Transcript
The Brief Interviewer (00:18.168)
Welcome everyone to a special episode of The Brief. The following interview with Sean McDonough of New West Data was filmed live at our invitation-only Olivon Advisors Spring 2025 conference in Austin, Texas. Let’s get started. Sean, what is New West Data’s value proposition in today’s market?
Sean McDonough (00:41)
New West Data is seizing a very significant first mover advantage in essentially reimagining the natural gas midstream through digital infrastructure. So by bypassing traditional natural gas midstream requirements, New West Data is able to execute really significant arbitrage on oil cash flows from oil wells with gas egress issues.
The Brief Interviewer (01:11)
Please compare your strategy of liberating “stranded oil” to monetizing “stranded gas” commonly found in the United States?
Sean McDonough (01:18)
Essentially what we’re doing when we’re liberating stranded oil is taking the next step from what our peers are doing in monetizing stranded gas. So when you think about Bitcoin mining companies which are monetizing stranded gas as a low-cost means of power for their Bitcoin mining activities, often what they’re doing is entering into very low-cost gas offtake agreements from oil producers. What we’re doing is full vertical integration, acquiring those oil wells that have off take or essentially natural gas egress issues and would require an offtake from a Bitcoin miner. We’re the full package. So we are both the oil company providing the gas to the Bitcoin miner and we’re the Bitcoin miner consuming the gas. And it boils into a really powerful value prop from a free cash flow perspective with diversified on correlated revenue streams.
The Brief Interviewer (02:18)
Please give us a sense for the size of the market opportunity you see for New West Data.
Sean McDonough (02:25)
Very conservatively, we put the market opportunity in Alberta at 10,000 oil wells, at a presumed 10 barrels a day per well. It’s 100,000 barrels of unexploited oil production accessible to us through our unique value prop on these projects and essentially accomplishing that ARB on those oil cash flows. 100,000 barrels of oil and at presumed 200 MCF a day of gas production, that’s enough natural gas. 200 MCF per day of gas production per well, that’s enough gas for 10 gigawatts of off-grade Bitcoin mining. At just 10 % of that addressable market would yield EBITDA of $450 million and a rough valuation of about $2 billion. Just accessing just 10 % of what I feel is a very conservative estimate for total addressable market.
The Brief Interviewer (03:24)
Where do you expect net profit interest to price in today’s market for oil and Bitcoin? Please help us understand expected IRRs and multiples of money.
Sean McDonough (03:35)
So we are budgeting $20 million Canadian in NPI sales in 2025. In terms of the returns on those NPIs, we adjust our base case production to assume initial commodity price assumptions that are current. So, oil price in the low 60s and current Bitcoin revenue. So, even with those initially lower commodity price assumptions, you’re still seeing return of principal for MPI investors in roughly 24 months, a 40 % IRR on the lifetime of the project, and about a 2.5 multiple invested capital. Importantly by investing in our MPI or investing in our MPI offerings, we don’t cap upside for the investors. So in future higher commodity price environments, MPI investors realize the incremental cash flow is there.
The Brief Interviewer (04:36)
What keeps you up at night?
Sean McDonough (04:38)
Like any operating company, we deal with operations. So we don’t have any operations hurdles that any other oil company wouldn’t, but we deal with inclement weather or the down-hold issues that all oil wells will have, kind of typical oil and gas down-hold issues. I think we’re really well-suited and we handle them very well, but like any executive, you worry over every detail. And I would say that’s probably it. You just always want to execute and work about the operation and details day to day.
The Brief Interviewer (05:09)
Where do you see new West data 12 months from now?
Sean McDonough (05:15)
So 12 months from today I firmly believe we will be an institutionally sized company. I think very likely we’ll begin to access more institutional capital partnerships but at the very least I expect us to be institutional in terms of assets under management so barrels of oil under management north of 300 and Bitcoin mining in the 8 to 10 megawatt range effectively being going from a company which is currently a meaningfully sized and a going concern with a built out team to something which is on the institutional size.
The Brief Interviewer (06:02.576)
Thank you for joining us here at The Brief by Olivon Advisors. For more information on our presenters, please visit olivonadvisors.com/companies. Want to join our mailing list? You can by signing up at olivonadvisors.com. We look forward to seeing you on the next episode of The Brief.
