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Our Strategy
Risk Management
Deciphering where we are in the cycle and acting accordingly.
The Cornerstone team continuously monitors and reacts to factors influencing the energy sector. Recognizing cyclical attributes versus secular change is paramount. Our assessment of events, and their current and future implications on assets, is integrated into all acquisition and management decision-making.
Due diligence of target acquisitions begins with a thorough, in-depth analysis of all factors impacting value, including operator quality, production characteristics, future development potential, and commodity price expectations.
Ongoing analysis of each asset continues throughout its holding period. Our internal processes provide insight into each individual well’s performance, allowing management to clearly identify positive and negative developments within the portfolio.
We tend to sell production forward when prudent. This “hedge” aims to lock in acceptable commodity prices while also reducing volatility of investment returns.
target investments
Cornerstone-managed portfolios are comprised of oil and gas mineral interests, royalty interests, overriding royalty interests, and non-operated working interests.
Acquisition targets adhere to stringent fundamental and return characteristics. Efforts are directed toward assets that generate current production as well as ongoing development potential that has the ability to offset depletion.
Through our established network of industry contacts, we pursue off-market acquisitions through transactions negotiated directly with owners.
FAQs
It has been estimated that the U.S. onshore minerals and royalties market size exceeds $500 billion, with only 2-3% represented by publicly traded minerals and royalties-focused companies.
Certain positive characteristics of minerals and royalties generally include:
- Consistent yield generation
- Perpetual as opposed to a finite lifespan
- Exposure to world-class basins/reservoirs throughout the U.S.
- An asset class not readily available outside of the U.S.
- Robust secondary market, typically taking no longer than 30 days to divest a portfolio of any size
- Certain tax efficiencies such as depletion and 1031 like-kind exchange availability
Investment strategies that may benefit from mineral and royalty exposure include:
- Energy
- Real Assets
- Alternatives
- Alternative Credit
- Niche
- Yield Generation
Mineral Interests
The ownership of minerals on or under the surface, with the owner having the right to capture or recover and the right to delegate owner rights to another party to recover minerals by negotiating a lease agreement. Leasehold owners control the active lease in place.
Our entities receive income that is generated through the leasing of mineral acreage to E&P companies.
Royalty Interests
An interest in an oil and natural that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage.
Our entities receive production-related cash flow through their percentage ownership of each well.
Overriding Royalty Interests (“ORRI”)
An ORRI is a fractional, undivided interest with the right to participate or receive proceeds from the sale of oil and/or gas. It is not an interest in the minerals, but an interest in the proceeds or revenue from oil and gas minerals sold. The interest is limited to a specific tract of land and is bound to the term limits of the existing lease. If a lease is allowed to expire, an ORRI is dissolved or expires with the lease.
Our entities receive production-related cash flow through their percentage ownership of each well.
Non-Operated Working Interests
A working interest owner is one that does not participate in the day-to-day operations of developing and operating a mineral interest. A working interest is the right granted to the lessee of a property to explore for and to product and own oil, gas, or other minerals. The working interest owners bear the pro rata share of exploration, development, operating, and marketing costs on a cash, penalty, or carried basis.
Our entities receive production-related cash flow through their percentage of ownership of each well after paying their pro rata share of expenses.
- American Assurance 2000, L.P. (formerly JDT 2000, L.P.)
- Cobra Petroleum Company, LP
- Metcalfe Minerals, L.P.
- Royalty Repository II, LLC
Cornerstone offers both onshore and offshore investment funds and separately managed accounts.
Focus Areas
The U.S. has an abundance of high-quality oil and gas plays. Selectivity of interests that meet our demanding criteria is what sets us apart.
Getting Started
Considering divesting your royalties? Contact Cornerstone today for an offer on your mineral interests, royalty interests, overriding royalty interests, non-participating royalty interests or non-operated working interests.