Marketed: Chevron Delaware Basin Working Interest, ORRI

The following information is provided by Detring Energy Advisors LLC. All inquiries on the following listings should be directed to Detring. Hart Energy is not a brokerage firm and does not endorse or facilitate any transactions.

Chevron U.S.A. Inc. retained Detring Energy Advisors to market for sale about 10,200 net acres of operated working interest leasehold and 7,300 net royalty acres of underlying overriding royalty interests (ORRI) located in the core of the prolific southern Delaware Basin.

The contiguous high net revenue interest position allows an oil-weighted pad development program across multiple de-risked benches, according to Detring. The assets include five DUC locations forecast to achieve payout in under six months and 95 modestly-spaced Wolfcamp A and 3rd Bone Spring undeveloped locations.

The assets are being offered in two distinct packages: operated working interest (leasehold at 25% royalty burden) and ORRI (remaining Net Revenue Interest >75%). Proposals to acquire the assets must be submitted by package.

Combined Package Highlights:

• ~10,200 Net Acre Position
  • Average unit working interest of 77% Working Interest with a royalty burden of 16% (8/8th) across the combined Working Interest and ORRI position
    • ORRI package generates an average Royalty Interest of 6.9% per well
  • Operated and contiguous position provides developmental control
    • Ten DSU’s accommodate average lateral lengths of >10,000 ft (including four units at ~100% Working Interest)
    • Reduced capital costs via pad development and shared facilities
  • Low combined royalty burden drives premium margins, compelling single-well economics and attractive threshold pricing
  • Horizontal footprint provides operational flexibility
    • Total control of inter-well spacing to maximize recoveries and returns
  • 3P PV-10 of ~$840 million ($680 million Working Interest / $160 million ORRI)
    • 3P undiscounted cash flow of ~$2.4 billion ($2 billion Working Interest / $390 million ORRI)
• Immediately Actionable Development Program
  • Five DUC locations with ~100% Working Interest (83% NRI) and facilities in-place
    • Minimal capital required to drive meaningful production growth
    • Payback in under six months
    • PV-10 of $84 million (Working Interest plus ORRI)
  • University Lands leasehold allows for continuous pad development
  • De-risked position offset by active rigs and recent completions
  • 95 PUD locations at spacing of 10 wells/unit (six Wolfcamp A plus four 3rd Bone Spring)
    • Robust type curves generate IRR’s >100%+ and payback in <12 mos.
    • PV-10 of $755 million (Working Interest plus ORRI)
• Attractive Petrophysical Properties Span Chevron's Core Delaware Footprint
  • The properties overlay areas where the 3rd Bone Spring and Wolfcamp A are overpressured and exceed 500 ft of thickness
    • Lack of structural complexity offers ideal conditions for drilling repeatable, low-cost, highly-economic wells
  • Nearby operators are successfully developing six to seven wells in the Wolfcamp A and four wells in the 3rd Bone Spring per drilling unit
    • Existing DUC inventory drilled at spacing equivalent to 10 wells per lateral mile (4 BS3/6 WCA), underpinning the assumed development plan across the full position

Process Summary:

• Evaluation materials available via the Virtual Data Room on Sept. 13
• Proposals due on Oct. 13
• Proposals must be allocated by package (operated working interest and ORRI)

For information visit detring.com or contact Melinda Faust at mel@detring.com or 512-296-4653.