Drilling Fund

What is the Preferred Equity Drilling Fund?

This is a private equity fund that is acquiring preferred equity ownership in private market oil and gas developments in the United States. We are blending the potential for strong mid teen IRRs with three distinct risk mitigation measures. First, by targeting PUDs we significantly decrease our downside risk by participating in wells that have a much higher likelihood of being recoverable under current economic conditions and technological practices. Second, by taking a preferred equity position in the capital stack, the fund's position in a well has seniority over the original working interest owner when distributions are made. In the event a well is underperforming, this can give us a much better opportunity to achieve our fund IRR targets. Third, by allocating capital into a diverse collection of PUDs, we aim to minimize any one-off operational or geological risk.

Finally, investors in this fund may benefit from some of the best tax advantages available in the US Tax code being it exclusively targets drilling opportunities. You can learn more about the tax advantages here and as always, we strongly encourage you to discuss any potential tax benefits with a tax professional.

Learn about the potential tax breaks here.

Who We Are

Our vertically integrated in house team brings together decades of experience in geology, petroleum engineering, financial analysis, asset management and technological development. This gives us the ability to swiftly analyze and diligence any private market opportunity that may come through our professional network, giving us the edge to ultimately extract value where others may miss it.

How the fund works

Our team has a strong pipeline of off-market or private oil and gas deals that we are constantly analyzing and running diligence on. Once we have identified a target we would like to invest in, we deploy capital into the project via a preferred equity arrangement known as a Drillco agreement. This ensures seniority with respect to the first 15% return on the opportunity while still participating at a split (usually between 10-25%) for the remaining upside in the project.

We continue this process until all capital is deployed. After drilling and completion is done for each well in the portfolio, distributions are made to investors for the life of the fund. Please keep in mind, we may continue to reinvest distributions into other opportunities in an effort to further grow the Fund's asset base in hopes of ultimately maximizing investor returns.

As the fund's term draws near, we plan to begin divesting in these assets to other buyers in the market. At this point, the now producing assets would be considered "PDP" (Proved Developed Producing), and the value would be based on a combination of oil prices, reserves forecasts, and other market drivers such as interest rates.

Once asset divestment occurs, we intend to begin returning all capital to our investors.