Acquisition Strategy

BXP primarily targets conventional oil and gas properties in the $5,000,000 to $50,000,000 range where operations are available and a majority of the working interest can be acquired. For deals in this target market, opportunities are more numerous and less frequently competitively bid, and as a result, generally have rates of return and payout periods that are more attractive than for larger, professionally marketed packages. Furthermore, many smaller properties operated by major or large independent companies are often neglected and offer significant turnaround opportunities where operating expenses can be reduced and existing production accelerated. Additionally, BXP is able to use its engineering and geological expertise to add value and maintain a low-cost operating structure.

An emphasis on the acquisition of producing properties with long production histories serves to reduce the risks inherent in estimating remaining oil and gas reserves and also provides more exposure to potential product price increases. BXP focuses its acquisition efforts on properties that possess the following characteristics:

  • Control of physical operations
  • Established production trends and long remaining reserve life (10+ years)
  • Tangible development / revenue acceleration potential in first year
  • Operational cost reduction possibilities
  • General / administrative cost reduction possibilities
  • Higher potential product prices through active marketing efforts

More specifically, BXP targets oil and gas properties with the following characteristics:

  • PDP (proven developed producing or currently producing) economic projection provides an unleveraged annual internal rate of return in excess of 8%
  • Enhancement case (PDP plus operational cost savings and PDNP, proven developed not producing or proven behind pipe reserves in existing wells) economic projection provides an unleveraged annual internal rate of return in excess of 20%
  • Revolving credit facility can provide 40% or more of the initial acquisition capital necessary to acquire properties
  • Geographic concentration in proven, mature oil and gas trends where the aggregation of smaller properties into larger property packages can provide attractive exit strategies

In addition to operated working interests, BXP may occasionally acquire non-operated working interests where it provides a unique and less costly entrance into a new field area that could eventually lead to operational control. Although the acquisition of producing royalty interests has never been a primary focus, BXP has taken advantage of several unique opportunities to purchase high quality, long-term royalty interests in Texas, New Mexico, Oklahoma and Louisiana.

While considerable competition exists for commercial oil and gas reserves, BXP has enhanced its competitive position by adhering to several critical operating principles:

  • Focus in areas of management expertise
  • Exercise discipline in evaluation and negotiation
  • Maintain low-cost operating structure
  • Avoid highly competitive bidding situations
  • Seek out and negotiate for the non-strategic assets of motivated sellers