How does a Joint Venture work?
A Joint Venture (JV) is a mutual funds approach to investing in oil and gas drilling. A given JV assembles investor capital and uses it to purchase a small working interest in multiple oil/gas wells in several different geological areas, owned by a variety of independent exploration and production companies. This diversified approach is designed to provide above-market returns in the form of long term, passive cash flow.
Who is your typical investor?
Western Oil and Gas J.V. (WOGJV) investors are financially-qualified individuals seeking to diversify their investment portfolio and obtain allowable tax benefits and long-term passive cash flow by owning a direct working interest in hard assets.
What is the investment process and timeline?
Joint venture capital is used to acquire a small, direct working interest in a diversified group of 5-8 wells. As each is drilled and tested, the completion is formulated (perforation, fracs, etc) and investors are billed for their share of completion costs. Cash flow typically begins in 12-15 months. Our goal is to return 100% of your after-tax investment in 4 to 4.5 years and 100% of your pre-tax investment in 6-7 years after all program wells are in revenue status.
What is your fee structure?
Our fee is 7.5% of the capital raised, and after the deduction of taxes and all expenses, 7.5% of the distributable revenue on all proceeds related to the well and prospect. Some of the prospects, when developed, carry a Back In After Payout (BIAPO), which shall decrease your net revenue interest (NRI) upon recoupment of your after tax investment, an element that is part of most oil and gas contracts.
Is this a liquid investment?
No. However, when you invest in a joint venture, you receive immediate and long-term tax benefits. For instance, if you invest $100,000, you will get an immediate estimated 80% tax write-off, and a NYC taxpayer will save approximately $39,200 on taxes – in addition to a depletion allowance for the life of the program (15-20 years). The government therefore expects that you will remain in the JV. If you choose to sell it, you may be subject to a potential recapture of the write-off.
How much financial risk is involved?
There is risk involved with any investment. In an effort to protect against downside and mitigate loss for each joint venture, we only acquire a small working interest in a range of low-to-moderate risk prospects. This approach reduces risk.
Has Western Oil and Gas J.V. or its investors ever been audited?
We have never been audited, and are not aware of any of our investors being subject to a federal or state audit.
Should I have liability concerns?
Every well that’s drilled has 3 types of insurance with a multi-million dollar umbrella policy carried by the operator, and no claim has ever made it past the first line of insurance. Western Oil and Gas wells are not in densely populated areas where there is the likelihood of extensive injury to person or property.
Disclaimer: The information on this Web site has been provided for informational purposes only and should not be used or construed as an offer to sell, a solicitation or an offer to buy any security. This information is not purported to be tailored to any particular investor. Information mentioned may reflect a third party’s independent opinions and are not recommendations of Western Oil and Gas J.V. Inc (WOGJV). WOGJV does not guarantee that the information supplied is accurate, complete, or timely, or make any warranties with regard to the results obtained from its use.