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Page added on October 1, 2015
Silicon Valley’s Hot New Investment: Oil and Gas
Technology investors aren’t usually known for backing anything related to fossil fuels—they tend to favor solar energy and other environmentally responsible endeavors.
But Peter Thiel, whose Founders Fund recently led a $7 million investment an oil-related startup called RunTitle Inc., isn’t your typical Silicon Valley investor. Thiel, Facebook Inc.’s first backer, is known for making contrarian bets. RunTitle is the latest in a series of oil and gas investments by his fund—even amid a slump that has seen the price of oil decline by more than half since June of last year.
RunTitle, essentially a search engine for mineral rights, compiles data on land ownership that’s valuable information for oil drillers. The company’s name is a play on the expression “running title,” a process of digging through public records to figure out who owns what in oil-producing regions.
“The reality is that fossil fuels will continue to be the dominant source of energy for years to come,” said Geoff Lewis, a partner at Founders Fund who led the investment in RunTitle. “There have been very few innovations in production.”
The San Francisco-based venture firm has also financed Tachyus, a company that sells tools to optimize oil production through data analysis; RigUp, a marketplace for oil-field services; and Modumetal, a materials company that sells to the industry. Founders Fund has also backed nuclear technology and clean energy companies.
While venture capitalists have invested $115 million in 20 deals in 2015, the amount fluctuates widely year-to-year, according to CB Insights. Funding totaled $246 million in 2014 and $125 million in 2013, according to the research firm.
The largest investment this year was $20 million in Seven Lakes Technologies, a provider of analytical tools for oil fields, led by Carrick Capital Partners.
RunTitle, based in Austin, Texas, collects data on land ownership and makes the information easier to find and analyze, cutting down on the need for “landmen,” the hired sleuths who manually gather public records and piece together ownership. RunTitle said it plans to raise another $1 million in funding.
“Oil and gas is one of the last giant industries yet to be fundamentally disrupted,” said Reid Calhoon, RunTitle’s chief executive officer.
18 Comments on "Silicon Valley’s Hot New Investment: Oil and Gas"
BC on Thu, 1st Oct 2015 9:27 pm
Uh oh! It appears that the Silly-Con and Social Mania Valley gazillionaires are running out of ideas and companies to fund.
Time to pull the plug on the bubble machine.
apneaman on Thu, 1st Oct 2015 9:43 pm
Oil and Money – Lessons Learned
http://hipcrime.blogspot.ca/2015/10/oil-and-money-lessons-learned.html#comment-form
makati1 on Thu, 1st Oct 2015 10:21 pm
Silicon Valley may just end up in another form of silicon … sand.
BC on Thu, 1st Oct 2015 11:31 pm
The leverage of the myriad bubbles associated with Silly-Con/Social Mania Valley, VC, angels, unicorns, and biobubbletechs is pricing out the bottom 95% of the population.
When the bubbles deflate, and there is increasing evidence that it has begun, the “anti-bubble” will surpass that of the Dotcom wipeout in terms of market cap to wages and GDP, public and private.
The bursting bubble will spread to unreal estate, particularly high-end, buy-up properties, which will coincide with the mega-drought, wildfires, overpopulation, and fiscal constraints that are certain to return when the bubbles burst and tax receipts decline.
James Tipper on Thu, 1st Oct 2015 11:59 pm
We are led to believe that the people in Silicon Valley are some of the most intelligent people on the planet, gifted with incredible foresight. So why, oh why would they invest in oil? A product that’s been going down in price for several years and only continues to get cheaper by the month.
“Oil and gas is one of the last giant industries yet to be fundamentally disrupted”
Did I wake up in the fucking Twilight Zone? Or are people just not aware of what is going on? Either way to say oil and gas has yet to disrupted is like saying that the newspaper industry is yet to be disrupted by the internet. This is it, this is hands down the dumbest thing I’ve read all month.
BC on Fri, 2nd Oct 2015 1:06 am
http://fortune.com/2014/10/24/peter-thiel-peak-oil-lives/
http://www.technologyreview.com/qa/530901/technology-stalled-in-1970/
James Tipper (JT hereafter), I’m empathetic. I had my requisite “literal” 15 minutes with Peter Thiel (that was extended by his generosity to 95 minutes and later 2-3 hours in follow up in a different setting), one on one, and undisturbed in 2010-11. Thiel is unquestionably an exceedingly bright and profoundly intellectually curious guy, and he recognizes that innovation peaked long ago; but he DOES NOT understand why nor does he fully understand Peak Oil, financialization, overshoot, LTG, the Marxian falling rate of profits situation, low labor share’s effect on productivity, debt and asset bubbles, and obscene inequality and its effect on money velocity, anticipated rates of return, investment, employment, etc.
When the gazillionaire techno-oligarchs don’t “get it”, well, you know what I mean . . .
idontknowmyself on Fri, 2nd Oct 2015 1:36 am
“Oil and gas is one of the last giant industries yet to be fundamentally disrupted”
It means the rich have no ideas how to protect their wealth and they see the crash coming. So they hope to be able to preserve their wealth by investing in oil. Some of them must be really scared about the prospect of being nobody like most us.
makati1 on Fri, 2nd Oct 2015 2:55 am
BC, perhaps a case of over specialization by the techie crowd? I can understand how even an Einstein can be ignorant of how the world at large works if his vision is too narrow and his education too specialized. I guess it is possible to know everything about something and nothing about everything.
rockman on Fri, 2nd Oct 2015 6:18 am
James – They didn’t invest in fossil fuels. They invested in a service company that provides data to energy companies. Their profitability will have little relationship to the profitability of the oil patch. Even with just 700 rigs drilling today it would represent many tens of thousands of individual leases drilled every year. Just as you wouldn’t buy a car without a clear title companies don’t drill if the leases don’t have a clear title. The old method was to physically send a landman to the county court house to run the records by hand. Consider the improved efficiency by going to the internet to research a subject compared to driving to the library and going by hand dozens of books. That’s the magnitude of the change in BAU that he’s shooting for.
paulo1 on Fri, 2nd Oct 2015 7:06 am
re: It means the rich have no ideas how to protect their wealth and they see the crash coming.
You can’t protect wealth, forever. Sooner or later it will be taken or shared, one way or another. It’s nice to have a little security, but how much does a family really need? These people must run on fear.
buddavis on Fri, 2nd Oct 2015 8:23 am
I have personally bought tens of thousands of acres in leases. For myself and for others before I got in business for myself. This is not the first company to do this, but the title situation in Texas, Mississippi and Arkansas is a huge mess and you often spend more on brokerage than bonus money. Louisiana is a little different because minerals prescribe through non use, but from my experience, this venture will only help on the margins and I will be surprised if attorneys draft an opinion on the data from this. No different than what drilling info does currently.
BobInget on Fri, 2nd Oct 2015 9:36 am
Whut next?
Ev’rythin’s up to date in Kansas City
They’ve gone about as fur as they c’n go!
They went and built a skyscraper seven stories high
About as high as a buildin’ oughta grow
Ev’rythin’s like a dream in Kansas City
It’s better than a magic lantern show!
Y’ c’n turn the radiator on whenever you want some heat
With ev’ry kind o’ comfort ev’ry house is all complete
You c’n walk to privies in the rain and never wet your feet!
They’ve gone about as fur as they c’n go
[All]
Yes sir!
They’ve gone about as fur as they c’n go!
[Will]
Ev’rythin’s up to date in Kansas City
They’ve gone about as fur as they c’n go!
They got a big theayter they call a burleeque
Fer fifty cents you c’n see a dandy show
rockman on Fri, 2nd Oct 2015 10:05 am
Bud – I agree especially about post-completion title work. But it might cut down the initial foot work quite a bit. But from what I’m guessing it’s primarily a digitizing efforts. Once done the records access cost will be almost nothing except for what they charge. But in Texas alone that would be digitizing hundreds of thousands if not millions of individual court house records. But this is he “digital age”.
To back up what Bud said: about 3 years ago I drilled a nice oil will in La. Then the “title company” we hired (and paid) did a detailed title write up. It took 10 months to complete: there were a half dozen leases with a total of 235 individual royalty owners. And understand this was only a 160 acre production unit. The royalty to each mineral on was calculated to 5 decimal places. Understand why it took so long: great granddad bought the 1,000 acres in 1894. Then he passed on different portions to his kids. Some who whom got married, divorced and split their ownership with their ex-spouse. And then there’s his asshole son who fathered 4 kids with 3 different women he had never married and one he did marry. And then he dies and some of the women filed lawsuits to gain some of his estate including some of his mineral interests. And then his other idiot son used a portion of the mineral interests as a collateral on a loan he didn’t pay back and that interest was transferred to the lender. The lender then was married 2 times and divorce both time with his ex-‘s getting different portions of the mineral interests. And did I mention the great grandson who lost and transferred a 1% mineral interest to Mr. Jones in a poker game? A Mr. Jones for whom they cannot find a current address. Not an uncommon occurrence. The money goes into an escrow fund. And depending upon each state after X years the state gets the money…not the company.
And I could go on and on with more examples of ownership transfers that happened over the 121 years after great grandad made the purchase. And every one of those ownership transfers has to be researched to make sure each perspective royalty owner. Screw up and don’t send a royalty check to a rightful owner he may eventually sue you and will win. And pay someone who you actually didn’t owe money to? Good luck getting that back. LOL. Outside the oil patch and mineral owners the public doesn’t have a clue about the complexity of mineral ownership.
idontknowmyself on Fri, 2nd Oct 2015 10:26 am
National Bank forced to cut ‘hundreds’ of jobs as economy, investment risk takes toll
There you go. Canadian has to make layoff to offset bad loan made to oil sand industries in Canada. Expect more from Canaddian bank.
http://business.financialpost.com/news/fp-street/national-bank-forced-to-cut-hundreds-of-jobs-as-economy-investment-risk-takes-toll
buddavis on Fri, 2nd Oct 2015 10:27 am
My first tract I ever worked on had a 3/32 mineral interest carved out of a 120 acre tract I was working in the Austin Chalk. It was originally owned by a lady who had no children and 10 brothers and sisters, in the 1950’s. Probably had 60 plus heirs covering a 3/32 mineral interst for a 120 acre tract in an 650 acre unit. Some of her heirs had a 3/25000 interest in that unit.
But the company wanted it leased. And it is only getting worse.
buddavis on Fri, 2nd Oct 2015 10:29 am
And rock, I think it will help on preliminary research. Lease and mineral takeoffs prior to diving in to lease up the prospect, but that is it. At least that is what I use drilling info for.
rockman on Fri, 2nd Oct 2015 1:36 pm
Yep – I do the cheap and dirt with DI also. A lot faster then waiting for the Land Dept to get off its ass. LOL.
BC on Fri, 2nd Oct 2015 10:03 pm
https://www.youtube.com/watch?v=121wUrSHQz0