A Denver-based oil and gas company that’s backed by a trio of major private equity funds is poised to become publicly traded, aiming to capitalize on continued growth in one of the world’s biggest oil fields.
CREDIT: Denver Business Journal – By Greg Avery Senior Reporter, Denver Business Journal
Desert Peak Minerals Inc. filed paperwork setting up an initial public offering this year that would have its shares start trading on New York Stock Exchange under the ticker symbol “DPM.”
The value of the IPO or the number of shares isn’t clear. The registration uses a placeholder $100 million estimate for the IPO value.
Desert Peak Minerals doesn’t operate oil and gas wells. It makes money from royalties paid by oil and gas producers that have drilled and operate about 5,000 wells where Desert Peak owns mineral rights in the Permian Basin in Texas.
The company also does a small amount of business providing water services to oil exploration and production companies.
Desert Peak Minerals is led by CEO Chris Conoscenti, whose background is in banking and oil and gas investment. Its largest shareholders are Kimmeridge Energy Management Co., a fund that’s based in New York City and Denver, and private equity fund giants The Blackstone Group, based in New York City, and Oaktree Capital Management, based in Los Angeles.
Desert Peak Minerals formed in 2019, combining mineral and royalty assets from the Kimmeridge Mineral Fund and Desert Royalty Company. It focused on collecting more mineral rights in the Permian Basin oil fields in West Texas.
The Permian is the nation’s most active oilfield, an area that includes the Delaware and Midland basins and stretches into southeast New Mexico. Its geology features multiple layers of rock holding oil and gas, and advances in fracking and horizontal drilling have turned the Permian into one of the most productive oil and gas areas worldwide.
Desert Peak Minerals’ portfolio in the basin came from 177 acquisitions of mineral rights since 2016.
This summer, it acquired mineral rights to 18,700 acres by buying Rock Ridge Royalty Company LLC., a company majority-controlled by funds of The Blackstone Group, which had committed $500 million toward Rock Ridge Royalty’s acquisition of mineral rights.
Desert Peak Minerals followed that in August by adding 24,500 acres of rights by acquiring two limited partnership entities owned by Oaktree Capital Management.
Desert Peak Minerals now owns mineral rights and collects royalties from wells across 104,000 acres of the Permian Basin.
Some familiar names in oil pay it royalties, including Denver-based BPX Energy, an offshoot of energy giant BP plc (NYSE: BP), as do Denver firms Centennial Resource Development (NYSE: CDEV) and PDC Energy Inc. (Nasdaq: PDCE).
The company employs 27 people.
Desert Peak Minerals lost $14 million on royalty and sales revenue of $43 million in 2020, a year marred by historic price drops for crude oil as the Covid-19 pandemic crushed demand for fuel worldwide.
A rebound in oil prices this year has helped push Desert Peak Minerals to profitability.
It reported earning nearly $9.5 million in profits from $36.7 million in revenue in the first six months of 2021.
Wells on the company’s acreage produced an average of 5,112 barrels of oil and equivalents per day in the first six months of the year, about 45% of that being crude oil, the company said.
Kimmeridge Energy Management is an investor in more than Desert Peak Minerals.
It’s the majority shareholder in Denver-based Extraction Oil & Gas and has been a driving force behind that company’s merger with two other Denver oil producers to form Civitas Resources.
CREDIT: Denver Business Journal – By Greg Avery Senior Reporter, Denver Business Journal
