Perhaps it has always been this way, but it seems like there is much more uncertainty in the business environment these days. Interest rates are rising, and they may be at their peak… but then again, maybe not. Our economy still has high inflation… yet everyone’s talking recession. Many office buildings are only 50% occupied… will workers return? When? Regional banks are on uncertain footing (1) … and the national debt ceiling? … don’t even get me started! In the face of this instability, last month Five States launched its 31st real asset energy fund (see

2022 was a terrific year for Five States and, from a financial perspective, for the investors in Five States funds. As you will read in this issue of The Producer, distributions from our oil and gas production funds were in the double-digits, ranging from 25.5% to 54.0%. In a year that was dismal for just about every asset class in most investment portfolios, Five States funds stood out as a bright spot. 2022 also marked a year in which we closed two new funds, one being the largest production fund in Five States’ history, and the other being our first fund in the renewable energy space. To be sure, as the Five States story continues to be written in the future, when we reflect back on 2022 it will bring a smile to our faces!

If you have read The Producer over the last two years, you may recall we have been reporting on different aspects of ESG as it applies to Five States. ESG (Environmental, Social and Governance) is a term used broadly to describe ethical, measurable principles and best practices for companies that seek to improve on socially conscious business behaviors. ESG has become so relevant and newsworthy over the last decade or so that we now dedicate a portion of each issue of The Producer to this topic. Some examples of ESG initiatives are shown below.

Last week my wife and I met with our financial advisor to discuss the performance of our investment portfolio for the year, and you can imagine how that went. At meeting time, all major domestic stock indices were down 20% - 30% YTD and the bond funds, although better, were still awful. Even our alternative positions, that were intended to buffer market gyrations, had suffered. All the numbers in my portfolio were red… that is, except for those in the recent Five States funds, specifically FSPA 2020 and FSEI 2021. Those funds have performed exceedingly well so far in 2022 and investors in those funds will enjoy reading about them in this issue of The Producer.

A friend of mine who coaches his daughter’s volleyball team once taught me an important lesson. After the team executes an excellent play, usually ending with someone “spiking the ball” to secure a point, the team briefly gathers, they give each other a high five, and say some encouraging words before they get back in position and resume play. If this was the end of a set, the celebration would last longer and be more demonstrative; nevertheless, they would get back in position and prepare for the next set until the match was over. This action looks trivial to some, but it is more important than one might think. The coach said that when his team wins a point, a set, or an entire match, its important to pause, acknowledge their achievement, and celebrate even the smallest “win” before getting back to work. That’s what this issue of The Producer is dedicated to … celebrating after spiking the ball.

As our readers know by now, Five States issued two new funds last fall – Five States Energy Income 2021 and Five States Renewable Energy Fund. These funds will be closing to new investment by mid-year, and we have been pleased by the response from investors this spring. A reminder… call us right away to get into either or both of these funds! Marketing new funds is always an eye-opening experience. Meeting with prospective investors, many of whom are new to Five States, gives us first-hand exposure to what is on their mind. Having

We continue here in our series of articles about “ESG”, which stands for Environmental, Social and Governance. ESG is a term used broadly to describe ethical, measurable principles and best practices for companies that seek to improve on socially conscious business behaviors. While Five States has emphasized ESG-type practices over our 36-year history, we are now reporting on specific ESG initiatives and measurable outcomes. Environmental To recap what has been mentioned in earlier editions of The Producer, the “E” in ESG stands for

The high oil and natural gas prices we are experiencing right now make us look really smart. Many of the properties we bought when prices were low are generating cash flows for investors at a faster rate than we had expected, and for that we might be tempted to take a lot of credit. Certainly, there is a benefit to being in the right place, at the right time, with the right amount of money, but we need to “tap the brakes” on congratulating ourselves too much. The fact is, buying an oil/gas property is a singular event, an arms-length transaction that

I am extremely pleased to report that on October 22nd, Five States closed the largest oil and gas property acquisition in its 36-year history. It was big enough in fact, to warrant splitting the acquisition between two funds and allowed us to complete full deployment of the FSPA 2020 fund capital less than 16 months after the fund was closed. Given that the fund started when the pandemic brought our industry to an abrupt halt, this speaks to just how quickly our industry has come roaring back. The six acquisitions for FSPA 2020 occurred

Unless you follow the energy industry closely, your awareness of oil and gas may be limited to the occasional mention of oil and gas prices or drilling rig count reported in the mainstream news. While prices and rig counts are certainly important, there are many other factors that dictate the success of Five States funds and the returns they provide to investors. One of these factors is the availability of investment capital. Without investment capital, development of oil and gas assets slows to a crawl, production drops significantly, and revenues drop. This is the very environment that we are operating in now, but fortunately it is working to our advantage. Here’s why…