Silverado is our latest and greatest boutique deal yet! Why? because it’s our most recent–and we just keep getting better at these!
As our formula improves with these deals, some things don’t change because they are solid staples. The first staple that has become increasingly important to the way we build projects at Cruciform Properties — start with existing production, then pair it with carefully selected development upside.
Silverado acquired interests in Armelise #1 and Dugas & LeBlanc #4 in Louisiana’s Napoleonville Field, along with an interest in Mejia #1 in South Texas.
These wells already tied into fields, with operators, production histories, monthly statements and hydrocarbons moving to market. So we already had some good data on them.
For investors, that meant Silverado had a decent investment safety net from the getgo. A data safety net. Investors began receiving the kind of information that ultimately matters most in the oil business: what the wells are doing..
Armelise #1 and Dugas & LeBlanc #4 continue producing from Napoleonville, while Mejia #1 adds natural-gas exposure from the Riverside Field in South Texas.
Each well behaves differently. Production changes. Field operations happen. Expenses fluctuate. Occasionally a well requires work. That is part of owning a producing oil and gas assets.
And it’s one of the reasons we like having multiple wells underneath a project instead of building everything around a single outcome.
The next layer of the investment onion!
Silverado wasn’t designed simply to purchase production and stop there. Once a layer is peeled back, we can find that the project also included capital for Palmetto, a new development well in the Napoleonville Area. BOOM! New layer is made.
In this case, Palmetto is a P.U.D. (a Proved Undeveloped Reserve).
Proved: because there is at least one well in the area that has been drilled and shown to contain oil and gas.
Undeveloped: Because no current producing well accesses the prospective reserves, therefore development requires a new well.
There are no guarantees that a development well will work, of course. Oil and gas development always carries risk. But this combination — existing production paired with development — is exactly what Silverado was intended to capture.
Production underneath the project. Upside still in front of it.
Why we like the structure
We often describe our boutique projects in two parts.
Part A puts capital into producing assets.
Part B puts capital into a drilling, re-completion or development opportunity.
Silverado may be one of the clearest examples of that philosophy.
The producing wells give the partnership operating assets from the beginning. Meanwhile, the development component gives the project something more to work toward.
And our investors get to follow along with the success of their investment through their personal secure online portal. A portal where they can learn and ask questions about their investments as they progress.
Silverado I is closed to new investment. This article discusses a previously completed project for informational purposes only and does not constitute an offer to sell or a solicitation to purchase any security. Oil and gas investments involve substantial risk, including the possible loss of principal.