, providing both immediate cash flow and long-term growth potential.
Operator Diversity
The mineral tracts acquired have best-in-class operators such as ConocoPhillips, Oxy, and BP, each focused on low break-even and highest return potential resource opportunities. This diversity ensures resilience and optimal management across the company’s assets.
Varied Cash Flow Profiles
Spicewood’s recent acquisitions offer both in-place yield and early-stage development potential, featuring sub-$40/barrel break-even operator returns which assist to ensure continued cash flow under various market conditions.
Asymmetric Upside Potential
The company believes the recent acquisitions present notable upside potential through timing and reserve appreciation, positioning Spicewood well for future development.
About Spicewood Mineral Partners
Spicewood Mineral Partners is a Dallas-based U.S. mineral and energy investment firm. We are an investment and technology-driven firm focused on the acquisition, aggregation, and management of mineral & royalty assets within the top-tier U.S. basins, where we have downside protection from low break-even drilling economics, deep inventory potential and highest quality resource potential. Spicewood utilizes its investment process, in-house technical expertise and industry relationships in an effort to provide attractive risk-adjusted returns to its investment partners. Spicewood’s mineral strategy is designed to provide current income for yield-focused investors. The Spicewood team is currently supported by 13 investment and technical professionals with 100+ years of combined experience in the oil and gas industry. For more information about Spicewood, please visit www.spicewoodpartners.com.
Contacts
John Golden
Spicewood Mineral Partners
[email protected]