Raptor Resources is a non-operating participant in the North Dakota Bakken and Three Forks play. As a non-operator, Raptor participates in Bakken and Three Forks wells on a proportionate basis according to its leasehold interest in each drilling unit that is drilled by its operating partners. For example, if Raptor controls leases on 64 acres in a 1280-acre drilling unit, Raptor would hold a 5% working interest in any well drilled in that unit and thereby proportionately share in both the costs and income generated by those wells (i.e., Raptor would contribute 5% of well costs and benefit from 5% of well income). Companies that hold a majority interest in a drilling unit are responsible for the actual drilling and operation of the wells – they are referred to as operators.
One of the advantages a non-operator model is that Raptor takes a minority rather than majority interest in its wells. This strategy enables Raptor to develop a highly diversified portfolio of wells across the Williston Basin, with a current focus on the Bakken and Three Forks play. Which in turn, allows Raptor, to have lower operational risk on a well by well basis. Combining this strategy with experienced management, a disciplined operation, and low overhead, Raptor is prepared to take full advantage of opportunities throughout this resource play.
Another benefit of the non-operator model is that it allows Raptor to partner with some of the most experienced and efficient operators in North Dakota. Operators (whether privately owned businesses or publicly held companies), invest heavily in exploration, drilling research, and development. By taking a minority interest in a well, we leverage the Operator’s significant investment and drilling capabilities associated with each particular well.
Another advantage of a non-operator strategy is low overhead. As a non-operator, Raptor does not bear the operating and overhead costs of its operating partners. As a non-operator, Raptor intends to capitalize on the investment opportunities presented in the Bakken and Three Forks shale oil plays while minimizing its requirements for capital expenditures, employees, and other overhead costs, making us a low-cost producer throughout the Williston Basin.