Swan Energy Drills the Nicni in McClain County

by Brandon Davis


http://swanenergyinc.com - The Nicni is another Swan Energy well in McClain County Oklahoma. Drilling began June 20, 2012.

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Swan Energy - Just Exactly What Is Missing From Barack Obama's Job Plan?

At the beginning of September President Barack Obama presented Congress with his $447 billion business proposal to get Americans back to work and pleaded both the House and the Senate to push it forward without delay.

Having said that there is an oversight that should have played an essential aspect to his job plan—American Energy.

American self-sufficient nation wide oil and gas producers are the backbone of the energy sector. These individual producers, like Swan Energy, cultivate 90% of the gas and oil wells in the U.S... These wells produce 68% of the oil and 82% of the natural gas in the United States.

As President Obama crisscrosses throughout the nation promoting his job strategy amidst the high unemployment and financial worries, the self-sufficient gas and oil producers are quietly making contributions to the job growth.

According to the President of the Independent Petroleum Association of America (IPAA), in 2010 individual Oil and Gas businesses (including Swan Energy) made up almost 4 million work opportunities; that's an exceptional 3% of all the jobs in the U.S.!

Rather than promoting this outstanding job opportunity which only could improve our country's policy and also lessen our reliance on the foreign oil, Obama's strategy puts its crosshairs on the oil and gas sector by the mischaracterized "tax loopholes" for the oil and natural gas suppliers by seeking to eliminate the past tax structure which has promoted industry investing by self-sufficient producers and individual shareholders which are willing to consider thehigh risk of oil pursuit and production. These so-called "tax loopholes" have endorsed American work growth for many years.

If we think about the market as a whole, thinking over and above the independent oil and gas suppliers, America can see considerable job growth

According to William O'Keefe, CEO of the George C. Marshall Institute, President Obama's decision to leave out traditional energy from his jobs strategy clashes with his own administration's data. Labor Department figures show that the Oil and Gas industry continues to be creating jobs as the economic climate has been losing them.?

Look at the data below that was unveiled by the U.S. Labor Department this year, since 2007 the U.S. has dropped 5.7% of its jobs, even though the oil and gas industry has gained 16.9%. Swan Energy believes that with the oil and gas growth that we are experiencing throughout the U.S. we could observe considerable job growth in 2012. Job development in the oil and gas market improved about 200% in less than a year in 2011. It's not unreasonable to infer that people could see this identical pattern in 2012.

What could occur to job growth if the hostility towards oil and gas exploration and production is lowered?

Swan Energy was surprised to find out from the IHS Global Insight-CERA findings that just a single year measure to boost the speed of federal government permitting for Oil and Gas suppliers could produce:

- 230,000 American job opportunities
- Over $44 billion to the U.S. GDP
- Nearly $12 billion in state and federal tax and royalty earnings.

All this without having the $447 Billion price tag.

What is Direct Participation in Oil and Gas?

Direct participation in oil and gas is not about buying stock in oil and gas companies or investing in public companies. Direct participation in oil and gas means that an investor or participant puts their money into a venture that is going to go out and drill a specific number of wells (these projects can consist of one or more wells) with the intent of these wells producing oil and/or gas which will then provide revenue back to the participant.  

This illustration by Swan Energy shows how direct participation in oil and gas works:

Direct Participation in Oil and Gas explained by Swan Energy

The revenue from the production goes back to the venture and dispersed out to the participants proportionate to their Working Interest (minus taxes, fees, operating cost, etc.).

Working interest refers to direct liable portion of the ongoing cost associated with exploration, drilling and production.  Working interest owners also fully participate in the profits of any successful wells.   It is important to note that when anyone looks at participating in a working interest venture then they should also make sure that the venture has a turnkey contract so that they know what their costs will be up front.  These upfront costs generally include exploration, drilling and testing.  There may also be additional investments that will vary from well project to well project.  Fracking, pump jacks, and storage tanks are all examples of common additional costs that are allocated to the participants.  Make sure that you understand the financial obligation before becoming involved in a Joint Venture.

The concept of forming partnerships or Joint Ventures to create business relationships has been around for centuries.  There are many different types of entities for direct participation in oil and gas ventures; the most common are Limited Liability Partnerships and Joint Ventures.  A video presentation comparing, Limited Liability Partnerships and Joint Ventures in relation to direct participation in oil and gas ventures can be found at Swan Energy’s website.

If the venture is a Joint Venture (the entity that Swan Energy uses), there are two main roles that are important to understand.  The first role is the investor or participant.  The participant puts up money in exchange for Working Interest in the venture.

The second role is the managing venturer.  The managing venturer runs the day to day operations of the venture which may include, but is not limited to, forming the venture, managing the drilling and operations of each well, holding conference calls, handling any issues that may come up, and managing the financial aspect of the venture including payments on oil and gas revenues back to the participants based on revenues that are received from the production of each well.

In a Joint Venture, the participants have the control and make the decisions of Joint Venture.   The Managing Venturer then implements these decisions.  In fact, the participants can replace the Managing Venture with a simple majority vote.   As an example, the participants have the control to decided whether to cap a well or go to completion on a well. A lot of investors like this kind of oversight and control with their investments.

With any direct participation in oil and gas ventures comes risk.  There is always the possibility that once a well is drilled and tested that there is no oil or gas to be found. 

Swan Energy uses the Joint Venture structure to meet the objectives of the participants in our programs to:

1. Provide cash distributions from operations
2. Provide increased tax benefits
3. Place control of the operations and management of the oil and gas program in the hands of the participants. 

With oil extraction costs between $8 to $10 per barrel and each barrel selling north of $80, Swan Energy believes that it does not take an engineer to figure out that the oil market is poised to see high profits that can be made at the source for independent investors by participating in oil wells directly.