Working Interests

A working interest carries drilling and operating cost obligations along with its share of production, and selling it out from under those obligations requires the operator to formally recognize the new owner, a step beyond a signature between buyer and seller.

Owning a working interest means owning a share of the well itself, subject to your proportionate share of drilling, completion, and operating costs, a real financial exposure, unlike a royalty carved free of expense. That cost exposure is exactly why working interest owners look to sell, particularly non-operated WI positions where an operator is billing joint interest costs the owner did not sign up to keep funding.

We buy working interests directly and take the operator consent and novation process seriously, since a WI sale is not complete, in any way that actually protects you, until the operator has recognized the transfer and released you from future joint interest billing.

Why a working interest sale needs operator consent

Most joint operating agreements require the operator's consent, or at minimum notice and a right of first refusal among other working interest owners, before a WI can be assigned to a new party. Skipping this step does not make the sale invalid between buyer and seller, but it leaves the operator continuing to bill the original owner unless and until the operator's own records are updated.

This is the step that separates a real close from a paper transaction. We handle the operator consent and novation process directly as part of the sale, rather than treating the assignment between buyer and seller as the finish line.

Novation: getting you fully released

Novation is the formal substitution of the new owner in place of the old one under the joint operating agreement, and it is what actually releases you from future cost obligations, not merely the assignment document. Until novation is complete with the operator, you can remain contractually on the hook for joint interest billing even after you have been paid for the sale.

We close as the buyer of record and pursue novation with the operator directly, rather than assigning the interest onward to a different party who would then need to seek their own consent, adding a second novation step and a second window where your name could still be attached to the well.

Why we buy WI directly instead of through a paper chain

Some working interest transactions in this market involve a buyer intending to flip the position to another investor before or shortly after closing, which means the operator consent process may need to happen twice, once for the initial buyer, again for whoever the interest gets assigned to next. Every extra link is another point where your release from the JOA can stall.

We hold working interests we buy rather than immediately reassigning them, which keeps the novation process to a single step between you and us, and gives the operator one clear substitution to process.

Valuing a working interest

WI valuation nets your share of expected future revenue against your share of expected future operating costs and any plugging liability at the end of the well's life, which is a materially different calculation than a royalty valuation with no cost exposure. Wells with rising operating costs relative to declining production can carry real negative value in the WI position even while the royalty owners on the same well still see a positive number.

Non-operated versus operated positions

Most owners selling to us hold a non-operated working interest, a passive share billed by the actual operator for its portion of costs, with no say in day-to-day decisions but full exposure to whatever the operator spends. An operated position, where you or your company is the named operator on the well, involves additional regulatory and bonding transfers beyond the standard JOA novation, which we account for separately in the closing process.