Investors who want a piece of the U.S. oil boom but are wary of struggling shale companies are instead gobbling up mineral rights, hoping to benefit from production growth
By Rebecca Elliott and Christopher M. Matthews July 22, 2019 12:48 pm ET Investors are still eager for a piece of the U.S. oil boom. Some just don’t want to own shale companies that have struggled to consistently turn a profit.
In 2018, the value of publicly announced minerals and royalty deals neared $3.3 billion, the highest level of spending in the sector in the past five years, according to data analytics firm Drillinginfo. Brigham Minerals initially hoped to raise $100 million in its April initial public offering but increased that amount to $261 million at $18 per share because of higher than expected demand, according to a regulatory filing. Shares of the company, which was created in 2012 by oilman Ben “Bud” Brigham, are currently trading around $20.Private-equity firm Kimmeridge Energy Management Co. agreed this month to combine assets from its minerals fund with assets owned by Desert Royalty Co.
Despite their financial woes, many shale companies continue to drill to hold on to leases or meet pipeline commitments, or because their executive compensation is tied to production growth.
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