Swan Energy - Gas and Oil Drilling Update

Swan Energy drills another successful well in McClain county, Oklahoma.

Established in 1977, Swan Energy continues its long-term commitment to the exploration and production of proven oil and gas fields; specializing in the acquisition and development of domestic oil and natural gas fields in petroleum-rich areas across the United States. Please watch the most recent video update from the field:



As managing venturer, Swan Energy has participation opportunities in new oil and gas Joint Ventures to qualified investors; employing the highest standards of due diligence, creating cost effective turnkey structure, and managing cost effectively,

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.

THE OIL AND GAS TAX LOOPHOLE: STRENGTHENING AMERICA, CREATING 9 MILLION JOBS AND EXPANDING THE ECONOMY

Once again Washington is talking about cutting tax benefits to the oil and gas industry. Before any politician considers this he should take a close look at the positive effects the domestic oil and gas industry has on our economy inspired by the so called “tax loophole”.

According to a new report by PricewaterhouseCoopers (PwC), the U.S. oil and gas industry provides more then 9 million American jobs as well as significant economic contributions as employers and purchasers of American goods and services.

The PwC study reports that the oil and gas industry’s total value-added contribution to our national economy was more then $1 trillion in 2007 (the most recent year for the study).  That was 7.5% of the U.S. gross domestic product.  Over the last 3 years, the industry has seen significant growth.  I would estimate these numbers to grow at least 25% or higher in 2010.

PwC states that, “The economic impact of the oil and natural gas industry reaches all 50 states and the District of Columbia….” “The top 15 states, in terms of the total number of jobs directly or indirectly attributable to the oil and natural gas industry's operations, were Texas, California, Oklahoma, Louisiana, New York, Pennsylvania, Florida, Illinois, Ohio, Colorado, Michigan, Georgia, North Carolina, Virginia and New Jersey.”
Congress and the President must keep the study’s findings in mind as it debates greater domestic oil and gas access, higher energy taxes and so called tax loopholes.
API President Jack Gerard said, “Congress should remember, that some of the energy tax and climate change legislation it has proposed would have a devastating impact on the industry and many of the 9.2 million American jobs it supports, as well as on the American economy and energy security.” 

“The people in the U.S. oil and natural gas industry are the backbone of our economy,” Gerard said. “They provide most of the nation’s energy, spurring growth and job creation across America. At a time of economic recession, the oil and natural gas industry is actually responsible for creating more jobs and generating more revenue to the economy. Irresponsible proposals to pile new taxes on the industry threaten these jobs and the nation’s ability to produce more of its own energy. We should not put any jobs at risk, but especially not when millions of Americans already are unemployed and economic recovery remains uncertain.” 

Anyone that has actually looked into the so called “tax loopholes”, found in section 469(c)(3) of the Tax Code, will quickly see that it is one of the most successful methods of inspiring domestic oil production that congress has come up with.   This portion of the code does not provide loopholes to major oil companies but rather to independent oil producers.  There is a significant difference. 

According to the Independent Petroleum Association of America, independent producers account for 90% of oil and gas wells in America.  These tax advantages stimulate high risk investment of oil exploration by mitigating some of the financial risks—creating jobs and driving the economy.  

 These are not tax loopholes; this is a smart move with a direct contribution to domestic oil and gas production, having a positive impact on our economy, our jobs and our way of life: reducing our dependence on foreign oil and strengthening America.

 
To learn more about Swan Energy, Inc. visit http://swanenergyinc.com.

Swan Energy Inc., Brandon Davis, and John Schiffner are trademarks of Swan Energy Inc., 6400 S. Fiddler's Green Circle Suite 1600, Greenwood Village CO 80111 and may not be published or used in any form with out express written permission of Swan Energy Inc.

Swan Energy Inc.™, Denver

Where Does Oil and Natural Gas Come From?   find out more... http://www.swan-energy.com/

More on natural gas...   http://www.swanenergyinc.net/

More about Swan Energy Inc.™...  http://swanenergyinc1.blogspot.com/

Brandon Davis™, CEO      John Schiffner™, President