By Eagle River Energy Advisors
As the calendar winds down, operators and investors are making critical year end decisions that balance drilling schedules, capital budgets, and tax planning before December 31. It sometimes feels like the energy industry’s version of holiday shopping season. Everyone is trying to wrap up gifts before the year closes out, except in this case, the gifts come in the form of cash flow and efficiency. For owners holding AFEs, this period often provides the most advantageous timing to sell.
Our team has been exceptionally active this year in the AFE market. Across Texas, New Mexico, Colorado, Utah, Wyoming, North Dakota, Oklahoma, Louisiana, Ohio, and West Virginia, our clients have stayed busy while we have continued to connect quality projects with motivated buyers. Through the first three quarters of 2025, Eagle River has facilitated more than 140 wellbore transactions with a gross AFE value of approximately 1.3 billion dollars, setting a new internal record for Q3 activity.
In Q3 alone, Eagle River completed two separate DrillCo opportunities in Texas and Colorado. Each transaction involved the sale of non-operated wellbore working interests for the operator’s 2025 capital program. These projects highlight the continued appetite for high quality drilling opportunities, even amid a market environment defined by shifting commodity prices and cautious capital allocation. The results speak to the strength of Eagle River’s network and the growing comfort among investors in deploying capital toward well structured development projects. Our team is well positioned to help close additional transactions before year end.
The Fourth Quarter Opportunity
As we enter the season of football, family gatherings, and year end deadlines, the window for additional AFE transactions remains open. Buyers continue to seek exposure to development programs that can start spudding before the new year, while sellers look to capitalize on current momentum. Transactions executed before December 31 can offer tax advantages, liquidity benefits, and a chance to finish the year strong.
In the fourth quarter, the energy market traditionally experiences a surge in deal activity. Operators move to finalize budgets, private equity groups look to deploy remaining capital, and buyers seek deductions to offset taxable income. For AFE owners, this creates a unique window of opportunity where demand rises and buyers are motivated by both strategic and fiscal incentives.
Key Benefits Of Selling AFEs Before Year End
- Tax Positioning And Deductibility
Participating buyers can often recognize intangible drilling costs or tangible equipment depreciation within the same tax year. AFEs sold before year end can deliver immediate tax benefits to the buyer, which often translates into stronger offers for the seller. - Capital Reallocation And Liquidity
Selling AFEs can free up capital that would otherwise be tied to upcoming drilling obligations. With many operators pushing to spud wells before year end, selling your AFE interest can convert pending cash calls into liquidity that may be redeployed or held as working capital. - Valuation Momentum In Core Basins
AFEs located in high performing basins such as the Permian, DJ, and Williston are currently commanding premium pricing as drilling efficiency improves and well economics remain strong. With service costs stabilizing and commodity pricing steady, buyers are eager to participate in near term drilling programs before budgets reset for 2026.
Market Dynamics And Execution
Transaction activity involving AFEs has accelerated across private markets. Family offices, aggregators, and mineral funds are using year end timing to capture deductible exposure in 2025 drilling programs. On the operator side, there is an increased push to secure working interest partners before the new fiscal year begins, creating tighter bid timelines and stronger competition for quality AFEs.
Eagle River Energy Advisors specializes in helping owners evaluate AFE participation options, identify qualified buyers, and execute transactions efficiently. The team tracks active drilling & pooling schedules and uses comparative transaction data to ensure each client has a clear understanding of market value before making a decision.
The Bottom Line
Every year we see the same pattern. By mid November, buyers are suddenly very motivated, and sellers are suddenly very interested. Coincidence? Probably not. Selling AFEs before year end can align financial strategy with market momentum. Whether your goal is to gain liquidity, rebalance your portfolio, or optimize your tax position, this is the season when motivated buyers and financial incentives are most closely aligned.
Owners considering an AFE sale before December 31 are encouraged to contact Eagle River Energy Advisors to discuss current pricing trends and market conditions.
