Complete a 1031 Exchange using Producing Oil and Gas
Investments as "like kind" Property.
For1031 Exchange Buyers a substitute for Ownership of
Real Estate is a fractional interest in an Oil and Gas Production
that qualifies as "like kind" under Section 1031 of the IRS
Code. Ownership is structured through a "fractional interest"
similar to tenant-in-common ownership in real estate
and is considered "like-kind" for a 1031 exchange.
A Viable Alternative Investment for "like-kind" 1031 Exchange.
Section 1031 of the IRS Code classifies an investment in an
Oil and Gas Production working interest and Royalty Interest
as "like-kind" for 1031 exchanges. A working interest is a leasehold
interest which allows the lessee the right to search for and produce
Oil and Gas on a parcel of land and receive a portion of the proceeds
of the Oil & Gas produced. Each fractional owner of an offering
has the same rights as a single owner and can subdivide or offer
for sale their ownership interest at any time on the open market.
The purchase of a "fractional interest" in a qualified
working interest offers the 1031 exchange Buyer the stability
of an immediate economical closing with a predictable cash
flow stream with the ability to participate in the future production
with payment based on commodity prices over the long term.
Portfolio Diversification: A 1031 Buyer now has a simple
and economical vehicle to add diversification to a portfolio by
acquiring highly liquid individual fractional ownership
in one or several qualified Oil and Gas Production working interests
in different markets with predictable Oil and Gas Production flow
in place and no management responsibilities.
| Liquidity: |
There is an active secondary market for established Oil
and Gas Production to sell directly to investors or by auctions
specializing in Oil and Gas Production based on projected
production and the commodity prices. |
| Life of production: |
Long term projected production with proved reserves supported
by qualified third party reports. |
| Annual Return: |
Average payout of 10% to 18% per annum over the term.
This payment must be considered as return of investment
as well as return on investment as the future value
of the investment will be zero when the production is completed. |
| Tax Treatment: |
Income is eligible for tax free depletion allowance of
approximately 15% which is not charged back upon the future
sale or 1031 exchange of the investors "fractional interest". |
| Diversification: |
Long term management free investment with secure cash
flow with a wholly-owned interest with the investor controlling
the timing and exit strategy. |
| Valuation: |
There are no drilling risks but Oil and Gas Production.
Investments are valued on the amount of potential production
and the price of the commodity. Prices will increase and
decrease and therefore payouts will vary. Over the long
term growth should provide an ideal inflation hedge. |
| International: |
Unlike real estate Oil & Gas is a Global commodity
that is not solely dependant on the US economy and interest
rates. |
| Leverage: |
Investments are ideal for balancing equity and leverage
to 50% of value is available through typical Bank loans
to qualified borrowers. |
| Closing: |
Quick and economic closing. |
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Individual 1031 Investors should consult their tax advisor,
CPA, QI, and legal and financial advisors as part of making
any investment decision. |
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