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WHAT IS AN ACCREDITED INVESTOR?
- 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.
- A natural person who has an individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence.
CAN YOU EXPLAIN THE TAX BENEFITS?
Yes, there are two important tax benefits only found in oil & gas.
- 1. 100% dollar-for-dollar tax write-off:
The new Tax Cuts & Jobs Act of 2107allows investors to write-off 100% of their investment against ordinary income. For example: An investor with $500,000 ordinary income who invests $200,000 would reduce their taxable income to $300,000 – which immediately reduces their federal tax bill by $70,000, assuming a 35% personal tax rate.
- 2. 15% annual depletion allowance:
15% of the cash flow received by the investor is tax-free and the remainder of the income is taxed at the investor’s individual tax rate. Therefore, an investor who earns a 9.5% yield on their investment would earn a taxable equivalent yield of 10.27%, assuming a 35% personal tax rate.
HOW FREQUENTLY ARE DISTRIBUTIONS MADE?
Distributions to the investors are made monthly.
WHAT IS MY LIQUIDITY?
Oil & Gas investments are long-term commitments by nature with anticipated long-term payouts and cash flow. Therefore, investors should not anticipate having the ability to cash out of their investments.
CAN AN INVESTMENT BE MADE THROUGH MY LLC, TRUST OR IRA ACCOUNT?
Yes. Investors can invest through an LLC, trust and a self-directed IRA account (SDIRA). We recommend consulting your CPA or tax advisor for advice.
WILL I RECEIVE A K-1?
Yes, oil and gas K1’s are sent out by the 15th of March the following calendar year.
WHAT IS THE PRIMARY DIFFERENCE BETWEEN CONVENTIONAL VS. UNCONVENTIONAL WELLS?
Conventional wells are more predictable when forecasting performance, the cost to drill and complete are typically lower and the associated operational risks are reduced.
WHAT FEES ARE PAID BY THE INVESTOR?
No commission, points or G&A expenses (salaries and expenses) are paid by the investor, but the fund does collect a nominal one time 15% management fee.
DOES THE FUND HAVE STRATEGIC OPTIONS TO PROTECT THE INVESTOR FROM COMMODITY VOLATILITY?
Unlike the majority of energy funds, the MOC San Andres 2020 Fund, LLC and its affiliate operates the assets, which allows us to act on behalf of the investor.
WHY DIRECT ENERGY INVESTMENT?
The advantages of direct investments in oil and gas include significant tax advantages, higher cash flow and profit potential, asset diversification, direct cash flow and more control.
TO WHAT DEPTH ARE WELLS TYPICALLY DRILLED?
The San Andres is a shallow formation with typical depths ranging from 2500 to 5000 feet below the surface.
HOW DO I INVEST?
After the investor reviews the PPM, completes the offering documents and accredited investor verification, funds can be sent via check, wire or ACH.
AFTER INVESTING WHAT DOES AN INVESTOR OWN?
Each investor owns units in a partnership which in turn owns working interest in oil and gas wells.
WHAT TYPE OF COMMUNICATION SHOULD AN INVESTOR EXPECT FROM THE FUND AFTER INVESTING?
Investors will receive quarterly updates as well as supplemental information as necessary.