I’m a big fan of royalty companies. And I want to tell you about a new firm I’ve found, that’s using this time-tested model for stable profits—run by some very successful people with proven track records in the petroleum business.
In fact, this oil and gas royalty company is so new, it hasn’t even been fully formed yet—let alone garnered any attention from the wider investment community. But you can still invest in it today through a couple of back-door trading avenues.
More on this company in a moment. But first, what is a royalty company? And why should we be looking at such firms today?
The royalty business model is one of the simplest going. Get into a play early (which usually means low acquisition costs), then wait until deep-pocketed investors come knocking at your door. Let them do all the heavy lifting drilling, completing and paying for wells—and keep a no-risk carried interest.
It’s always amazed me that more companies don’t pursue this model. Likely because doing so requires two qualities that are relatively rare to find in human beings.
First, foresight. The ability to plunk down cash on an idea that’s different, before you have the cerebrum-stroking comfort of seeing other people doing the same thing.
Second, patience. Blaise Pascal said that most people’s miseries derive from an inability to sit alone in a quiet room. And being in the royalty business means…