Nov 17, 2022   SOURCE: BusinessWire

Desert Royalty Company Acquires Legacy Mineral Position from Private Seller

Desert Royalty Company, LLC (“Desert”) today announced it has purchased a material mineral position from a private seller in core areas of Reeves and Loving Counties, Texas (the “Acquisition”). The undisclosed consideration was primarily equity in Desert’s current mineral fund, Desert Partners VII, LP (“DP7”), in addition to some cash.

Asset Summary:

- 2,905 Net Royalty Acres
- 86% of the acreage operated by Oxy and Callon
- Recent permitted wells or DUC activity is greater than 0.2 of a net well
- Total Horizontal PDP over 1.65 of a net well
- Current production estimated at over 180 net BOPD and 1,300 net MCFD
- Effective September 1, 2022

The Acquisition will exhaust the remaining capital in DP7—once the Acquisition closes DP7 will be completely invested. Kyle Stallings, Founder and CEO of Desert, commented, “We are very fortunate to close our mineral fund with this tremendous Delaware asset. To our existing partners the deal is immediately accreditive on a cashflow basis with plenty of long-term inventory; and to the seller the outcome provides the right type of exposure and stability they were looking for. The opportunity to take title to an asset such as this is a testimony to how important relationships are in this business. We were fortunate to work directly with the family, who are long-term owners of the minerals, and get a deal done that met the objectives of both parties.” Desert’s President, K.C. Stallings said, “We enjoy transactions that include an equity component with the right type of mineral owner. This transaction is a partnership with the Seller, and the relationship is just beginning now that we have closed. It’s a great solution for private mineral owners who want more exposure to quality properties intentionally targeted as compelling investments in today’s environment. The combination of DP7’s current properties and the Acquisition’s properties create a high-yielding fund with underdeveloped, core properties that were purchased in late 2020 and 2021. It would be very difficult to recreate this asset today.”

About Desert Royalty Company

Desert has been exclusively investing in minerals for over 30 years. In 2001, Desert began raising funds for long-term investment into minerals. Desert’s investors consist of friends and individuals primarily in the oil and gas industry. Desert has deployed capital through seven funds and continues to own over 90% of the minerals acquired in the last 22 years.

DP7 began acquiring interests in November 2020 and holds over 11,000 NRAs in the Permian, 800 NRAs in the Eagleford, along with exposure to the Haynesville and Bakken.

The combined ownership of Desert’s funds includes over 150,000 NRAs across 14 states, with an emphasis on the Permian Basin where they collectively own over 43,000 NRAs.

Forward-Looking Statements

This Press Release contains forward-looking statements based on Desert’s current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words such as "believes," "will," "expects," "anticipates," "intends" or similar words or phrases. No forward-looking statement can be guaranteed. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made and Desert does not undertake any obligation to correct or update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by applicable law.