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How does a JV work?
A Joint Venture is a mutual funds approach for investing
in oil and gas drilling. A given JV assembles investor
capital and invests it in multiple oil/gas wells in
different geological areas, by up to 5 different E and P
companies. This diversified approach provides strong
risk spread, which protects against downside, mitigates
losses and is designed to provide above market returns
in the form of long term passive cash flow. |
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How does the tax aspect work?
Each Joint Venturer, as defined in the partnership
documents, is entitled to take the IDC losses directly
against all forms of income. These losses, which
approximate 80% of all invested capital, can reduce
federal state and local taxes, in the year of
investment, by as much as 40% for qualified investors.
Basically, every dollar you give us is an 80% tax loss,
and every dollar we give you is sheltered from taxes by
15% by the depletion allowance. |
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What is a qualified investor?
As defined by the tax code, a qualified investor must
meet certain defined standards and be accredited. (please
refer to Investor Qualifications) |
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How does the investment work?
Once closed the initial joint venture capital is
invested to acquire direct working interests in 7-10
developmental wells and one higher risk prospect. As
each well is drilled and tested, a completion is
formulated and investors are billed for their share of
completion costs. These costs also qualify for year of
investment tax treatment, at the 80% level. As each
successful well is completed and turned into production,
and sales, cash flow begins. It is estimated that all
wells in a give JV will be drilled and completed in a
6-9 month timeframe, with full revenue in effect in 12
months. |
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Has WOG or its investors been audited?
We have never been audited, and I am not aware of any of
our Joint Venturers being subject to a federal or state
audit. |
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What types of wells does Western Oil and Gas invest
in?
Western works with 5 qualified E and P companies in
Oklahoma, Texas, Louisiana, Kansas, and Colorado. These
companies provide us with their prospects, which upon
evaluation by our geologists, are selected for
investment. We invest 75% of raised capital in a variety
of these infield and field extension – development
wells. The other 25% is typically invested in a higher
risk prospect to potentially enhance the Joint Venture’s
performance. |
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What is our track record?
Since the inception of our mixed risk JVs, we have 36
operating partnerships encompassing over 290 wells.
All of these except two, are generating monthly
distributions and will repay investors pretax capital.
The average annual return for all JVs is over 20%. |
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What is depletion allowance?
The Internal Revenue Service provides additional tax
benefits for oil and gas income, as a depletion
allowance. Effectively 15% of all returns from gas and
oil wells are non-taxable. The balance of distributed
cash flow is taxed as regular income. |
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What exactly do you own?
A working interest in a select number of wells. You own
a percentage of each well in a family of wells that make
up the Joint Venture. |
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Does an investor have added exposure in the
investment?
We have 3 types of insurance. We have had injuries and
accidents at our drill sites, and our insurance
companies have taken care of the claims entirely. No
claim has ever gone past the first line of insurance. |
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Liability?
Many of our investors have set up LLCs to protect their
assets against disasters (fire, explosions). Granted
this has never happened in the 25 years we have been in
the business. Our joint venture wells are not in densely
populated areas so the likely hood of extensive damage
to persons or property is unlikely but not out of the
question. Once again, this has never happened but some
investors feel more comfortable fire walling their oil
and gas activities from their other assets. |
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