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The Oil Market has just
Made A Paradigm Shift

We have not invested in oil drilling projects for 5 years, but we believe it is time to participate in Proven Producing (P1) wells that offer negligible risk for the investor, says William Velmer, editor of S. A. Advisory financial newsletter.

The payout to the partners are estimated to be in the first 18 months of revenue from sale of O&G. This is based upon $55 WTI and the tax advantage is excellent. These wells have multiple zones and have a very long life.

We have purchased interest in this project being offered.

Great time to invest in Oil and Gas Partnerships

1. Huge hedge funds have turned bullish and are acquiring positions in tier 1 and 2 domestic and International O&G equities and producing properties.

2. Saudi Arabia and Russia inked a deal that would make deeper cuts in production greater than anticipated in order to firm up the market. The group of more than 20 producers agreed to cut an extra 500K barrels/day to take their target to 1.7 million bpd or 1.7% of global demand. The Saudi's could cut even further (additional 500k).

3. The Saudi's also want firmer oil prices because they intend to float their prize jewel oil IPO (Aramco) during the 1st Q of 2020. It is obvious that they need higher prices in order to make their deal attractive to world investors.

4. Oil inventories have surprisingly drifted lower, which is another bullish indication for firming prices.

5. Regardless of the firm prices domestically the equity market has been very reluctant to fund O&G companies. This has caused many O&G entities to scale back their drilling programs because of lingering lower prices. All O&G companies are always hungry for cash infusions. Fracking is extremely cash sensitive so production in the US, we believe, will flat-line for the foreseeable future.

6. The number of rotary rigs drilling for oil again is down from the past week 3 to 668. There are 219 fewer rigs targeting oil that last year. Rigs drilling for oil are 83% of all drilling.

7. Iran is another "wildcard" that could lash out at production from competing Middle East producers. We have seen in the past that Iran has attempted to mine oil tankers in the gulf, bombed Saudi oil installations and pirated oil tankers. They also have and continue to threaten the Strait of Hormuz which 1/5 of the world oil passes through on any given day.

8. Another potential price appreciation could occur if there is a China trade deal and if the world economies get a bump.

9. DUC's (drilled but uncompleted) number in the thousands. The market is drawing false assurance from this backlog that will potentially flood the market. The scale is much lower. A more accurate barometer would be months of supply, on which indicate that the number of DUC's is lower than average. Unless something happens to dent demand, the oil market is far tighter than many observers assume.

10. Goldman Sachs raised its oil price forecast for 2020, citing tigher-than-expect inventories after OPEC and its allies agreed to deepen oil output cuts through the first Q of 2020. The Bank has revised WTI outlook from $55.50 to $58.50. The Bank believes it is an important shift in OPEC+behavior to managing physical surpluses and deficits rather than trying to correct perceived long-term imbalances through open-ended commitments.

The primary reasons above have made our decision very easy to participate in this oil program. The well is currently producing and undergoing necessary rework and down hole tubing. The reserves for this well still equal 1.4 million barrels+ gas.

This well is (P1) – proven and producing.

It should be noted that we have been doing business with Energy Equities led by Mr. Chauncey Buck since 1991. Please feel free to visit and review their current website: http://www.energyequities.com.

Info about the Actual Opportunity
Proven Oil Prospect
Empire 1 (Producing Well)

This project is to develop proven reserves on State Lease 18165. The lease is located under the Mississippi River and is accessed from direction wells drilled from an onshore pad on the west bank of the river. These reserves are called Proven (P1) in accordance with the SEC classification of "90% probability that the quantities actually recovered will equal or exceed the estimate". (Source: Ralph E. Davis Associates and Paul B. Jones, CPG).

The Empire 1 working interest is in a producing existing well which produces over 500 barrel of oil+gas. This well is going under a normal lower hole maintenance work-over this month in the same zone it is producing.

Based upon a $100k participation or 1% there are 2 different scenarios that we have calculated.

If we use $50 WTI and $2.00 MCF of gas and base the assumption that we will produce 475 bopd and 1 MCF of gas the payout would take around 21 months. Taking these numbers into account your initial investment of $100k would be paid back. You would also get all of tax advantage and additional production that could last decades.

If we use $55 WTI and $2.25 MCF of gas and base the assumption that we will produce 475 bopd and 1MCF of gas the payout would take around 18 months. Under this scenario in 18 months your total investment would be returned ($100K) and you would have also taken advantage of the huge tax advantage. Again for possible decades you investment would continue to deliver attractive returns.

As you may or may not know at present WTI is $59.27/barrel and NGAS is around $2.27/MCF. Based upon current valuations the payout is around 14 months. Please keep in mind that higher Oil and Gas prices only enhance your turn.

Please note there are excellent tax advantages for this specific kind of investing.

Based upon the 1% or $100k investment it should be noted that $60k of that amount is consider an intangible and is a very valuable write off. The tangible tax relief for the same $100k is around $10k the first year and about the same for each of the next 4 years.

OVERVIEW: We have a quality and extremely low risk project that is currently producing. The estimated returns are exceptional, the tax advantages are excellent and the overall returns could easily surpass our lowball estimates. If you are looking for a long-term monthly income stream from a (P1) producing well~one should take a serious look at this project before all available interest has been taken. Smaller amounts of interest can be purchased.

For additional information concerning “the Empire 1” call Chauncey Buck at 1-800-746-4427 or email him for complete package ~ buck@energyequities.com. PS: You must be an accredited investor stipulated by SEC guidelines.

Editor’s Note: All opinions expressed herein are those of William Velmer, S.A. Advisory investment newsletter. Mr. Velmer has edited S. A. Advisory since 1984. Mr. Velmer was The Wall Street Journal Dartboard Challenge #1 Winner, with the highest % Gainer of all 10 years.

S. A. Advisory recommends low priced Nasdaq and Nasdaq Bulletin Board opportunities that are fundamentally undervalued and underfollowed, midcap higher priced stocks that are out of favor and turn-around situations, and international investment opportunities. For more information and to sign up for FREE email service visit www.saadvisory.com.


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