Targeting Alpha returns in Oil & Gas
Where we invest
We target producing assets with significant identified upside, such as enhancement of existing production or operations, implementation or optimization of waterfloods or other EOR methods, or through recompletions or drilling.
Such a profile gives us the ability to acquire assets with a positive base return, while allowing for additional upside through successful enhancements and opportunistic development.
Our approach limits downside while targeting ample equity returns primarily through asset cash flow without reliance on favorable changes in commodity prices or cash flow multiples.
In practice, this means we seek assets producing through multiple well bores penetrating multiple potential pay zones, providing ample and current data.
Oil production is preferred, but gas / NGL-weighted assets will be reviewed opportunistically. We usually require full access to all minerals and prefer Alpha operatorship, as we would like to apply our engineering and ‘What’s Possible’ approach.
We welcome partnership with those who know the assets best, hands-on, in the field or in the geo-model.
Why we believe there is an opportunity
- Technology has vastly improved extraction efficiency, but has not been evenly applied.
- Capital and engineering talent have been heavily concentrated on several core basins.
- Conventional fields have been overlooked or ignored in many cases.
- Conventional fields are no longer ‘core’ to their owners, often financially immaterial, while representing a large capital opportunity to a specialist such as Alpha.
We witness concentrated capital, technology, and management attention, and believe it creates an opportunity for successful contrarian focus and asset identification.