In the fast-paced world of minerals, timing is everything. With mature basins becoming the norm and no new shale plays on the horizon, mineral companies must embrace a forward-thinking mindset to stay ahead of the competition. In this blog post, Enverus will explore how an analytics-intensive approach can help mineral companies identify and seize M&A opportunities, build a strong portfolio and extract maximum value from their investments.
The state of the mineral market: Forecasting and investing into the future
Mineral and royalty assets attracted about $6 billion in deals last year. The Enverus Intelligence Publications team recently shared their thoughts on the first publicly disclosed mineral deal of 2023, Kimbell’s Midland Basin buy. Enverus expects to see a continued uptick in deal activity for this sector. However, finding transactions that are accretive to both yield and activity well levels will be challenging according to the Mineral Review report, “Mineral Review | Competitive M&A Market Set to Get Hotter,” (available to Enverus Intelligence® | Research (EIR) subscribers) published by EIR in December 2022.
Anticipating opportunities in a competitive minerals market
Minerals companies often find it challenging to keep a pulse on operator activity to anticipate opportunities. Traditional methods of monitoring permits and rig activity may not suffice in this hyper competitive environment. The winners will be buying ahead of the drill bit, using leading indicators of an operator’s development activity. In addition, to understand minerals upsides requires understanding proved developed producing (PDP) reserves and proved undeveloped (PUD) reserves or upside value.
These three focus areas are what will reveal leads early in the development cycle and help mineral companies effectively screen opportunities — making it more likely they make accretive investments.
Stay ahead of the drill bit with insights for minerals
Enverus offers mineral investors access to the most timely, accurate activity, production and revenue insights to find new opportunities before the competition even knows they are there. Tracking oilfield activity, such as pad detection and frac crew movements, is the key to knowing what will happen before others that use more traditional line of sight tracking methods.
Plus, with pre-built production forecasts, geologic zone and ESG insights, you get reliable estimates from new wells to generate competitive offers, stay informed about drilling and completion activity, and gain knowledge in areas with potential for development and which operators you want to work with.
Real-world application: The benefits of using Enverus insights for mineral investment
To understand how mineral companies can use Enverus insights to influence investment decisions for non-operating assets, Enverus spoke with Scott Rice, COO at Riverbend Energy Group, a multi-faceted investment firm focused on the energy sector.
Rice said, “We’ve used Enverus analytics and intelligence for 15 years. Without Enverus, we couldn’t get the information we need fast enough to stay on top of the market. We also couldn’t value deals as accurately or as quickly. The research and development Enverus does — where your researchers are constantly creating and updating new data feeds — allows firms like ours to scale.
“We are very process oriented to ensure we are really maximizing how efficiently we operate. If we tried to build an in-house solution that provided the same level of data accuracy, it wouldn’t be as robust. With Enverus, our team out in the field can bring opportunities to our engineers. Our engineers pull in Enverus analytics to our solution to do the technical evaluation of the asset so we can assign a proper value to it. This also helps us when we need to sell an asset.”
You can download the full Riverbend Energy case study here.
To understand the step-by-step analysis using these insights, take a look at the Enverus article, “Workflows to Forecast Higher Mineral Profits.”
Looking ahead: An analytics-intensive approach to mineral acquisitions
The future of mineral acquisitions will depend on mineral companies’ ability to stay ahead of the competition. With scarcer, undeveloped inventory and more mature basins, finding the right opportunities will require an analytics-intensive approach that leverages leading indicators of operator activity and an understanding of PDP acreage and PUD reserves. With timely and accurate insights from Enverus, mineral investors can gain a competitive edge and make informed investment decisions to extract the most value from these opportunities.
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About Enverus Intelligence®| Research
Enverus Intelligence Research, Inc. (EIR) is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Energy Transition Research is a research division of EIR focused on topics including Power & Renewables, CCUS, Low-Carbon fuels and Emissions. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. See www.enverus.com/disclosures for additional information.