It is no secret that the energy industry has gone through massive fundamental changes over the past decade. Some of the consequences of these changes are yet to be realized. With the advent and rapid adoption of shale drilling, massive amounts of debt were raised to put the technology to work in plays across North America. In addition, millions of acres of land that had marginal oil and gas activity came to the forefront as hotspots for drilling. These two factors have created new opportunities for innovative financial products to be developed. Companies that have high amounts of debt, and are being pressured to improve their free cash flow, are using royalty interests as an asset to help remove some of that burden.

See Range Resources multiple ORRI sales to improve free cash flow:

Companies are also starting to develop large mineral positions and bundle them together. They then take this bundle and sell it as a diversified single asset to a fund manager, this is called securitization. With a securitization, the asset must hit certain metrics on cash flow, risk, time horizon etc. that the fund manager prescribes.

See Raisa Energy completes the first rated securitization of Oil and Gas wells.

Both Range and Raisa have begun to innovate the financial side of the oil and gas industry. At ARC our products are innovative in a very similar sense, and provide the exact same solutions that these groups are looking for. However, we can scale down to a much smaller level. If you are a mineral owner or producer and want to learn more about our innovative financial products that both manage risk and allow for access to capital, reach out to us.