Diceros Asset Management, LLC (Diceros) provides mineral, royalty and working interest (WI) wealth planning, management and advisory services for its clients as follows:
Services
For each client, we will assemble a team of industry professionals led by a staff member, whom is dedicated to a select number of clients. The team will consist of a firm principal, a mineral manager and other specialists as needed. The result is a truly individualized mineral, royalty or working interest plan in a collaborative approach to meet unique needs. The starting point for any mineral, royalty or working interest plan is a comprehensive understanding of the particular needs. We recognize that this type of asset or investment is invaluable for current and future generations. We will see to it that each mineral, royalty or working interest estate is properly managed and protected. Mineral, royalty, and working interest asset management requires an individual strategy for each client. Sound management, nurtured over time, generates wealth. We channel client’s assets or investment opportunities in a manner consistent with our firm's philosophy. Our managers track client’s mineral, royalty or working interest estate while making recommendations, as necessary, to ensure the highest probability of achieving the client’s goals.
Geological and Geophysical analysis
Most mineral and royalty owners are familiar with the "what ifs" regarding the existence of hydrocarbons on their property, specifically, "Is there oil/gas under my property?" Diceros has the background, skills and experience to help mineral owners answer that question. Most of the United States has geological and geophysical data available to commence a geological review. Diceros has the ability to locate, acquire, and analyze such data and make recommendations regarding the possibility of hydrocarbon presence under most land in North America. Some data is readily available; some is proprietary. In either case, our business is helping people answer the question of hydrocarbon presence and to help strategize their position. Diceros believes that having the answers and properly armed with the geological information, our clients can be better prepared when it comes to negotiating mineral rights - "Knowledge is Power". The scope and precision of the geological and geophysical capabilities of Diceros is afforded by over 30 years in exploration and production.
Oil & Gas Lease - Negotiations for lease contracts and surface agreements
When the potential for oil and gas reserves is substantiated based on strong geological and geophysical presence, the next step is to materialize the value of the assets. The management of Diceros has a proven record of accomplishment of prospect generation, negotiation and leasing such properties. Our E&P network subsequently drilled new wells and has discovered new oil and gas reserves . Diceros has a far-reaching network of industry contacts, which allows our clients to have their assets reviewed by major E&P companies, potentially leading to lease bonus consideration and new drilling activity.
It is a long-standing tradition in the oil and gas industry for landowners to wait for a phone call or a knock on the door from a landman, and then to sign an oil and gas lease at the kitchen table. At Diceros, we take a proactive approach by initiating lease negotiations with oil and gas companies on behalf of our clients. Our extensive land management experience affords our clients strong representation in their boardroom. Our goal is for our client to get full credit for their asset as reflected by the provisions of the lease and lease bonus. In addition, we know the value of presenting favorable terms to the oil and gas companies to ensure the lease is signed and the property is drilled - timely. The principals at Diceros are seasoned professionals. We are fluent in the language of lease contracts, lease provisions and leasing structures. We closely follow the marketplace and clearly discern a good offer with respect to cash consideration and the provisions within the lease, and we have what it takes to close the gap between what is being offered to our clients and what they deserve. Our goal during lease contract negotiations is to maximize the upfront cash consideration and royalty position of our clients that is consistent and competitive with the marketplace, and subsequently, sign leases that afford the peace of mind and satisfaction that come with such full, due respect for their property. At the same time, it is important to negotiate favorable terms so that the oil and gas companies have a great incentive to drill the property, and if applicable, start producing the hydrocarbons. Hydrocarbons make deposits each month, which, in turn, create a producing asset that was once a non-producing asset.
Due diligence for working interest investments
Diceros respects that working interest ownership is an important asset class to an investor’s portfolio and is a vehicle to raise capital for domestic exploration and production activities. Oil and gas exploration is a high risk/high return venture demanding rigorous due diligence before committing the capital to the undertaking. Diceros is willing to make available our professional investment expertise and exploration and production experience in two capacities.
The Diceros’ approach to due diligence begins with the first test a prospective investment must pass; the oil and gas company itself "Bad People Will Kill A Deal Quick". This industry is necessary and yet has gotten a black eye from bad people promoting great geological ideas. However, without such contamination, we believe the commitment of capital for projects of substantial geological and geophysical merit put together by oil men of integrity are in fact worthy of consideration. Through our experience on both sides of working interest, Diceros can quickly ascertain whether moving forward with a full-scale analysis is a prudent decision.
Our thorough analysis and due diligence on working interest investments is designed to help our clients implement a wise buy/sell discipline. Diceros is well suited to analyze prospective drilling proposals based on our experience in the business. We take into consideration many factors during our analysis including the track record and leadership of the operator, the geological and geophysical merits presented, the prospects location and analogous production, the risk of the project including failure probability and reserve estimation, the upside of the project relative to risk, and the cash flows and valuation of the investment relative to the pricing for the ownership. Pricing for working interest ownership is where we know we will save money - we know what it cost to drill holes in the earth.
Review division orders prior to signing
A law firm contracted by oil and gas operators prepares division order title opinions. This document stipulates divisions of interest for each royalty owner who owns interest in the well. These documents properly identify each owner and their respective division of interests. It is the operator’s responsibility to mail division orders in a timely manner. Many times, even when mailed timely, they are incorrect. These are non-negotiable agreements and when signed by the owner they are agreeing to what the operator is stipulating their interest to be. These need to be carefully reviewed in order to ensure the appropriate division of interest is correct before signing and returning to the operator.
Royalty payments
We are familiar with operators suspending revenue that does not belong to them and belongs to royalty owners. As many owners know oil revenue is distributed on the 20th of each month for oil produced from the previous month. The practice of many operators to suspend these revenues is far too common in the industry. Many operators suspend royalty payments for lengthy periods of time for reasons that are obscure. Diceros monitors our client’s mineral estates and when there is a permit or any drilling activity on our client’s mineral rights, Diceros will monitor the drilling activities and will have knowledge of the results of the wells performance and will inform our clients when they should expect to see a division order.
Pursue operators or first purchasers royalty payments
It is a well known fact, there are hundreds of millions of dollars held in suspense accounts from the first purchasers to the operators relating to oil and gas revenue distribution. Many times, it is as simple as a division order not being signed and therefore, the payer will not disburse funds until they are in receipt of the proper acknowledgement usually in the form of a signed division order. Many times the royalty and/or mineral owners may have changed their address and/or a family member may have become ill and/or perhaps passed away, leaving unfinished paperwork to be executed. In addition to these issues, properties change hands through divestitures creating a completely new stream of paperwork that needs monitoring before sending back paperwork to the new operators. Diceros will monitor these issues regularly to ensure that our client will be paid in a timely manner.
Title curative (check deed records for correct interest)
Diceros will crosscheck the title opinion after we receive it from the operator and/or law firms. If need be Diceros will send a professional land person to cross check, and then, forward to a Certified Division Order Analyst, CDOA, for proper calculation.
Thorough mineral portfolio inventory and thorough statement of mineral positions
As part of our asset management process, Diceros will classify and consolidate into one statement all the mineral holdings of our client. This service provides clarity and organization for our client’s for overall asset allocation.
Track holdings and performance
As part of our comprehensive management service, Diceros prepares monthly cash flow statements, current statements of mineral positions, and a material action statement (A&D activity, suspense, new division orders, etc.) with online account access and/or monthly distribution. Mineral assets often meet or exceed the valuation of banking accounts and/or equity and fixed income positions in brokerage accounts. Diceros believes the same level of service makes sense for mineral owners. Streamlining this process helps our client's track their holdings, production and stay informed of relevant events affecting their position. In addition, we can work with your CPA to convey relevant, simplified documents during tax season so they can focus on what they do best.
Valuation of assets and mineral interests
Unfortunately, royalty and mineral assets do not come with ticker symbols that enable their owners to calculate their value with precision. Diceros has the geological, geophysical and engineering expertise as well as asset valuation credentials to provide a reasonable range of an asset's value for the purpose of buy/sell negotiations and tracking its relation to the net worth of an overall portfolio.
RHINOSHIELD Membership Program
The RHINOSHIELD membership program is a culmination of all of the services provided by Diceros. The benefit to the client is a long-term relationship with Diceros that provides peace-of- mind knowing that they have professionals performing stewardship of their mineral wealth. This service includes a thorough review of client holdings, discounted geological and geophysical analysis, marketing of their interests, negotiating lease contracts and surface agreements, WI reviews, division order review, monitor royalty payments, locate any suspended royalty payments, title curative, mineral portfolio inventory list, track holdings and performance, valuation of oil and gas assets and mineral interests.
Method of Analysis: The Diceros Asset Management Company Philosophy
We believe that diversification spreads risk, that risk and return are related, and that the asset allocation decision is the primary determinant of energy risk and expected return. We believe that owners are better rewarded for taking risk with the right operators and producers rather than those less qualified to handle the task associated with drilling, developing and producing oil and natural gas. We believe in certain instances that mineral allocation needs diversification, minimizing concentrations in any one company. We believe that risk as well as return must be evaluated. When selecting the companies who will drill on your lands, we choose a structured company approach. Structured management is based on years of history dealing with oil and gas producers. From our years of experience, we understand that risk and return are related and that mineral owners and investors reap higher returns when dealing with known, reputable people and companies. We also understand that diversification diminishes risk. We encourage a diversified plan avoiding concentrations to any one company. This principle is especially true when considering an oil and gas investment opportunity. When selecting companies that are offering to lease your minerals, or companies whom you are considering an investment with, we suggest a strategic approach with top ranked companies managed by highly competent people. A strategic approach, based on the quality of people and companies in known geographical areas, will minimize risk to your asset or investment capital. According to academic studies, three risk factors are most likely to produce returns: the major company premium, the large-independent company premium and the small-independent company premium. Our company management programs are designed to balance each of these three premiums, minimizing the inherent risk associated with the complexities of oil and natural gas development. Mineral ownership allocation and oil and gas investment opportunities should not be considered without the opinion of an expert.
