EnergyFunders launches $25 million yield fund offering

1.     Proven development projects, where we pay for a portion of a well’s drilling and completion costs, in exchange for an agreed-upon undivided working interest. As production comes online, we receive our proportionate share of the well’s net income, until recouping 100% of the principal investment plus a specified IRR yield. After which, our equity ownership reverts to 10% of the original working interest. This residual interest represents a de-risked upside boost beyond the IRR earned from the original principal + yield payout.

2.     Proven developed projects, where we purchase a working interest in wells already on production. This more straight-forward transaction involves simply negotiating a purchase price, and then we own the working interest outright. The upside here comes from avoiding the risks associated with drilling and completion.

In each case, no investor capital goes towards land leases or other prospecting promotional fees. Instead, this model focuses investor capital primarily on productive drilling and completion costs (PUDs) or direct purchases of working interests in already-producing wells (PDPs). In this way, the platform seeks to disrupt the traditional industry model by providing investors with capital-efficient exposure to direct oil and gas investing.

EnergyFunders Goal: Deliver 10 – 25% IRRs for Investors

Through these deal structures, the upcoming Yield Fund aims to deliver 10 – 25% IRRs back to investors, net of fees. The key factor for achieving these hurdle rates of return comes a rigorous project screening process, drawing upon a team of in-house experts and trusted third party consultants. This includes veteran geologist and newly appointed EnergyFunders CEO Laura Pommer Fidler and expert reservoir engineer Virginia Urban Light. In addition, each project must clear a final review from EnergyFunders Chairman Nav Behl – a pioneer of the U.S. shale revolution, who helped EOG develop industry-leading unconventional drilling and completion methods.

Beyond this internal vetting process, the key external factors shaping the opportunity set for EnergyFunders include the competition for capital and future energy prices. Despite the consensus view among many investors and market commentators that says that oil and gas is a dying industry, we’re finding a rich opportunity set in today’s environment.

Profiting from Mr. Market’s Miscalculation

The consensus view on oil and gas says that renewable energy will soon push hydrocarbon demand into secular decline. However, this perception is not only misaligned with reality, but it is also creating a tremendous opportunity for oil and gas investors going forward.

Stepping away from the headline hype and simply examining the facts reveals that global oil demand set new record highs in every year from 2010 – 2019. Going forward, all signs point towards a robust recovery from the short-term disruption from COVID-19. The U.S. Energy Information Agency recently projected a complete recovery in global oil demand towards new record highs in 2022:

Capital Starvation Creates Opportunity

Meanwhile, the rise of ESG investment mandates is forcing many large-scale capital allocators away from the industry completely. This reflects a 180-degree reversal from the shale boom years, where record volumes of cheap capital poured into the industry. This excess capital forced up the cost of doing business and made buying good assets at good prices virtually impossible. EnergyFunders CEO Laura Pommer Fidler explains why this sea change in capital availability creates opportunity:

“In today’s capital-starved market, we’re seeing the best opportunity set for sourcing oil and gas deals in years. That’s why we believe now is the perfect time to capitalize on highly vetted, income-generating oil and gas projects.”

The EnergyFunders team spent the last several months compiling a list of 10 – 15 opportunities that clear our 10 – 25% IRR threshold. These opportunities are now available for investment in a $25 million Yield Fund offering. The capital allocation plan will involve distributing back 10% of net income, while retaining the remaining proceeds for reinvestment opportunities. Through this reinvestment process, EnergyFunders aims to compound investor capital at above-market rates, without taking excessive risks along the way. In order to allow for this reinvestment process, the Yield Fund life will last between approximately three to five years.

The World’s First SEC-Compliant, Tokenized Oil and Gas Partnership

Given that some investors may wish to access liquidity on a shorter time scale, EnergyFunders recently partnered with tZERO – a leading blockchain-based platform for tokenizing and trading private market assets in an SEC-regulated and compliant manner. This tZERO partnership will allow the transfer of EnergyFunders Partnership units in full compliance with federal securities laws. In simple terms, the tZERO platform will open up a secondary market for trading EnergyFunders Partnership units in the same way that you might trade stocks, bonds or ETFs in a regular brokerage account.

EnergyFunders CEO Laura Pommer Fidler shared, “EnergyFunders is democratizing access to energy investments. We strive to compound investor capital at above-market rates, which historically required tying up capital for several years in private market partnerships. tZERO’s revolutionary blockchain-based platform offers a leading regulatory-compliant, continuous, and automated trading environment for private market assets in the U.S. We couldn’t be more pleased about this potential opportunity to provide a secondary market for trading our new EnergyFunders Yield Fund I in the same way that you might trade stocks, bonds or ETFs in a regular brokerage account. This will give our investors access to the potential for liquidity in a regulatory-compliant manner.”

On June 2nd, we’ll be hosting a live webinar to dive deeper into these topics and other key details for the upcoming Yield Fund. Click here to reserve your spot today. In the meantime, if you’d like to learn more, you can schedule a meeting with someone on our team by clicking here.