BlueRock Energy Capital II, LLC

Growth Capital for Small Production-Based Oil and Gas Projects

Skip to content

economic-impact-header

Using BlueRock as a capital partner allows you to retain substantially more value in your project

WI Sell Down with 25% Back-in		BlueRock Financing


By partnering with BlueRock, the producer was able to capture 2.5x more cash flow on their investment throughout the life of the project over traditional forms of financing, while maintaining control of operations

Deal Example:
A producer is looking to acquire 30 PDP wells for $1,500,000. The development plan includes drilling and completing 10 shallow wells costing $30,000 each. The producer’s total capital need is $1,800,000 and the producer intends to contribute $100,000.

The producer’s options:

Sale of Working Interest with 25% back-in at project payout:

Working interest partner: the producer funds $100,000 out of pocket and raises $1,700,000 from a working interest sell-down, leaving the producer with 5.6% working interest in the properties
At project payout the producer backs into the working interest partner by 25%, leaving the producer with a 29.2% working interest in the properties

BlueRock Financing:

Producer funds $100,000 out of pocket and BlueRock funds the remaining $1,700,000 at an 18% rate of return before payout
BlueRock receives payments through a limited term overriding royalty interest that captures a percentage of revenues from the properties. BlueRock structures the transaction so that the producer retains ample production to pay royalties, lease operating expenses and retain some additional cash
Once BlueRock has achieved payout, the producer owns 100% of the cash flow from the properties, less a small permanent override retained by BlueRock (3%)

Benefits of Using BlueRock:

The producer maintains control of his properties, which may not occur if he is forced to sell down equity or working interest
BlueRock’s payout typically occurs in 4-6 years, while additional equity / working interest partners remain throughout the life of the project
The producer owns more of the upside; once BlueRock hits payout, the producer owns the vast majority of production and cash flow from the properties
The producer is required to come up with minimal equity day one
In many cases, a producer is not able to obtain traditional bank financing due to size or limited number of wellbores

Economic Impact:
The charts above illustrate one of the largest benefits of partnering with BlueRock - the producer retains the upside…and puts more cash in his pocket!

BlueRock Energy Capital II, LLC

Using BlueRock as a capital partner allows you to retain substantially more value in your project

WI Sell Down with 25% Back-in

BlueRock Financing

By partnering with BlueRock, the producer was able to capture 2.5x more cash flow on their investment throughout the life of the project over traditional forms of financing, while maintaining control of operations