High Margins and Low Capital Costs A Winning Combination for Verde Bio
Mineral rights acquisitions companies benefit directly from increasing commodity prices
Oil and gas stocks have long been popular with income-focused investors. When commodity prices are high, investors benefit from dividends from the resulting rising share prices. Mineral rights investments offer all the advantages of a typical oil and gas portfolio, with the rewards brought about by increasing energy prices, without taking on the burden of drilling and operating costs.
Verde Bio Holdings (OTCQB: VBHI) is a mineral rights and acquisitions specialist acquiring interests in lower risk, onshore oil and gas properties within the major oil and gas plays in the United States. The company is revenue-producing, with a portfolio of over 400 wells across seven states, and 24 operators in eight reservoirs.
We spoke to Verde Bio CEO, Scott Cox, to find out more.
Q: Private equity interest in mineral rights acquisitions has driven prices up over the past decade. How does Verde Bio ensure it sources the best deals?
A: We use what we like to call “boots on the ground” sourcing. While it’s true that prices have increased, we believe we are still able to get the best deals available to deliver value for Verde Bio’s shareholders. We have forged strong relationships with operating companies, landowners, and brokers which has allowed us to identify smaller, under the radar assets, and avoid overpaying for assets. In the past 12 months, we have successfully completed 18 acquisitions and we expect our acquisitions strategy will continue to focus on seeking out small, high value properties.
Q: How much land does Verde Bio hold, and in which basins are your assets located?
A: We currently hold approximately 50,000 gross acres of royalty interests, and our acquisition strategy has been key in ensuring these properties are located in some of the most active mineral areas of the United States. We have acquisition experience in every major basin and assets in Texas, Colorado, Louisiana, Oklahoma, Ohio, West Virginia and Wyoming. We are regularly reviewing opportunities and expect to complete a number of attractive acquisitions in the coming 12 months.
Q: Are all the company’s assets developed?
A: Verde Bio holds a mix of developed and undeveloped acreage. Often mineral rights investors don’t have any guarantees as to when – or even if – a well will be drilled on that land. We ensure we work with high quality, well-capitalized pureplay operators that have a strong incentive to develop the land. We currently work with 23 well-regarded operators, including Southwestern Energy in the Haynesville reservoir, Bonanza Creek in the DJ Basin and EOG Resources in the Permian.
Q: What are Verde Bio’s long-term growth prospects, and what can investors expect to see?
A: Verde Bio’s investors, and mineral rights investors in general, directly benefit from increasing commodity prices and the fact that no future capital investment will be required in our company assets. We also expect to see continued organic growth as operators drill new wells on Verde Bio interests. Our strategy is centered around adding long term value for shareholders, and we do this in a number of ways.
We are risk averse in our approach to growth, acquiring minerals, royalties and revenues from existing oil and gas production to create sustainable, continuous cash flow, without incurring expenses typically associated with oil and gas wells. We also work to diversify our royalty assets with strategic non-operated working interest and other acquisition opportunities.
Q: What can investors expect to see from Verde Bio in 2023?
A:Verde Bio has been built from the ground up with a lean operating model and cost structure and a strong commitment to acquiring top-tier assets and building value for shareholders. In 2022 we completed 18 acquisitions, the majority of these revenue-producing, that we believe will deliver long-term benefits for Verde Bio’s investors. In 2023, we expect to achieve revenue milestones and will continue to assess and execute on growth opportunities.