Operator: Newfield Exploration Company, Devon Energy, Others
Royalty: Effective Royalty Rate: 1.61%
In the fourth quarter of 2016 Franco-Nevada purchased royalty rights in the STACK shale play in Oklahoma’s Anadarko basin for $100 million. STACK is an acronym for Sooner Trend, Anadarko Basin, Canadian and Kingfisher counties, and the play has been gaining momentum over the past couple of years due to its status as one of the most economic shale plays in North America. The current focus is on the Meramec formation, although the royalties have exposure to multiple horizons at depth, including the Woodford and Osage formations. The lands consist of GORRs and mineral title rights which apply to approximately 1,200 acres (net after royalties) that with pooling provides exposure to an estimated gross acreage of approximately 74,880 acres with an estimated average royalty rate of 1.61%.
The top two operators of the acreage are Newfield Exploration and Devon Energy. Both companies have made the STACK a major focus of their capital spending, a portion of which will be on the royalty lands. Until recently, most of the drilling was focused on proving up resources, however, full-field development is expected to begin in 2017.
|Total Revenue to FNV ($ million)