U.S. Energy Development Corp., an independent oil and gas operator specializing in direct participation programs, has sold a portion of its Echo project to Devon Energy for a 61.35 percent return to investors.
The property was sold on behalf of the Strategic Energy Income Fund V, one of the company’s acquisition funds. The Echo project was acquired by the Strategic Energy Income Fund V in early 2018 and proceeds were distributed to investors in October.
Strategic Fund V’s original ownership in the Echo project included 1,140 net mineral acres for future oil and natural gas development in the northern Permian Basin in New Mexico. Capitalizing on rising acreage values since the time this project was initially negotiated last summer, this asset sale included approximately 17 percent of the Strategic Fund V’s current assets and a gain of greater than three times the value the company had assigned to the acreage when it was purchased earlier this year. The return on investment, ROI, totaled 345.7 percent.
“We are very pleased with the results on behalf of our investors as well as our ability to complete full-cycle transactions in such a short period of time,” said Matthew Iak, who serves as the company’s EVP and director. “Additionally, with this sale the fund still retains a sizeable portion of the original asset, and we feel we have opened the door to working with other large and reputable companies like Devon Energy [the purchaser in this sale].”
U.S. Energy’s Acquisition Funds target an investment mix that include both income- and growth-focused energy projects. U.S. Energy continues to look at a multitude of options to monetize the remaining Echo assets; whether that be through the potential acquisition of additional assets or by new divestitures. Recently, the Strategic Fund V elected into approximately $554,000 of new drilling in the Permian Basin inside the Echo project.
The Strategic Fund V is currently open to new investors and will close by July 1, 2019.
Established in 1980, U.S. Energy provides investors direct access to energy investments through partnerships. U.S. Energy remains one of the largest sponsors of direct oil and gas investments with three diverse offerings, which include a drilling fund, acquisition fund and 1031 exchanges. In total, the company has deployed more than $1.3 billion in investor capital since the early 2000s.