A native of Slidell, Louisiana, Melinda Faust entered business after graduating from the University of New Orleans with a bachelor’s degree in marketing. After working for an independent E&P company, she joined start-up DrillingInfo.com, which provides online oil and gas industry data, consulting and mapping.


Faust spent a few years out of the oil and gas business to pursue an opportunity in motorsports racing as well as real estate, gaining experience in the latter that lends itself neatly to her current position at Noble Royalties Inc.


At Noble, Melinda is director of acquisitions and divestitures, buying oil and gas royalties since joining the team in February 2007. Noble is the largest privately owned royalty buyer in the country with $805 million in assets purchased in more than 190 acquisitions.


Faust’s personal interests include golf and racing as well as charity efforts with Make-a-Wish and Habitat for Humanity, and she was preparing at press time for the 2008 BP-sponsored MS150-mile bike tour from Houston to Austin that raises funds for research by the National Multiple Sclerosis Society.


Faust spoke with Oil and Gas Investor about her work and interests.


Investor What drew you to the energy industry?
Faust I saw early on the opportunities in the energy business. This is a great business with lots of interesting personalities. There are plenty of very smart, talented people in this business that “fuel” this economy—no pun intended.


Investor How does Noble Royalties differ from a traditional E&P company?

Faust While Noble Royalties is in the energy sector, we are not an E&P company. We buy producing royalty interests and overrides, and work with numerous E&P companies. We provide an alternative funding source for additional drilling capital or for exploratory projects. We also work with individuals with RI/ORRI looking to diversify their portfolio.


Investor What do like best about your job?
Faust Networking and generating deal flow. I enjoy working on deals from start to finish. It can be very challenging but very rewarding at the same time. We like creating win/win opportunities for sellers.


Investor How do you see the M&A marketplace in 2008?
Faust It will be full of opportunities. The major risk is obviously pricing. Acquisition multiples are good, prices are at historical highs and the threat of capital gains taxes increasing in the coming months make it a great time to be a seller. Royalty owners can take advantage of current market conditions by monetizing declining property and redeploying capital into other appreciating assets.


Investor Which royalty owners should sell?
Faust Historically speaking, anyone with a production decline higher than 7% should sell their royalty assets and reallocate the capital in an appreciating interest rate or equity market. It is simple Finance 101. The rub is that no one can predict where oil and gas pricing will be in 10 years, so the guessing game continues for some evaluations and a buyer-seller gap continues in certain situations.


Investor What’s your favorite sport and why?
Faust Golf. My dad and three older brothers all played golf and had me out playing at an early age. I played on teams and in tournaments growing up. My handicap was much lower then than it is today.

Investor What got you into motorsports?

Faust I got into motorsports years ago when Tracy Krohn (founder, chairman and chief executive of Houston-based, Gulf of Mexico-focused W&T Offshore Inc.) offered me a position in marketing with his race team. It was a very exciting job, as you can imagine.
I still enjoy attending races from time to time and try to go to as many as possible. To be sitting in the pits at Daytona at 3 a.m. is an experience like no other.


Investor What was it that brought you to back to the E&P business?
Faust Even while in motorsports, I still attended NAPE Expo and other industry events. I missed the business and the friends I had made over the years. Luckily, Scott Noble offered me the position as director, A&D, in the Houston market. It has been a great experience.
This is a solid company and Scott has been great to work for. He started this business of buying royalty interests 10 years ago and has had great success in establishing Noble Royalties as a leader in the industry.

Investor Who are some of the people in the industry you admire?Faust Ray Hunt—I admire his success, and the contributions he and his father have made to this industry are endless. I had the pleasure of meeting him not long ago. He is truly a legend in his own right.
T. Boone Pickens—I have learned quite a bit about him over the years and he is a very interesting, innovative person. And, with great stories to tell!
Scott Noble—Truly, Scott has been a visionary when it comes to buying royalty interests over the past 10 years. I appreciate the fact that he is an “out of the box” thinker and have learned a great deal from him.


Investor What’s some of the best advice you’ve ever received?
Faust To keep an open mind and remain optimistic. You never know where the next deal will come from.