Marketed: AE&J Royalties Core Delaware Basin Minerals Position

Transaction Type
Sellers
Marketers
Basin
Permian Basin; Delaware Basin
Announce Date
Post Date
Close Date
Room Opening Date
Estimated Price
MM
Description

The following information is provided by Detring Energy Advisors LLC. All inquiries on the following listings should be directed to Detring. Hart Energy is not a brokerage firm and does not endorse or facilitate any transactions.

AE&J Royalties LLC is offering for sale a mineral interest position located in the core of the Delaware Basin in southern Lea County, N.M.

Detring Energy Advisors, which was retained for the sale, said the AE&J position is "concentrated in the highest-returning portion of the highest-returning basin in the Lower 48" with substantial near-term cash flow as a result of premier operators drilling extended laterals utilizing next-gen, high-intensity completion techniques.

Cash flow from the offered assets is forecasted to reach roughly $5 million in 2020E. Currently, the position includes exposure to seven proved developed producing and 17 drilled but uncompleted horizontal wells and permits.

Detring added the offering includes non-cost bearing clauses across roughly 50% of the net royalty acreage that increases margin and realized cash flow. Additionally, the offering's high royalty interests average about 2% per well, accelerating the impact of on-mineral development.

Highlights:

  • About 550 Net Royalty Acres (at 1/8)
    • 100% minerals
    • Roughly 50% non-cost bearing
  • Core mineral position operated by premier Delaware Basin E&P’s
    • About 50% Concho Resources Inc., 35% Cimarex Energy Co., 15% BTA Oil Producers LLC and less than 5% Chevron Corp.
  • Prolific stacked-pay in the deep, overpressured core of the most active basin in the United States
    • IP-24: 2,300 to 4,900 barrels of oil equivalent per day
    • EUR: 1.3 million to 2.3 million barrels of oil equivalent
    • Spacing: 28 wells per mile
  • Significant cash flow generated by 24 existing horizontal wells/permits:
    • About $5 million (2020E); about $8 million (next three years); about $20 million (full-life)
  • Substantial undeveloped inventory generates about $65 million of additional undiscounted cash flow (about $85 million 3P)
    • 70 total undeveloped locations across the Wolfcamp A, Wolfcamp B, Bone Spring 1-3 and Avalon
    • Total net inventory of 1.9 wells (0.5 developed / 1.4 undeveloped) normalized to 7,500 ft
    • Additional unbooked inventory in the highly prospective Wolfcamp C and Wolfcamp D
  • Southern Lea County exhibits the highest quality Bone Spring and Wolfcamp rock properties found throughout the Delaware Basin
    • About 5,000 ft of stacked-pay with multiple landing zones and upside throughout the position

Process Overview:

  • Evaluation materials available via the Virtual Data Room Aug. 14
  • Proposals due Sept. 11

For information visit detring.com or contact Melinda Faust at mel@detring.com or 713-595-1004.

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