Production from oil & gas wells naturally depletes over time as the subsurface resources are slowly exhausted. In many cases, operators may drill new wells on tokenized properties in an attempt to generate new production streams which can effectively replace or offset this depletion, a phenomena referred to as “reserve replacement”. However, even with reserve replacement occurring, it is highly likely that production volumes, and therefore cash flows, will deplete over the 15 year investment term of a Mineral Vault offering.

In fact, depletion itself is one of the main reasons that the investment is term-limited to 15 years, ending the tokenization initiative before cash flows become immaterial.

As expected cash flows to the tokenized SPV will decrease over time due to the effects of depletion as well as the approaching termination of the 15 year investment term, it is expected that token prices will slowly decrease over time in order to reflect this. In effect, all cash flows received by the SPV and token holders are part “dividend” and part “return of principal”.