Proteus acquires working or joint venture interests in oil and gas properties that are near the end of a production cycle or have been significantly underdeveloped. We seek out producing fields with PDNP, PUD and proved behind-pipe reserves, making use of advanced techniques such as 3D seismic and horizontal and directional drilling. We implement a plan for redeveloping each property using the latest petroleum engineering techniques and refiting it with commercially-proven, non-conventional equity-making production technology. We do not engage in any exploration or wildcat drilling.
One of our main strategic drivers is to increase the intrinsic value of the surface land. Implementing modern technology increases the efficiency of operations, stabilizes the long-term development of the field, decreases the environmental burden of production, and generates compelling financial returns. We differ from our competitors by the comprehensive nature of our field redevelopment process (which may include surface rights and facilities as well as infrastructure where appropriate) and our target acquisition market.
Once our properties have been refit and worked over and their improved operating results demonstrated for 12 to 24 months, Proteus then evaluates the stabilized cash flow of each acquired property with a view to hold only those properties upon which additional, complimentary, high performing technologies can be continually layered onto field-wide operations to sustain and grow initial production increases. Proteus will sell properties that do not meet these criteria, (i.e., when the initial redevelopment is the most optimum) and redeploy the profits into the acquisition of additional marginal fields.
Unlike other companies (or even energy funds), whose investors do not know specifically where their capital is being invested, Proteus actively works to minimize both deal identification risk as well as market risk. Further, we maintain our backlog such that several future acquisitions are usually tied up under contract or in advanced stages of negotiation/due diligence offsetting much of the risk associated with the M&A process.
Proteus targets for acquisition those oil and gas fields with marginally economic production that have the greatest potential for improvements in operating cash flow, resource recovery (increases in recoverable reserves) and value enhancement upon resale. We focus on properties whose capex and acquisition costs vary between $5MM – $100MM all-in. Our minimum investment return and capex development standards allow us to differentiate between properties that support long-term growth and immediate return versus those that don’t. Geographically, we continue to define our primary target markets as the small, single asset companies and projects located in California and the West Coast that are owned by individuals, family offices, trusts, regional and national independents, for whom these redevelopment issues inside their portfolios are cost inefficient.
The production technologies Proteus is applying have been in commercial use by major oil companies for several years, generating production increases ranging from 20% to 100%, operating cost savings of 50%+ over current best standard practices, and substantial extensions of recoverable reserves with very limited development risk. Because the major oil companies and large independents are primarily focused on exploration, as opposed to production increases on fields that they already own, Proteus’ identification, application and use of technology is vastly different from its competitors in the oil and gas industry, creating a valuable market opportunity.