Debt for buying producing properties, working interests, royalties and leases.
Oil and gas acquisition financing funds the purchase of producing properties, working interests, royalties or leases. Lenders commonly finance producing acquisitions with reserve-based facilities or term loans sized to the present value of the proved producing reserves being bought, using a third-party or lender reserve report and the lender's price deck. Undeveloped acreage and leases receive much less debt value and are often financed with more equity.
Acquisition lenders also weigh the buyer's operating experience, title, environmental and plugging obligations, hedging and the integration plan. Timing is part of the deal: a purchase agreement's closing date has to allow for reserve and title work. These guides cover PDP acquisitions, lease and mineral purchases and what to prepare before signing.
Buyers commonly combine equity with reserve-based or term debt sized to the present value of the proved producing reserves, using an engineering report and the lender's price assumptions. The lender also reviews title, lease operating expenses, plugging obligations and the buyer's ability to operate the wells.
Undeveloped leases are harder to finance because they produce no income, so lenders give them little debt value. Buyers commonly fund lease acquisitions with equity, partner capital or financing secured by other producing assets, and finance development once wells are producing.
Lenders commonly require a reserve report, production and revenue history, lease operating statements, title documentation, the purchase agreement, information on environmental and plugging obligations, and the buyer's financial statements and operating experience. Assembling these before signing keeps the closing date realistic.
Acquisition Financing — Debt for buying producing properties, working interests, royalties and leases.