CorEnergy Sees “Tremendous Opportunity” for Acquisitions Among Upstream Operators
06/27/2018 | by
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Dave Schulte, president and CEO of CorEnergy (NYSE: CORR), participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.

As the first publicly-listed energy infrastructure REIT, CorEnergy’s business model can sometimes be a challenge to explain to investors.

“Infrastructure tends to be critical to somebody else’s operations—they can’t run their business without access to those assets. And that’s not that familiar to traditional REIT investors,” Schulte said.

While CorEnergy’s primary investor base has been in the energy sector, over time, the company has increased awareness among REIT-dedicated investors. “They have started owning our perpetual preferred stock, and even some of our convertible debt,” Schulte added.

Regarding the potential for acquisition opportunities among upstream operators, Schulte said that in a “post-oil and gas crisis world,” upstream companies have emerged with much greater capital discipline. He said that because investors in those companies want their operations to be self-funded, a “tremendous opportunity” has been created for CorEnergy.

“We can enable companies to sell an asset to us that has a lower return profile, and redeploy those dollars that are on their balance sheet already into higher return activities such as drilling,” Schulte said.

Schulte said the company sees opportunities in the upstream sector with dedicated assets, where operators want to retain control of their assets but don’t need to own them. “That’s perfect for us,” he noted.

Looking to the end of 2018, Schulte said that CorEnergy has two priorities: to maintain good stewardship over its current assets and to grow the business. “We expect to close one to two acquisitions per year, in the $50 [million] to $250 million range,” he said. “Our pipeline of opportunities is robust.”