Darren Barbee, interim editorial director, Hart Energy: Hi, my name is Darren Barbeie. I'm the editorial director of Hart Energy and I'm here with Darin Zanovich. He's the CEO and president of Mesa Minerals.

So you were just on stage with me, a lot of great information. I guess I wanted to start off by kind of getting the nuts and bolts of the composition of your team and kind of some of the assets you've been able to acquire over the past couple of years with Mesa III.

Darin Zanovich, CEO, Mesa Minerals: Great. Yeah, so our team today consists of about 13 individuals. I think we have three reservoir engineers, geologists, landmen, finance and accounting. So really built out more like an E&P team today, and that's what you see with many of the private equity and public royalty companies.

Our assets today at Mesa III—we’ve got about 16,000 net royalty acres in the Haynesville, about 6,000 net royalty acres in the Permian Basin, and our NTM cash flow is around $50 million on those assets. We started putting those are in our Mesa III entity. We started acquiring and putting that together about two and a half years ago, and we're about to put a bow on that and we're really excited to kick off Mesa IV, and that's going to happen. I think a press release will be going out next week to kick off Mesa IV, new equity commitment from NGP out of their royalty fund, and we'll be kicking that off and continue to focus in the Haynesville, on the Permian, and likely to expand into some other basins as well.

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DB: Can you talk about those basins at all? I mean, what other basins would you be interested in? I mean, you're already in the Permian.

DZ: Yeah, already in the Permian. I'd say probably an oilier basin. We haven't nailed down exactly where that's going to be, but TBD [to be decided].

DB: Okay. All right. The other question I wanted to ask was kind about the market conditions that you're seeing right now with the large and the small acquisitions opportunity set, kind of what's marketed, off marketed and just in general, what the broader market is for minerals, but also the Haynesville in particular and Appalachia.

DZ: Sure, yeah. I'd say this year we've seen several billion royalty transactions that have taken place in the Permian. I think one was in the D-J. I think throughout this year you'll probably see some other large $500 to $1 billion large transactions happening in the Permian. There's two large Appalachia acquisitions that are on market, I think waiting for bid right now. So it'll be interesting to see how those transact. Overall in the Haynesville, you've got our Mesa portfolio that we put together at Mesa III combined with our Permian piece. That'll probably be something we take to market in the next few years. So, excited about that.

But probably two other large Haynesville portfolios besides ours that you kind of see out there that are in the hands of private guys right now. On the Appalachia side, not a lot of, you haven't seen a whole lot of large, $100 million-plus transactions happen. So again, it'll be interesting to see as there's a couple of those coming to market now, and we're starting to see more and more competition regardless of basin. If you've been able to build up something of scale that has cashflow and has running room, I think regardless of basin as we move forward in the mineral and royalty space, with the amount of capital that's coming in, that you're going to see a lot of competition for all those types of opportunities.

DB: So with a company like Mesa III that you've been building up now for a while, and you've got, I think you said 16,000 net royalty acres, is that right? In the Haynesville and also in the Permian you have a pretty big position. Who's the natural buyer for that? Is there a natural buyer for that? Is it a Sitio? Is it maybe a Viper? I mean, do you have any thoughts on who might be the natural acquirer of that?

DZ: Sure. I think you'll definitely see there's six or seven public guys now, and not only public royalty guys, there's coal companies, gold companies that are public as well as the public mineral and royalty companies. I think all of those type of groups would be in play, and you see a lot of the large private equity groups out there and institutional groups that love to buy these type of assets for the cashflow and the yield that are definitely long-term holders of things like this that you've seen. A lot of those guys play in the space. So wouldn't surprise you in a large Permian marketed deal or something like what our Mesa III assets will look like when they go to market to have 30 to 50 NDAs and people signed up to look at it. It's a very healthy A&D market right now.

DB: Yeah, that's great. That's great. Well, we look forward to seeing what you do at Mesa IV, and just want to thank you for being here at DUG Gas. Thanks very much.

DZ: Alright, thank you Darren.

DB: Appreciate it.

DZ: Yeah, thank you.

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