Tailwater Capital expands Permian Basin presence with new acquisition
Already in possession of expansive exposure in the Permian Basin, Tailwater Capital has grown even further with the acquisition of a significant, off-market non-operated working interest asset package from Accelerate Resources Operating.
The acquired assets include more than 5,000 net leasehold acres in the core of the Midland and Delaware basins. The assets are predominantly held by production and are currently producing more than 5,000 net barrels of oil equivalent per day. They also possess meaningful future inventory under premier operators, including ExxonMobil, ConocoPhillips, Diamondback Energy, EOG Resources, Mewbourne Oil Company, Apache, Occidental Petroleum, Devon and Coterra Energy.
"We have a wide swath of investments," said Doug Prieto, chief executive officer of Tailwater E&P, the upstream platform for Tailwater Capital. He listed holdings in water midstream, mineral and royalty investments covering 28,000 gross acres, and a soon-to-be-announced investment in a natural gas midstream operator.
"We believe the Permian Basin is the growth engine of U.S. oil and gas and we want to be part of that," he told the Reporter-Telegram.
Prieto, a native Midlander, said he was especially excited to be working with professionals he's grown up with, known most of his life and most of his professional career. The companies Tailwater will be working with are best in class, capital efficient and expert at proving up zones, he said.
Those zones being proved up include the Avalon, First Bone Spring, Harkey Sand and Wolfcamp C and D benches and "notably, the Barnett and Woodford," according to Prieto. As operators continue to identify new drilling targets and optimize production, Prieto said his company anticipates additional upside potential in this already prolific asset base. The company strategically hedged a significant portion of the acquisition's production profile alongside the execution of the purchase and sale agreement, helping to mitigate market risk and solidify the return profile.
He said he sees his company's role as supporting the operators developing those resources, helping provide solutions such as access to capital or midstream capacity.
"We have a full technical team at Tailwater E&P, a team with operator backgrounds so we offer expertise as well as capital," Prieto said.
He said the company sees opportunity in the minerals and royalty market, estimated at $700 billion.
"We're seeing some institutionalization of the market, with large companies buying," Prieto said. "There are significant opportunities buying minerals in parts of the Permian Basin."
The flight of capital from the industry and into ESG (environment, social and governance) initiatives also creates opportunities for Tailwater and the industry long-term, he said. With upstream capital intensity growing and operators drill longer and longer laterals, he said that creates value for mineral owners that's greater than in the past.
"It creates the opportunity to sell minerals and have a life-changing impact," he said.
This story was originally published October 4, 2024, 10:59 PM.
