Limited Partnership documents are long and complicated because they must meet strict Security and Exchange Commission regulations. Investors compare reading them to drinking from a fire hose: the volume of information and terminology are overwhelming! Most investors need assistance understanding the details.
We have put together this “checklist” to help you organize the facts and figures contained in our limited partnership documents. When you are done, please call us! We will then confirm why you should invest in our current limited partnership now! No other Independent O&G company that contacts you will give you a checklist because they are unwilling to help you understand their deal.
Project Type and Size
- Type (Infill Offset Workover)
Depth_______
Drill Costs/Foot______
Drilling Cost______ Testing Cost______ Completion Cost_______
- Total Number Units and Unit Cost_____________ Unit % Ownership_______
Number offered to Private Investors_______
Number purchased by Company or Other Parties_____
Number and Type of Payments__________
- Timing Estimates
Start Date_________
End Date__________
Start Date for Monthly Revenue________
- Financial Projections (for Low/ Medium/High Oil Price Scenarios)
Average R.O.I. and how calculated________
Payback Period________
Monthly Revenue (Gross and Net after taxes and operating expenses)__________
Total Revenue ____________ Duration (Years) _______
Petroleum Geology Considerations
Petroleum geologists estimate the recoverable reserves by “reading the well logs” that indicate porosity (more is better), permeability (more is better), water content (less is better) and resistivity (more is better). You should find information pertaining to this. Read through it so you can discuss why the geologists think they will get a producing well.
- Geology Discussion Notes
Memorandum Details
The actual Memorandum is an official legal/business document whose structure should adhere to regulatory legal/accounting guidelines. It is designed to provide transparency (Blue Sky Law) and protect the investor from fraud and deception. If you have a Lawyer or Accountant, you could have them review it for compliance with generally accepted legal/financial practices. Here are the key points to understand:
- Liability (Who is liable and how is it shared among all parties)
- Percent Markup (Profit margin for compensation to company for their work)
- Tax Issues (Write-off and deduction status)
- Contingency Costs (Subsequent charges partners might encounter: Workover, Plugging and Abandoning , etc)
