Sitio Royalties成立不到 3 年，但它已迅速成长为一家领先的矿产和特许权使用费权益参与者，拥有公开交易的多盆地方式。

在从事能源投资银行业务近二十年后，克里斯·科诺森蒂加入了私募股权公司Kimmeridge，并接管了其新的矿产部门Desert Peak Minerals。三年后，该公司以近 20 亿美元的全股票合并与上市公司 Falcon Minerals 合并，在华尔街掀起了一股风暴，并创造了 Sitio 这个名字，西班牙语中意为“地点”。

但增长才刚刚开始，Sitio 迅速收购了Momentum Minerals、Foundation Minerals，然后又完成了一笔大交易：以 48 亿美元与Brigham Minerals合并。

此后，Conoscenti 和 Sitio 一直在悄然发展，并已准备好迎接矿产整合的下一篇章，此前两年，上游勘探与生产企业进行了大规模整合。

Conoscenti 与特约编辑 Jordan Blum 谈论了最新的行业趋势和 Sitio 的未来。

为简洁起见，本次采访经过了编辑。

Jordan Blum：首先，您认为矿产和特许权使用费领域的总体趋势是什么？情况如何发展？您关注的重点是什么？

Chris Conoscenti：我认为最大的三个趋势是，首先，大量资本投入到矿产开发中。这种趋势比以往任何时候都要多，而且是公共矿产公司、主要专注于自有租赁权的运营商和传统私募股权的结合。有直接面向 LP（有限合伙人）的私募股权，有收入基金、保险资金、家族理财室。有各种各样的参与方，但愿意投入矿产领域的资本并不缺乏。

我想说的另一个趋势是整合机会仍然巨大。即使竞争如此激烈，仍有许多工作要做，以整合这个高度分散的领域。我们仍然面临这样的情况：向公共矿产公司支付的特许权使用费不到 5%。我们最终是这些资产的自然永久所有者，这意味着需要进行大量从个人手中到私人资本再到公共资本的转移。这将需要很长时间，还有很多工作要做。因此，有大量资金投入矿产资源这一事实实际上是一件好事，可以保持这种整合生态系统的运转。

我想说的第三个趋势是，资金正在大规模地向上市矿业公司转移。矿业公司的总市值首次超过 500 亿美元。显然，这个数字还需要更大，才能在上游领域争夺投资者的眼球和关注，上游领域的规模是矿业公司的数倍，但这是朝着正确方向迈出的一步。关于趋势，我要提到的最后一件事是正在发生的上游整合。它直接影响了矿业行业。过去 18 个月，上游公共和私人企业进行了大规模整合，这对矿业所有者所拥有资产的开发速度和资本分配产生了影响。它改变了你对矿业资产估值方式和开发时间的看法。拥有更健康的运营商能够在周期内维持其资本计划，减少资本计划的波动性，这是一件好事。总体而言，这对矿业所有者来说实际上相当不错。这只是需要更加精心地衡量这些地点在更大规模的公司投资机会集中的位置。

JB：随着上游的整合以及大量公司被收购，可供购买的土地面积减少，这是否是吸引更多眼球和资金进入矿产和特许权使用费领域的因素之一？

CC：我认为这只是更多地将矿产视为一种资产类别。我认为它以前被视为副业，现在它已成为许多人的核心业务，因为他们认识到这项业务的现金流潜力和整合潜力。最终，资本流向能获得最佳回报的地方。矿产业务的回报非常丰厚，我认为这也吸引了大量资本。

JB：从更广泛的角度来看，我想了解一下您拥有权益的盆地概况：二叠纪盆地、威利斯顿盆地、鹰福特页岩、丹佛-朱尔斯堡 (DJ) 盆地。目前情况如何？您最关注哪些盆地？

CC：我们对所有这些盆地的活动都有着很好的了解，因为我们的足迹遍布所有这些盆地。如果你看看二叠纪盆地，我们的土地位于钻井单元内，覆盖了整个二叠纪盆地的 36% 以上。在 DJ 盆地，我们的土地位于钻井单元内，覆盖了大瓦滕贝格油田的一半以上。鹰福特和威利斯顿盆地的核心也有类似的统计数据。我们有一个观察运营商活动的好机会，我想说，首先，我要指出的趋势是，运营商的效率是真实的。运营商正在不断创新，并证明他们可以用更少的资金接触更多的岩石。你可以看到钻机数量和压裂人员数量都在下降，但水平段的钻探和完成量却在上升。

作为矿产所有者，我们关心的就是这些。我们希望尽可能多地开采岩石，开采尽可能多的资源，我们不太关心实际钻机数量。我们希望实际开采的资源量最大化。我们看到这些运营商意识到了这一趋势，因为他们钻探了更长的水平井，并拥有更好的土地配置。他们钻探这些马蹄形的水平井，是为了接触之前被搁浅的岩石，因为那是一个单节单元，没有人再钻探 1 英里长的水平井了。现在他们在 640 [英亩] 的土地上钻探 2 英里长的水平井。我想说，所有这些盆地的另一个趋势是，矿产买家可购买的空白空间越来越少。你今天要买的几乎所有东西都会有一定程度的开发，无论是现有的 PDP 还是已经开钻或获得许可的油井。它为我们这样的买家提供了更好的可见性。对于私募股权式的买家来说，它提供的上行空间较小，但对于试图在上行空间和当前现金流之间取得平衡的公共领域人士来说，这对我们来说是一个很好的动态。

JB：我实际上很好奇，想问一下空白空间如何融入您的战略并在那些更具视角的领域进行赌博。

CC：我们并不认为这是赌博，因为我们有一支技术专业人员团队，他们帮助我们承保每一次收购的每个单位。我们有 GIS（地理信息系统）专业人员、地质学家、工程师、土地测量员以及财务和会计专业人员，他们帮助我们分解我们关注的每个单位的价值。空白区域可以是未钻探的单位，也可以是尚未触及的层位。它成为一种评估，用于判断运营商何时会来从该部分或层位开采资源。我们绝对对空白区域感到满意。我们喜欢现有生产产生的现有现金流和额外上行空间之间的平衡，这就是为什么我们专注于 Permian 和 DJ Basin 这样的地方，因为它们拥有大量这样的资源。我们看到 Permian 和 DJ 的剩余钻井库存还有很大的运行空间，而 Eagle Ford 和 Williston 的钻井库存则较少，我们认为这些是更成熟的盆地。他们将继续看到一些初级开发，但随着初级钻探的产量稳定或下降，这些盆地不久将转向二次和三次采油。

JB：我们谈到了二叠纪盆地，但我想再多谈一下。显然，这里的竞争非常激烈，而且有充分的理由，但我想听听你的看法，你如何在那里保持领先地位，避免支付过高的价格。

CC：是的，你问题的关键部分是避免支付过高的价格。在矿产行业，最简单的事情就是发展。在矿产行业进行收购非常容易。困难的部分是要对长期回报率有纪律地进行收购。在 Sitio，我们受到长期回报率的激励。这是我们在 Permian 和其他地方进行的每一项收购的视角。我们真正与众不同之处在于我们的战略。我们并不擅长在广泛的拍卖过程中说出最高的价格，所以我们在拍卖中并不是特别有竞争力。所以，我们寻找我们具有竞争力的地方。它是符合我们的情况但可能不符合私人买家情况的资产，或者是我们与矿产所有者的关系，或者是我们可以提供的解决方案。例如，我们有一个 Up-C 公司结构，因此如果矿产所有者想要出售他们的矿产并购买我们的 C 类股票，我们能够为他们提供延税解决方案。他们可以推迟出售所得的资本收益；他们可以继续从我们的股息中获得收入；他们可以让我们专业地管理这些矿产；他们可以接触到更广泛的业务范围——比他们仅拥有的矿产范围更加多样化。因此，我们努力以解决方案为导向、以关系为驱动力，最终专注于长期回报率。

JB：请告诉我你喜欢与哪些运营商合作。

CC：我们确实喜欢与资本雄厚、有能力在周期内持续支出的运营商合作，而这正是整合的伟大之处。看看康菲石油、西方石油、埃克森美孚、雪佛龙、Diamondback和Permian Resources之间最大的整合者所做的一些工作。所有这些人都为将资产从资本波动较大的支出者转移到资本持续支出者做出了巨大的贡献，他们与我们志同道合。他们希望资本流向回报率最高的领域，这让我们的工作稍微轻松一些，因为我们可以根据他们将在哪里获得钻井资金的最佳回报率，对他们将如何分配资本做出有根据的估计。

JB：除了二叠纪，甚至在二叠纪的勘探边缘，美国本土 48 个地区目前最让您兴奋的还有什么？

CC：我们对任何可以分配资本以获得最高回报率的地方都感到兴奋。我们不只在特定邮政编码区拥有资产。我们希望获得投资的最佳回报率。因此，我们购买二叠纪盆地矿产的可能性，就像我们购买海恩斯维尔页岩、落基山脉或阿拉斯加矿产或购买墨西哥湾的超额特许权使用费一样。这些都在考虑范围之内。我们还没有做这些事情。我们发现二叠纪盆地和 DJ 等地是获得最佳回报率的最佳机会。

我们确实对二叠纪盆地的未来感到兴奋，这些地区将成为盆地中迄今为止勘探较少的主要区域的一部分。人们一直专注于盆地的核心区域，但也有不同层位正在接受测试。我们看到更深的层位正在接受测试，整个盆地都有新概念。正如我之前所说，还有一些效率措施，使搁浅部分的主要层位也更具经济性。所以，二叠纪盆地有很多令人兴奋的地方。我们对 DJ 也感到非常兴奋。我们在过去两年中分配了大量资金，因为监管环境变得更加平衡。它增加了运营商的额外成本，但提高了矿产所有者的可见度，这对我们很重要，因为我们正在考虑我们可以为运营商的开发速度和活动水平承保什么。运营商在满足监管要求时所做的一些披露对矿产所有者非常有帮助。

JB：哪些盆地拥有最多的地表矿产权？这对业务有何影响？

CC：据我们估计，仅在特拉华盆地和米德兰盆地的购买区域内，这些区域内就有大约 1200 万英亩的净特许权使用费。如果减去新墨西哥州或联邦实体或德克萨斯州大学土地拥有的矿产，或雪佛龙或Viper [Energy]等 Sitio 无法获得的矿产，仍然剩下大约 1000 万英亩的净特许权使用费，这些矿产在技术上是可以获得的。而 Sitio 拥有 20 万英亩的净特许权使用费。所以，我们才刚刚开始挖掘潜力。这是一个巨大的盆地。有很多原始地表所有者仍然拥有他们的矿产权。随着时间的推移，家庭将这些矿产传给不再与地表联系在一起的人，或者人们有不同的流动性需求或税收敏感性，他们会寻找这些矿产的解决方案，这对我们很有帮助。地表所有者希望从二叠纪地表权利中获得更多价值，这种趋势十分明显，这也有助于开发。地表所有者希望看到开发，因为他们从水或钙质岩等物质中获得了更多价值，而这又会为矿产所有者带来更多价值，因为他们对地表开发的态度更加积极。

JB：根据您的经验，说服矿产所有者出售最困难的地方在哪里？

CC：无处不在。矿产是永久性的不动产资产，因此永远不会过期。每天醒来时，我们最大的竞争就是保值，并说服矿产所有者今天是出售的好时机。实际上，矿产所有者必须有一些出售的催化剂，这归结为遗产规划、一些流动性需求、一些税收敏感性，我们可以为他们面临的所有这些问题提供解决方案。没有一个地方比其他地方更难。在美国，我们很幸运生活在一个个人可以拥有矿产权并自行做出决定的国家。

JB：显然，你们正处于增长模式。KeyBanc 的一份报告预测，你们今年将购买矿产资源。我只是想和你们讨论一下这一战略以及 2025 年可能的发展情况。

CC：我们已经证明我们有能力在整个周期内持续进行收购，今年的前景非常好。今年的前景和去年一样令人兴奋。在我们积极购买的核心区域，运营商仍然非常活跃，他们正在开发他们的优质资产，我们仍然有诱人的回报率投资机会。Sitio 完全有机会在 2025 年继续成功实施其整合战略，就像我们在 2024 年所做的那样。我们的目标是更大规模地做到这一点，并实现矿产业务非常独特的规模经济，这与其他任何业务都截然不同。为了实现这些目标，我们需要继续在整合方面取得很大进展。

JB：让我们回顾一下过去，Desert Peak 与 Falcon 合并已经快三年了。我想听听您对这一切进展的回顾、Kimmeridge 的参与以及您个人转型领导这家上市公司的想法。

CC：在那次交易之后，我们确实有三个重点领域。第一，继续成为该领域整合的领导者，并实现与我们作为私募股权支持的私营公司时追求的回报率相同的回报率。第二，组建一支专业团队，他们与我们有着共同的愿景，相信我们可以将这项业务带向何方，并且他们对这项业务充满热情。第三，我们希望建立专有系统，专门用于管理几乎无限可扩展的多样化矿产资产。

我想说，在这三个方面，我们都取得了很大的成功。正如我之前所说，我们希望这种整合能够继续扩大规模，但我们在组建一支高素质团队方面非常成功。我想说，我们建立的系统确实让 Sitio 与众不同，并为我们创造了为股东带来更多价值的机会，因为我们能够从特许权使用费中获得比其他任何人都多的现金收入，因为我们能够以精细的方式跟踪生产的每一个分子。

JB：那么，你们显然有大笔交易，尤其是 Brigham Minerals 和 Foundation Minerals（规模较小）。这些交易带来了怎样的变革？Sitio 在其相对较短的生命周期中是如何持续发展的？

CC：我们非常幸运地在奥斯汀保留了十几位真正高素质的专业人士，他们是 Brigham 团队的一部分。他们和我们一样对这个行业感到兴奋。他们赞同我们建立 Sitio 的战略愿景。我们为奥斯汀的团队增加了更多成员。我想说，Brigham 的整合比我们进行的任何资产交易都容易，因为当你收购资产时，需要向法院转让所有权。但是，当你购买一个实体时，所有权记录所有者不会改变，因此不会在混乱中丢失任何东西。由于运营商会跟踪谁拥有矿产以及谁应该获得特许权使用费，因此当法院发生所有权转移时，运营商通常会拖延很长时间才能向矿产所有者支付费用。Brigham 不必发生这种情况，因为我们购买了整个实体。这非常幸运。Brigham 团队的连续性帮助我们解决了有关数据结构和历史的问题。

JB：您想强调的是，为什么矿产如今已成为一种引人注目的资产类别？

CC：首先，从投资者的角度来看，作为一种资产类别，它是利润率最高的投资工具，通过它可以增加对能源价值链的接触。这是一个巨大的整合机会，可以推动该行业的规模扩大，真正实现矿产业务固有的独特规模经济，这与能源价值链的所有其他元素截然不同。这个领域需要进行的整合还处于非常早期的阶段。因此，无论是作为公共股权投资者还是私募股权投资者，现在都是投资矿产行业的一个非常激动人心的时机。鉴于该领域还有很大的发展空间，作为矿产整合者投资矿产行业是一个非常激动人心的时机。

JB：显然，我们谈论了很大的整合空间和很多的竞争，但为什么除了一些例外，我们没有看到更多的大型上游参与者拥有更发达的矿产战略呢？

CC：我认为这也许是未来需要解决的最重要的问题。如果你看看 Diamondback 和 Viper 为所有人公开制定的路线图，你会发现他们已经证明成功的矿产战略并不会分散注意力。它实际上是一个差异化因素，可以为上游运营商和矿产所有者的股东创造价值。它可以成为运营商和矿产所有者整合方面的差异化因素，并且两者都可以溢价交易。令我惊讶的是，每个规模上游运营商都没有明确的矿产战略，因为事实证明，它是可扩展的，不会分散运营商的注意力。它实际上是运营商的差异化因素。我希望更多的运营商采用明确的矿产战略。

话虽如此，没有任何运营商应该将资本用于购买矿物。他们都应该与 Sitio 这样的公司合作，因为钻探一口优质二叠纪油井的回报期可能短至一年，长至四年。这是一个相当快的回报。对于您在矿物上投资的资本，回报期要长得多。因此，租赁权的所有者应该专注于钻井，而不是购买矿物，但他们应该制定策略来获取更多价值，并突出他们所拥有的矿物对股东的价值。当他们收购上游资产时，自然会伴随着这些收购而来的矿物资产，这些资产应该被分离出来并分配给他们能获得最大价值的地方，那就是在像 Sitio 这样的上市矿物公司内。

JB：现在这个行业还有什么让您感到兴奋的呢？

CC：这项业务的发展才刚刚开始，我们需要证明它具有可扩展性，如何证明它能增加价值，如何证明和衡量成功。它将与世界在上游领域所看到的截然不同。一家矿业公司的成功标准不是钻井。它取决于你承销收购的纪律以及承销这些收购所获得的回报。这需要更长的时间来证明。随着人们意识到我们从所做的投资中获得的回报，这将是一个令人兴奋的过程。

JB：我很好奇，凭借您在金融、银行、私募股权、石油和天然气领域的个人背景，您是如何找到矿产和特许权使用费市场并开展业务的？

CC：这是我多年来培养的所有技能的完美结合。看看这个行业的日常情况，我们每天所做的就是整合矿产。我们正在进行收购。这是并购背景的一部分。我们必须深思熟虑如何为这些收购融资。银行业背景对此很有帮助。我们必须在管理这些矿产和创新方面做到一流。你可以从优秀的导师和私募股权中学到这一点，私募股权总是能找到创新和竞争的方法。

Sitio Royalties is less than 3 years old, but it has quickly grown into a leading mineral and royalty interests player with a publicly traded, multi-basin approach.

After almost two decades in energy investment banking, Chris Conoscenti joined private equity player Kimmeridge and took over its new minerals arm, Desert Peak Minerals. Three years later, it hit Wall Street with a nearly $2 billion, all-stock merger with publicly traded Falcon Minerals, creating the Sitio name—Spanish for “place.”

But the growth was just getting started, with Sitio quickly scooping up Momentum Minerals, Foundation Minerals and then the big deal: a $4.8 billion merger with Brigham Minerals.

Growing more quietly since then, Conoscenti and Sitio are ready for the next chapter of minerals consolidation, following in the massive wake of upstream E&P consolidation the last two years.

Conoscenti spoke with contributing editor Jordan Blum about the latest sector trends and the future of Sitio.

This interview was edited for clarity and length.

Jordan Blum: Starting out broadly, what are the overall trends you’re seeing in the minerals and royalties sector? How are things evolving and what are you focused on?

Chris Conoscenti: I'd say the three biggest trends, first, is just the abundance of capital that's pursuing minerals. It's more than ever before, and it's a combination of public minerals companies, operators—mainly focused under their own leasehold and traditional private equity. There's direct to LP (limited partner) private equity, there's income funds, insurance money, family offices. There's a whole host of different parties, but there's no shortage of capital willing to be put to work in the mineral space.

The other trend I would say is the consolidation opportunity is still enormous. Even with all that competition, there's a lot to be done to consolidate this really highly fragmented space. We still have a situation where less than 5% of royalties are paid to public minerals companies. We're the natural permanent owners of these assets eventually, and that means that there's a lot of migration from individual hands to private capital to public capital that needs to take place. That's going to take a long time and there's a lot to be done. So, the fact that there's a lot of money pursuing minerals is actually a good thing to keep this ecosystem of consolidation going.

I'd say the third trend is that the migration of money to the public minerals companies is happening on a larger scale now. The aggregate market cap of the minerals companies is over $50 billion for the first time. That needs to get a lot larger, obviously, to compete for eyeballs and attention from investors within the upstream space, which is multiple times larger, but it's a step in the right direction. The last thing I'll mention in terms of trends is the upstream consolidation that's taking place. It directly impacts the minerals industry. The last 18 months saw a tremendous amount of upstream public and private consolidation, and that has impacts on the pace of development, and the allocation of capital for the development of assets that are owned by the mineral owners. It changes your calculus for how you think about how minerals assets are valued and when they'll be developed. It's a good thing to have healthier operators capable of sustaining their capital programs through the cycles, and less volatility of capital programs. It's actually pretty good for mineral owners overall. It's just going to take a more calculated measure of where do these locations fall within a much larger company's investment opportunity set.

JB: With that upstream consolidation and less acreage readily available to buy as a lot of companies get gobbled up, is that part of what's bringing more eyeballs and dollars to the minerals and royalty space?

CC: I think it's just a greater adoption of minerals as an asset class. I think it was previously viewed as a side business, and now it's becoming a core business for a lot of people as they recognize the cash flow potential and consolidation potential of this business. Ultimately capital flows where it gets the best returns. There are very good returns to be had in the minerals business, and I think that attracts a lot of capital as well.

JB: Still speaking more broadly, I wanted to get your basin-by-basin overview where you own interests: the Permian Basin, Williston Basin, Eagle Ford Shale, Denver-Julesburg (D-J) Basin. How are things looking, and where are you most focused?

CC: We have a great lens into activity in all these basins just because our footprint is so broad in all of them. If you look at the Permian Basin, our acreage sits within drilling units that cover over 36% of the entire Permian Basin. In the D-J Basin, our acreage sits within drilling units that cover over half of the Greater Wattenberg field. It's similar statistics across the core of the Eagle Ford and the Williston Basin. We have a great window into operator activity, and I'd say that the trends that I would call out there, first of all, the efficiencies are real for the operators. The operators are continuing to innovate and demonstrate that they can touch more rock with less capital. You see that in the trend of rig counts coming down and frac crew counts coming down, but lateral feet being drilled and completed going up.

As a mineral owner, that's what we care about. We want as much rock to be touched and as much resource to be extracted as possible, and we're less concerned about the actual rig count. We want the actual amount of resources extracted to be maximized. That's the trend that we're seeing these operators realize as they drill longer laterals and have better land configuration. They're drilling these horseshoe-shaped laterals to access rock that was previously stranded because it was in a one-section unit that nobody drills anymore as a 1-mile lateral. Now they drill 2-mile laterals within a single 640 [acres]. The other trend I'd say across all these basins is that there's just less white space for a mineral buyer to buy. Pretty much everything you're going to buy today is going to have some degree of development, whether it's existing PDP or wells that have been spud or permitted. It provides better visibility for a buyer like us. It provides less upside for a private equity-style buyer, but for somebody in the public space that's trying to balance upside with current cash flow, it's a good dynamic for us.

JB: I was actually curious to ask how white space fits into your strategy and gambling on those more perspective areas.

CC: We don't look at it as gambling because we have a team of technical professionals that help us underwrite every single unit for every single acquisition. We have GIS (geographic information systems) professionals, geologists, engineers, landmen and finance and accounting professionals that help us break down value in every single unit we look at. The white space can be either a unit that's undrilled or horizons that have not been touched yet. It becomes an assessment for when we believe the operator will come and extract the resource from that section or from that horizon. We absolutely are comfortable with white space. We love a balance of existing cash flow from existing production and additional upside, and that's why we focus in places like the Permian and the D-J Basin because they have that in spades. We see a lot of running room left in remaining drilling inventory in both the Permian and the D-J, less so in the Eagle Ford and Williston where we see those as more mature basins. They're going to continue to see some primary development, but it's going to shift to a secondary and tertiary recovery before too long across those basins as production from primary drilling either plateaus or declines.

JB: We talked about the Permian, but I wanted to maybe home in on there a little more. Obviously, it's super competitive and for good reason, but I wanted to get your take on just how you stay ahead of the competition there and avoid overpaying.

CC: Yeah, the key part of your question there was avoiding overpaying. The easiest thing to do in minerals is to grow. It is very easy to make acquisitions in minerals. The hard part is doing it with discipline around long-term rates of return. At Sitio, we are incentivized by long-term rate of return. That's the lens through which we look at every single acquisition we make in the Permian and elsewhere. Really how we differentiate ourselves is around our strategy. We are not very good at just saying the highest number in a broad auction process, so we're not particularly competitive in auctions. So, we look for where we are competitive. It's in assets that fit our profile but may not fit a private buyer's profile, or it's a relationship we have with a mineral owner, or it's a solution that we can offer. For example, we have an Up-C corporate structure, so we're able to offer owners of minerals a tax-deferred solution if they want to sell their minerals and take our class C shares. They get to defer their capital gains on the sale; they continue to get income from our dividend; they get us professionally managing those minerals; and they get exposure to a much broader footprint—a much more diversified footprint than they have with just the minerals they own. So, we try to be solutions oriented, relationship driven and, at the end of it all, focused on long-term rate of return.

JB: Please tell me what you can about the operators you like to work with.

CC: We do love working with well-capitalized operators that have durable ability to spend through cycles, and that's what's been great about the consolidation that's taken place. You look at some of the work that the biggest consolidators have done between Conoco[Phillips], Oxy (Occidental Petroleum), Exxon [Mobil], Chevron, Diamondback[Energy] and Permian Resources. All those folks have done tremendous things for moving assets from more volatile spenders of capital to more durable spenders of capital, and they're very like-minded to us. They want the capital to flow to the highest rate of return, which makes our job marginally easier because we can make educated estimates for where they're going to allocate their capital based on where they're going to get the best rate of return for their drilling dollars.

JB: Outside of the Permian, or even in the exploratory fringes of the Permian, what else are you most excited about in the Lower 48 right now?

CC: We are excited about anywhere we can allocate capital to get the highest rate of return. We are not driven just to own assets in a particular zip code. We want to get the best rate of return on the dollars we invest. So, we're just as likely to buy minerals in the Permian as we are to buy in the Haynesville [Shale] or in the Rockies or Alaska or overrides (overriding royalty interest) in the Gulf of Mexico. Those are all on the table. We haven't done those things yet. We have found the greatest opportunity for the best rates of return in places like the Permian and the D-J.

We do get excited about areas of the Permian that are the future, which is going to be parts of the basin in primary zones that have been less explored to date. People have been focused on more core areas of the basin, but there's also different horizons which are being tested. We're seeing deeper horizons being tested and new concepts throughout the basin. As I said before, there's also some efficiency measures which are making even primary horizons more economic in stranded sections. So, there's a lot to be excited about in the Permian. We're really excited about the D-J too. We've allocated a lot of capital over the last two years because the regulatory environment has become much more balanced. It's layered on additional costs for the operator, but it's improved visibility for the mineral owner, and that's important for us as we think about what we can underwrite in terms of pace of development and activity levels for the operator. Some of the disclosures that operators make as they fulfill the regulatory requirements are quite helpful for mineral owners.

JB: Which basins have the most mineral rights held by surface owners and how does that affect the business?

CC: By our estimates, within just our buying areas within the Delaware and the Midland basins, there's approximately 12 million net royalty acres within those shapes. If you were to just subtract out the minerals that are either owned by state or federal entities in New Mexico or University Lands in Texas or some minerals that are not acquirable by Sitio such as Chevron or Viper [Energy], you're still left with about 10 million net royalty acres that are technically acquirable. And Sitio owns 200,000 [net royalty acres]. So, we're just getting going on the potential. It's a massive basin. There's a lot of original surface owners that still own their mineral rights. As we get further on in time and families pass on those minerals to people who are not as connected to the surface anymore, or people have different liquidity needs or tax sensitivities, they look for solutions for those minerals, and that's helpful for us. There's been a big trend for the surface owners extracting more value for their surface rights in the Permian, and that helps with development as well. The surface owners want to see development happen as they realize more value from things like water or caliche, and that turns into more value for the mineral owner because they're being more constructive about development on their surface.

JB: From your experience, where has it been hardest to convince mineral owners to sell?

CC: Everywhere. Minerals are perpetual real property assets, and so they never expire. Our biggest competition when we wake up every day is the hold value and convincing a mineral owner that today is a good day to sell. Really there has to be some catalyst for the mineral owner to sell, and that comes down to estate planning, some liquidity needs, some tax sensitivity, and we can be a solution for all those problems that they have. There's not one place that's harder than others. In the United States, we're blessed to live in a country where the individual can own the mineral rights and make that decision for themselves.

JB: You’re obviously in growth mode. There's a KeyBanc report that predicted you’ll be a buyer of minerals packages this year. I just wanted you to discuss that strategy and how 2025 might play out.

CC: We've demonstrated we have the ability to source acquisitions consistently through cycle, and the outlook for this year is terrific. It's just as exciting as it was last year. The operators are still very active on our acreage in our core areas where we're buying actively, and they're developing their high-quality assets, and we still have attractive rate of return investment opportunities. Sitio has every opportunity to continue to succeed on its consolidation strategy in 2025, just like we did in 2024. Our goal is to do it at greater scale and realize the very unique economies of scale for a minerals business that are really different than any other business. To realize those, we need to continue to make a lot of progress on consolidation.

JB: Just to go back in time a little bit, it's been almost three years since the Desert Peak-Falcon merger. I wanted to get your retrospective thoughts on how everything has gone, Kimmeridge’s involvement, and your personal transition to leading the publicly traded company.

CC: We really had three focus areas after that transaction. The first was to continue to be a leader in the consolidation of this space and achieve rates of return that were identical to what we were pursuing when we were a private equity-backed private company. The second was to build out a team of professionals that shared our vision for where we believe we can take this business and they're passionate about this business. And, third, we wanted to build proprietary systems that are purpose built for managing a diverse set of mineral assets that's almost infinitely scalable.

I'd say on all three of those fronts, we've had a lot of success. As I said before, we want that consolidation to continue at a larger scale, but we've been very successful at building out a very high-quality team. I'd say the systems we have built really set Sitio apart and create an opportunity for us to bring more value to our shareholders as we are able to realize more cash receipts from our royalties than anybody else given the granular nature with which we're able to track every single molecule of production.

JB: Then, you obviously had big deals, especially for Brigham Minerals and to a lesser extent Foundation Minerals. How transformative were those deals and how has Sitio continued to grow in its relatively short lifespan?

CC: We were very fortunate to retain a dozen really high-quality professionals in Austin who were part of the Brigham team. They shared our excitement about this industry. They embraced our strategic vision for building Sitio. We've added more members to the team in Austin. The integration of Brigham, I would say was easier than any asset deals we've done because, when you acquire assets, there are requirements to transfer title with the courthouse. But, when you buy an entity, the title record owner doesn't change, and so nothing gets lost in the shuffle. With operators keeping track of who owns the minerals and who should get paid the royalties, there's often a long delay from operators to put mineral owners in pay when there's a transfer of title at the courthouse. That didn't have to happen with Brigham because we bought the entire entity. That was very fortunate. And the continuity from the Brigham team helped us address questions about data structure and history.

JB: What do you want to highlight in terms of why minerals are compelling today as a distinct asset class?

CC: First and foremost, as an asset class from the investor perspective, it's the highest margin vehicle through which you can add exposure to the energy value chain. There's a tremendous consolidation opportunity to drive more scale to this industry and really realize the unique economies of scale inherent in the minerals business that are very different from every other element of the energy value chain. It's just very early stages of the consolidation that needs to take place in this space. So, it's a very exciting time to be investing in minerals as either a public equity investor or a private equity investor. It’s a very exciting time to be investing in minerals as a minerals consolidator just given the amount of running room there's left in the space.

JB: Obviously, we talked about a lot of room for consolidation, a lot of competition, but why don't we see more of the big upstream players, with some exceptions, have more developed mineral strategies?

CC: I think that's perhaps the most important question that needs to be addressed going forward. If you look at the roadmap that Diamondback and Viper have very publicly laid out for everybody, they have proven that a successful mineral strategy is not a distraction. It's actually a differentiator, and it can lead to value creation for shareholders for both the upstream operator and the mineral owner. And it can be a differentiator in terms of consolidation of both the operator and the mineral owner, and both can trade at a premium. It's surprising to me that every upstream operator of scale does not have a defined mineral strategy because it's proven to be scalable and not a distraction to the operator. It's actually a differentiator for the operator. It's my hope that more operators embrace a defined mineral strategy.

That said, there's no operator that should be allocating their capital to buying minerals. They should all partner with a company like Sitio because the payback period for drilling a good Permian well can be as short as a year or as long as four years. It's a pretty quick payback. On the capital you invest in minerals, it's a much longer payback period. So, the owner of the leasehold should be focused on drilling wells, not buying minerals, but they should have a strategy to extract more value and highlight value for their shareholders for the minerals they do own. When they make acquisitions of upstream assets, there's naturally going to be minerals assets that come along with those acquisitions that should be separated out and allocated to where they're going to get the most value, and that's within a publicly traded minerals company like Sitio.

JB: What else are you really excited about in the industry right now?

CC: The evolution of this business is just beginning in terms of how we prove that it's scalable, how we prove that it adds value and how we prove and measure success. It's going to be very different than what the world has seen from the upstream space. The measure of success for a minerals company is not about drilling wells. It's all about the discipline with which you underwrite acquisitions and the returns you achieve on underwriting those acquisitions. That takes a longer time to prove out. It's going to be an exciting process to watch as people realize the returns we are achieving from the investments we've made.

JB: I was curious, with your personal background in finance, banking, private equity, oil and gas, how did you end up finding the minerals and royalties niche and running with that?

CC: It was a great intersection of all the skill sets that I developed over the years. You look at the day-to-day aspects of this business, and all we do every day is we consolidate minerals. We're making acquisitions. That's a bit of the M&A background. We have to be thoughtful about how we finance those acquisitions. That's helpful from the banking background. And we have to be best-in-class in how we manage those minerals and innovate. You learn that from good mentors and being around private equity, which always finds ways to innovate and compete.