Every oil and gas investment that one chooses to participate in whether it's a brand new drill, or something else, is always going to be risky. What we do to try and mitigate risk is get in areas that have multiple different formations. This allows us to get into wells that give us more than one opportunity to hit for oil and gas. If the drillers are going to start a well that passes through five different formations, we get five different chances per drill to hit something that could be productive and generate income. For this reason, we try to get into the best areas that have multiple different formations. We also strive to get into the best areas that already have proven production, which would be an area where wells are already producing or an area of existing production that is in close proximity to where we are currently drilling. Obviously, when we partner up with the operators we like to make sure that they have a good track record and a consistent track record of hitting producing wells and generating income. This gives us, as well as our investors, confidence in the process.
In conclusion, these investments can be risky but we attempt to mitigate the risk as much as possible by making sure we are in the right locations, with the right people, and getting in at the right prices.
We only charge one fee to invest in the partnerships, which is our management fee. What we do as a company is we turnkey the pricing to the investors, which means we sell the interest at a guaranteed cost. What that means for our investors is that if the operators spend more money or they blow the budget on the well, we don't go back and ask our investors to come out of pocket and put any more money into the investment. A portion of our management fee will go to pay for any cost overruns or any additional expenses acquired throughout the drilling process and completion when they go to frac.
The one-time management fee also pays for other things such as office materials, bookmaking, and everyday expense overhead, etc.
Typically, we don't sell more than two units to any one individual. For example, if we have a project that we are working on and the total amount raised which would own 45% of the well ends up costing $576,000, then we could sell a $65,000 unit in that project. The most we would sell to an individual would be two units for a total of a $130,000 investment.
If an investor really likes what we're doing and they want to invest more than two units, we would evaluate the situation on an individual basis, and sell more units to them while still placing the rest of the interest with our other investors. We prefer to spread out the interest throughout the year so that investors do not have all their money in only one well. Instead, they could have a good portion of their money spread out among multiple projects.
The short answer is anybody who meets one of the following criteria is considered to be an "Accredited Investor":
Each of these would be considered an Accredited Investor.
As a rule of thumb at United Exploration, LLC, we try hard to partner with the right people. Our typical client will have at least a one million dollar net worth and our ideal client usually has at least a five million dollars net worth to invest in multiple projects throughout the year.
Accredited Investor Opportunities
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The short answer to who can invest with United Exploration, LLC is obviously anyone that is an accredited investor. The majority of our business comes from business owners. These are individuals who generate a substantial amount of income throughout the year, with a big portion of that income being taxed and going straight towards the federal income tax. What we do is partner with business owners that can take advantage of the tax benefits that are generated through oil and gas drilling. We also partner with people that are not business owners but who want to invest. We also have clients that are retired, and due to retirement, lack long-term income since they are no longer producing an active income stream. All of these types of people are looking for a passive income, something that can be generated for many years. No matter the situation, we work with you and get to know your investment objectives.