Resources | Crudefunders

Oil & Gas Investment Resources

The information you need to make an educated investment decision.

  • Investing with Crudefunders

    Who can invest in Crudefunders' Projects?

    Crudefunders.com lists two types of projects that are open to individual investors over the age of 18; (1) Regulation D 506(b) offerings that only accredited investors can participate in; and (2) Regulation Crowdfunding (Reg CF) offerings that both accredited and unaccredited investors in which investors can can participate in for as little as $1,000.

    Who is an "accredited investor"?

    The term "accredited investor" is defined in Rule 501 of Regulation D of the Securities and Exchange Commission for individual investors as:

    • A director, executive officer, or general partner of the company selling the securities;
    • A natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase, or has assets under management of $1 million or above, excluding the value of the individual's primary residence; or
    • A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

    How much can I invest in a Reg CF project?

    As an individual investors, over the course of a 12-month period, you are permitted to invest in the aggregate across all crowdfunding offerings up to $100,000 as follows:

    • If your annual income or net worth is less than $100,000, then the greater of $2,000 or 5 percent of the lesser of your annual income or net worth in any single offering.
    • If both your annual income and net worth are equal to or more than $100,000, then 10 percent of the lesser of your annual income or net worth up to a maximum of $100,000.

    Are there fees to invest on Crudefunders?

    Crudefunders does not charge fees to investors. Project sponsors will pay a success-based transaction fee of cash and/or carried interest in producing wells if the minimum investment requirement is met. In addition, project sponsors are responsible for any associated listing or development fees with regards to their offering.

    If the minimum investment requirement is not reached, 100% of investment dollars committed will be returned to investors.

    Are these investments risky?

    Yes. Oil and gas investments inherently involve highly speculative activities in which results cannot be exactly predicted and which necessarily involve risk of loss. Legal and tax professionals should be consulted before any investment is considered in an oil and gas project.

    Many private oil and gas projects encounter mechanical and geophysical risk. To mitigate this risk, some investors may choose to build a portfolio of companies to spread their risk across a number of different companies.

    Investors should consider whether investing in a security offered and sold in reliance on Section 4(a)(6)(Regulation Crowdfunding) is appropriate for him or her.

    The Investment Process

    What is the process for the offer, purchase and issuance of securities?

    First a Reg CF offering goes live on the Crudefunders site, with all of the offering materials. Potential investors can evaluate the offering documents to see if they would like to Invest. If they decide to invest they can hit the invest button, transfer funds and sign documents. Once the deal closes the capital will go to the sponsor and the investor will receive an interest in the project.

    What are the restrictions on the resale of Project securities purchased?

    As an investor of Project offerings are obligated to hold his or her Interest and is prohibited from transferring, assigning or otherwise disposing of same without first satisfying certain conditions.

    There is no ready market for the sale of the securities acquired, therefore it may be difficult or impossible for an investor to sell or otherwise dispose of their investment.

    What information and how frequently will I receive updates from the Issuer?

    The Company, as the Issuer of the securities, will furnish investors quarterly operating and oil & gas production reports on the Company's website as described in the Offering Circular.

    On an annual basis, the Company must file certain financial and other information with the SEC and post it on its website. Crudefunders supports regular updates to keep investors educated and informed about the progress of the Company and its investment in the Projects.

    What is the limitations on an investor's right to cancel an investment commitment?

    • Investors may cancel an investment commitment until 48 hours prior to the Offering Termination Date (as may be extended);
    • Investors will notify investors when the target offering amount has been met;
    • If the Company reaches the target offering amount prior to the Offering Termination Date, the Company may close the Offering early by providing notice about the new offering deadline at least five (5) days prior to such new offering deadline; and
    • If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the investor's funds will be released to the issuer upon closing of the Offering and the investor will receive securities in exchange for his or her investment.

    What are the circumstances in which the Issuer may cancel an investment commitment?

    • If the capital raise is not fully subscribed to by the Offering Termination Date;
    • The Issuer and/or Intermediary determine that the Investor does not meet the financial criteria or suitability requirements of their investment amount: or
    • If the raise is over-subscribed and the Investor falls into the last in, first out category.

    However, regardless of whether the company has terminated its ongoing reporting requirements per SEC rules, if a Project is active, Crudefunders will encourage the Company to continue providing its investors quarterly updates.

    The following completion of an offering what is the ongoing relationship between the Issuer and Intermediary?

    On successful closing of most offerings, the Intermediary of Crudefunders.com, North Capital Private Securities Corporation, direct relationship with the Intermediary is completed. However, Crudefunders, LLC, as an agent of the Intermediary, may continue to provide certain services to the Company, based on a separate agreement with the Company, including ongoing investor relations services. Crudefunders will perform these services independent of the Intermediary and receive in exchange for such services compensation as set forth in the Offering Circular.

    When can the Company may terminate its ongoing SEC reporting requirements?

    • If the company becomes a fully reporting registrant with the SEC;
    • The Company has filed at least one annual report, but has no more than 300 shareholders of record;
    • The Company has filed at least three annual reports, and has no more than 10 million in assets;
    • The company or another party repurchases or purchases all the Securities sold in reliance on Section 4(a)(6) of the Securities Act; or
    • The company ceases to do business.

    Projects with Crudefunders

    How do you source the projects?

    Project sponsors come to Crudefunders through our online portal and extensive relationships with operators, drillers, associations, and industry contacts. Our advisory board, which includes people from the worlds of legal, accounting, technology, landmen, and oil field services, also assist in the sourcing process.

    How much due diligence does Crudefunders do?

    Since we offer securities, regulations require that Crudefunders conduct due diligence in assessing a project sponsor for our platform. We do not assess the validity of the project itself; that responsibility falls solely to you and/or your financial advisors. Crudefunders does not provide investment, legal, or tax advice. You can read more in our terms of use.

    Our due diligence may include the following reviews, as appropriate for the particular potential offering:

    • Review financial reports
    • Review information available from financial and other publishers
    • Independent verification of management's representations (contact with issuer's customers, lenders, vendors, lower-level employees, etc.)
    • Reviewing news articles and industry publications regarding the issuer, its market, and competition
    • Review the company's internal documents such as operating plans, product literature, corporate records, financial statements, contracts and lists of distributors and customers
    • Physical inspection of the company's facilities
    • Contact with the issuer's auditor and other experts knowledgeable about the company
    • Written company assurances as to the accuracy of records and financial statements
    • Contact with outside directors
    • Interviews of key personnel or customers
    • Updating due diligence as needed

    What do I get when I invest in a project on Crudefunders?

    Investors typically receive shares in a limited liability company issued and managed by the project trustee, which represent a working interest in one or more oil or gas wells. Revenue from the sale of oil or gas is paid to the company on a monthly and/or quarterly basis. Crudefunders is authorized to collect from the company manager and distribute revenue to investors. In the case of liquidation event, such as by acquisition, you will receive your portion of the proceeds from the sale. In addition, the rights of the investor will differ based on the type of security offered. It is important for you to carefully review all offering documents. If you have any questions or concerns, please consult your personal financial advisor(s).

  • AFE

    Authority For Expenditure

    APO

    After Payout

    BBL or BBLS

    Barrel or Barrels (A Barrel is 42 U.S. gallons)

    BBLS OILE

    Barrels of oil for all production in equivalent volumes

    BIAPO

    Back In After Payout

    BOPD

    Barrels of Oil per Day

    Bcf

    Billion Cubic Feet of Gas

    B/MMcf

    Barrels per Million Cubic Feet of Gas

    BC

    Barrels of Condensate (liquid hydrocarbons separated from gas)

    BCPD

    Barrels of Condensate per Day (Condensate is a high gravity crude oil generally associated with gas wells)

    BHP

    Bottom Hole Pressure

    HSIP

    Bottom Hole Shut-In Pressure

    BTU

    British Thermal Unit—The amount of heat required to raise the temperature of one pound of water one degree Fahrenheit under standard conditions of pressure and temperature..

    CASING

    Casing Pipe cemented in the well to seal off formation fluids or keep the hole from caving in.

    Casinghead Gas

    Gas found naturally in oil and produced with the oil

    Christmas Tree

    The system of pipes, valves, gauges and related equipment that is located on the well at ground level and that controls the flow of gas and other petroleum products produced from the well.

    CFG or Standard CFG Cubic Foot of Gas

    As a unit of volume, 1.728 cubic inches; As applied to water, 7.48 gallons; As applied to natural gas, the volume of gas which, when saturated with water vapor at 60F and at the pressure of 30 inches of mercury occupies one cubic foot of volume.

    CIBP

    Cast Iron Bridge Plug

    Developmental

    A well drilled to a known producing formation in a previously discovered field.

    Discovery

    The first oil or gas well drilled in a new field to reveal the actual presence of a petroleum-bearing reservoir.

    Disposal

    Well used for disposal of saltwater into an underground formation.

    Exploratory

    Any well drilled for the purposes of securing geological or geophysical information to be used in the exploration or development of oil, gas, geothermal, or other mineral except coal and uranium.resources,

    Field

    Area of oil and gas production with at least one common reservoir for the entire area.

    Formation

    A separate layer of rock or group of intermingled beds.

    FT

    Formation Test

    FP

    Flowing Pressure

    FTP

    Flowing Tubing Pressure

    FBHP

    Flowing Bottom Hole Pressure

    Frac

    High pressure or explosive method of fracturing rock formation.

    HBP

    Held By Production

    Horizontal Drilling

    A well which is not vertically drilled as defined in TRC rules.

    IBHFP

    Initial Bottom Hole Flowing Pressure

    IDC

    Intangible Drilling Cost (encompasses all costs that are not tangible, i.e. pipe, tanks & other physical equipment.

    IRR

    Internal Rate of Return—is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project equal to zero. See PV10.

    ISIP

    Initial Shut-in Pressure

    KB

    Kelly Bushing—Drilling rig equipment that fits inside the rotary table and is also used as a reference point on logs to calculate depth.

    LOE

    Lease Operating Expense

    Mcf

    Thousand Cubic Feet—Gas is sold on an Mcf basis; The price of gas is quoted "Per Mcf"

    Mud

    Drilling fluid used to lubricate the drill string, line the walls of the well .

    MMcf

    Million Cubic Feet

    MMcfG

    Million Cubic Feet of Gas—Cumulative production of gas from a well is generally stated MMcf if production is less than a Bcf (Billion Cubic Feet). Sometimes, however, it is stated a percentage of Billion Cubic Feet. For example; .575 Bcf is the same as: 575 MMcf or even possibly 575,000 Mcf.)

    McfPD or McfGPD

    Thousand Cubic Feet of Gas Per Day

    NGL

    Natural Gas Liquids

    PBTD

    Plugged back total depth

    PDP

    Proved Developed Producing

    PUD

    Proved Undeveloped

    Pefrorations

    Holes through casing and cement into the productive formation.

    Permeability

    Ability of rock to transmit fluids through pore spaces.

    Pit

    Hole dug next to drill site for temporary storage of fluids during drilling operations.

    Porosity

    Percentage of the rock volume that can be occupied by oil, gas, etc

    PSI

    Pounds per Square Inch—term measuring pressure on a 1" area.

    P&A

    Plugged and Abandoned—seal off formations to isolate fluids.

    PV10

    PV10 is the current value of approximated oil & gas future revenues, minus anticipated expenses, discounted at a rate of 10% per year. To calculate PV10, engineers create a reserve report of existing wells and proven undeveloped wells, taking into account present production rate, individual production costs and expenses for reserve development, and the forecast decline rate.

    ROR

    Rate of Return—See IRR above.

    Surface Casing

    Outer casing cemented in upper portion of wellbore to protect fresh water formations from contamination.

    Tank Battery

    Tanks for oil storage before delivery to a refinery.

    TD

    Total Depth of well

    Wildcat

    A well drilled to discover a new field or reservoir.

    Zone

    Interval of subsurface formation.

  • Tax Benefits Associated with Investments in Oil & Gas Drilling Joint Ventures

    There are significant tax advantages associated with private investments in domestic oil and gas drilling and production in the U.S. today. The Internal Revenue Code of 1986, as amended (the "Code") currently provides tax advantages for joint venture direct investments in oil and gas drilling and production in order to encourage investment in oil and gas exploration within the United States. However, in order to benefit from these tax incentives investors must meet certain requirements – investing in a publicly traded stock does not generate the same types of tax advantages. This overview sets forth some of the tax benefits associated with investing in joint ventures. Of course, prior to making any investment you are encouraged to consult with your tax advisor regarding how any specific investment will be treated given your particular circumstances.

    Investments in Oil & Gas Ventures Allow Investors to Offset Other "Active" Income

    The Code classifies investments in joint ventures formed to purchase working interests in oil and gas properties as an "active" business activity. This is beneficial because it allows individuals to offset costs from oil and gas joint ventures against other income from "active" business income from salaries, businesses in which they participate, and stock trades. The same benefits are not associated with "passive" investments, such as investments in stock in corporations. Intangible Drilling Costs include everything but the actual installed equipment. Labor, chemicals, mud, grease and other miscellaneous items necessary for well re-working are considered intangible. These expenses generally constitute 65-80% of the total cost of working a well and are 100% deductible in the year incurred and will potentially generate a write off against active or portfolio taxable income.

    Intangible Drilling and Completion Costs (IDCs) Generate Significant Deductions

    IDC costs comprise a substantial portion of the expense associated with drilling and developing a well, and include drilling expenses, such as site preparation, rig costs and the expensive, high-pressure fracturing of rock formations. A substantial portion (approximately 65%-80%) of a direct investment in a domestic oil and gas venture may constitute IDC and be deductible.

    Partner Tax Benefits of Investments in Oil & Gas Drilling Joint Ventures

    Tax incentives from limited partnerships are available on a pass-through basis. The partner will receive a Form K-1 each year detailing his or her share of the revenue and expenses termed the Net Revenue Interest (NRI). For any given project, regardless of how the income is ultimately distributed to the investors, production is broken down into gross and net revenue. Gross revenue is simply the number of barrels of oil or cubic feet of gas per day that are produced, while net revenue subtracts both the royalties paid to the landowners and the severance tax on minerals that is assessed by most states.

    Investments May Also Generate Depreciation Deductions Over Time

    Equipment including pipe, well casings, tubing, storage tanks, pumping units and other items that remain with the well after its completion are considered depreciable. These additional expenses may generally be depreciated over a seven-year period. Up to $17,000 of total completion costs per investor can be written off as a one-time charge in any given year with the remaining balance depleted (deducted) over a period of 7 years reducing income tax expense paid to tax authorities. Approximately 15% to 25 % of the amount of your investment is allocated to equipment as "Tangible Drilling and Completion Costs" (TDC's), and may be deducted from your income over a seven (7) year period.

    Investments in Domestic Oil & Gas Depletion Allowance

    Depletion Allowance applies to revenues from oil exploration and development projects. Participants will pay taxes on only 80-85% of total gas and oil income they receive. The impact of the depletion allowance is to generally make 15% to 25% of the gross income from a direct investment in an oil and gas property tax-free. The owner of an economic interest in a U.S. oil and gas property is generally entitled to claim the greater of "percentage depletion" or "cost depletion." Percentage depletion is generally available only to the domestic oil and gas production of "independent producers." To qualify as an independent producer, the taxpayer either directly or through related parties, may not be involved in the refining of more than 50,000 barrels of oil (or equivalent of gas) on any day during the taxable year or in the retail marketing of oil and gas products exceeding a total of $5. In contrast, cost depletion for any year is determined by multiplying the cost basis of the mineral interest by a fraction, the numerator of which is the number of barrels of oil (or mcf of gas) sold during the year, and the denominator of which is estimated recoverable units of reserves available at the beginning of the depletion period. In no event may the cost depletion exceed the adjusted basis of the property to which it relates. One important limitation on the depletion allowance is that the deduction in any tax year may not exceed 65% of the taxpayer's taxable income from all sources. Typically, any excess depletion allowance may be carried forward.

    Please Consult Your Own Personal Tax Advisor

    The above examples are for general information only and are not intended as individual tax advice. Federal and state tax laws are complex. Consult your personal tax advisor concerning the applicability and effect of oil and gas investments on your personal tax situation and, more specifically, whether or not oil and gas investments would produce favorable tax advantages in your tax situation. This information was current as of the date this document was first printed. However, tax laws change from time to time and there can be no guarantee of the interpretation of the tax laws. The tax benefits of oil and gas investments are merely one factor to consider in evaluating a potential investment and do not eliminate he risks of such investments.

  • What is Crudefunders

    How Drilling Works

    Intro to Well Logging

    Intro to Oil & Gas

    Crowdfunding Oil & Gas

    The Platform

t: (844) FUND.OIL/ info@crudefunders.com / 1601 Elm Street #4245, Dallas, Texas 75201

Crudefunders.com is an online investment platform operated by Crudefunders, LLC, a Texas limited liability company ("Crudefunders"), which is not a registered broker-dealer. Crudefunders does not give investment advice, endorsement, analysis or recommendations with respect to any securities. All securities listed here are being offered by, and all information included on this website is the responsibility of, the applicable issuer of such securities. Crudefunders has not taken any steps to verify the adequacy, accuracy, or completeness of any information. Neither Crudefunders nor any of its officers, directors, members, agents and employees make any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy or completeness of any information on this site of the use of information on this site. By accessing this website and any pages thereof, you agree to be bound by website's Terms of Use and Privacy Policy.

All securities offered on this investment platform offered are through a registered broker-dealer, a member FINRA / SIPC The broker-dealer does not make investment recommendations and no communication, through this website or in any other medium should be construed as a recommendation for any security offered on or off this platform. This site is intended for both accredited and non-accredited investors. Investments in private placements and particularly oil & gas projects are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest in such projects. There is no guarantee that the stated project projections and other information are accurate or in agreement with the market or industry valuations. Additionally, investors may receive restricted ownership that may be subject to holding period requirements. Investments in private oil & gas projects should only be part of your overall private investment portfolio strategy. Oil & gas investments are not insured and those investors who cannot hold an investment for at least 5-7 years should not invest.

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