Energy Valuation Insights

A weekly update on issues important to the oil and gas industry


Royalty Interests and the Importance of the Operator

In previous posts, we have discussed the market pricing implications of publicly traded royalty trusts to royalty and mineral owners. We have explained the importance of understanding the specifics underlying those trusts before using them as a pricing benchmark. In this post, we will delve further into market prices of royalty and mineral interests and the important role of operators. We will look into the three publicly traded royalty trusts operated by SandRidge Energy: SandRidge Mississippian Trust I, SandRidge Mississippian Trust II, and SandRidge Permian Trust.

Considerations for Endowments Divesting Fossil Fuels

The purpose of an endowment is to provide a permanent source of funding that maintains the operations of colleges, universities, churches, etc.  To best serve its fiduciaries, an endowment should achieve the highest return possible.  Congruently, when divesting, the endowment must ensure it achieved a fair price for its investments. This post does not weigh in on the discussion of whether endowments should or should not liquidate fossil fuels.  Rather, I hope to educate and advise those who have decided to divest their fossil fuel assets and are unsure of how to proceed.

Royalty Trusts: I’m a Revenue Partner… No, Wait… That Looks Like Equity

In previous posts, we have discussed the existence of publicly traded royalty trusts & partnerships and their market pricing implications to royalty owners. Before using publicly traded royalty trusts as a pricing reference for your royalty interest, it is important to understand the economic rights and restrictions within those royalty trusts. In this post, we discuss the current market, the outperformance of the Whiting USA Trust II (WHZT), and importance of understanding the details about your royalty interest.

Eagle Ford – 2017/2018 Acquisition & Divestiture Commentary

This week’s blog post discusses several observations: There has been steady A&D activity over past 12 months, with typical valuations between $8,000 – $10,000 per acre. The formation of Magnolia Oil & Gas Corporation from the deal between a blank check company & Enervest creates a pure play South Texas producer in the Eagle Ford and Austin Chalk. Lastly, producers are still divesting positions and re-allocating resources to Permian Basin.

Capital Structure in 30 Minutes Whitepaper

Travis W. Harms, Senior Vice President of Mercer Capital, wrote a series of whitepapers that focused on demystifying corporate finance for board members and shareholders. The purpose of this whitepaper is to equip directors and shareholders to contribute to capital structure decisions that promote the financial health and sustainability of the company.

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