Montego Minerals, an investor in oil and gas royalties and mineral rights in the Permian Basin, has closed its seventh 1031-eligible portfolio, Silver Peak Minerals LLC.
The $12.4 million fund was an all-cash and equity investment located in the Permian Basin, one of the oldest and most widely recognized oil and gas producing regions in North America that covers approximately 86,000 square miles across New Mexico and Texas.
Silver Peak Minerals expands across approximately 55,600 gross acres, eight counties, 35 individual properties, and 12 operators. Currently, this acreage has 135 producing wells, 19 active permits with room for more than 209 additional wells to be drilled. The 1031 structure allows for greater investor control.
“With record high inflation signals flashing brighter and brighter, the flight to hard assets with store of value has been a time-tested investment strategy. And with unprecedented stimulus from the Federal Reserve and the U.S. Government, we could be in store for a broad weakening of the U.S. dollar. Since oil and gas prices trade inverse to the dollar, when the dollar weakens, energy prices move higher,” said Rhett Gist, principal of Montego Minerals. “Historically, energy real estate focused on royalties and mineral rights outperform market equities in inflationary environments. These investments are also advantageous because they have no debt and no expenses.”
Montego Minerals acquires mineral and royalty interests for properties that have existing leases with energy companies and, in most cases, feature production already in pay status to investors, the company said. The operators drilling wells on the property pay all drilling and operating costs. The fund sponsor, Montego Asset Management, collects royalty payments from the operators and distributes the funds monthly to investors.
Montego Minerals is a three-generation family office of petroleum engineers and geologists that has evaluated and purchased minerals and royalties in the Permian Basin for the last 50 years.