Speaker 1: Reworked wells and drilling into understanding like what the reserves,
so knowing how much oil is underneath, right, again you
drill into that. But the other piece to add that
you know, really makes us successful with the investments we've
done as well as raised for is the idea of
portfolio of wells. So just like a property, there's a
difference between a single property, right who may be doing well,
may not be doing well, but the combination of all
of them are really then the opportunity to have i
mean really just you know security again, this thing, this
concept called like a rent roll.
Speaker 2: Right, you were listening to Carrie.
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Speaker 2: And welcome you are watching and listening to the Financial
Survival Network. I'm your host, Carrie Lutz. Well, today we're
going to learn about how you invest in oil and
gas wells without buying a stock, Actually investing in the
physical will getting a percentage of its profits and a
percentage of its tax benefits. Is if you know anything
about oil, you know there are huge tax benefits that
accrue when you own a producing well. Paul Graham is
with us, Paul, Hey, how do you go from real
estate broker, real estate agent to selling oil and gas participations?
Very very carefully?
Speaker 1: Sometimes the road is unknown, right, But one thing I've
found through just my careers, I found that real estate
was very interesting to meeting. I did portfolio commercial office
leasing when I was a broker and really found that
I'd want to be in the industry and self. But
just the investment, the numbers of things were just fascinating
to me. One of my superpowers is connecting people to
capital and so behold with Strengthfinder two point zero, a
little bit of time and knowing the right people kind
of landed on the planet called the oil and gas investing.
Speaker 2: So all right, So I guess there's some similarities here.
Speaker 1: Yeah, I mean there's a number of different similarities. Like
the best way that I go about to like explain
this is because most people are familiar with syndications in
the multifamily space, mainly because there's more multi family properties
than you know, other types of assets. And traditionally that's
how people like get into commercial real estate. Right, they
know someone who's doing a syndication and they're like, yeah,
I'm an expert in you know, multifamily because I lived
in an apartment, right, And no shame on, that's just
more of like they're familiar with it, right, And so
as you look at like how you're comparing them, if
you will, from like an investor perspective, a multi family
property has a rent role, right. Oil and gas is
a little bit of an amoeba. What I mean by
that is you can either poke a hole in the ground,
right exploratory, it could have oil, it could not. The
specific projects that myself and other partners have like raised,
you know, at this point over seventeen million dollars for
I mean, we actually have a current project right now
is on a portfolio of wells to rework existing wells
as well as drill new wells on what is known
for oil reserves.
Speaker 2: Right.
Speaker 1: So just like a rent role, you know, like what
has happened, what will happen, and then you're just improving it, right,
You're going into those rooms and you're improving them, right,
and so really it's just then a transferable type of
thought process. And I really want to you know, went
through that explanation be because again my point is also education,
because you could also talk to someone who's doing oil
and gas investment, but they could really just be talking
about a poke a hole in the ground, if you will. Right,
there's also vertical and horizontal wells, which you know, they're
kind of at nuanced sorts, but again just kind of
comparing apples to apples, they're kind of just a different
you know color.
Speaker 2: Really. So Okay, so you're selling some reworks which are
producing wheels that need redrilled because of the change in
the composition, off in the nature of the oil reservoir
that they're dealing with the projects you're marketing. Now, are
they producing currently producing oil?
Speaker 1: Yes, they're producing oil. If you know, I had my
phone you know, next to me, I could shoot you
a photo of some you know oil seeping through for
another well that we just you know, brought on live
as we're taking capital again to your point, like these
are investing into the actual wells themselves and with that
ownership and so it's a you know, an intentional bit
for when and how you know these wells are you know,
brought on and how much they're producing, because again, we
have levers as opposed to I mean yeah, kind of
like multifamily, you can't really say, hey, person, can you
leave for two weeks we kind of want to increase
rents and then you can come back. Right with oil
and gas, you have those levers with the commodity market,
and so you can then play that game really just
then say we can maximize returns given the you know,
current economic conditions as well as you know, minimize risk
to ensure that we're not just producing for the sake
of producing, right, So gotcha?
Speaker 2: Gotcha? Okay, so so there's some production already. Nowten do
the distributions get paid out? Are they monthly? Quarterly? As
I work?
Speaker 1: Yeah, so I mean these are you know, monthly distributions.
I mean, really, it's just going to the mailbox at
this point, right, And I mean that's sincerely of like
it is going to the mailbox. It's not like a
tenants and toilets you know sort of situation which I've experienced,
you know, being a you know owner in real estate.
And then just like with syndications, you know, oftentimes there's
complex you know, cap tables or what have you. But
I mean this is really just a legitimately going to
a mailbox type of you.
Speaker 2: Know, anaria. Okay, so, uh, what kind of return that
we look in at here? Yeah, I mean.
Speaker 1: We're we're i mean underwrote initially like a sixty dollars
barrel type you know, framework around that twenty percent. I
mean really with oil where it is today and the
returns of what we're actually getting today, I mean is
between thirty one to thirty three. There's another project we
previously had that you know, produced I think it was
like forty one. So there are you know a number
of these small factors. But it's just to say from
a track record standpoint, these at least in my opinion,
are enough to get out of bed. Single digit real
estate type returns are not. I'll kind of stay in
bet at that point, right. You know, there was a
high season for you know, the past four years or
really like three years if you will, and then now
again it's just to say, hey, it's shifted to diversification
with something.
Speaker 2: Like so, so who are the companies that that are
selling these participations and what do I need to know
about them.
Speaker 1: So I mean, really, just like any syndication of sorts,
it's you know, knowing the operators themselves as well as
the details of kind of the market they're you know,
playing into. Specifically, you know, with the one that we're
raising for today is for through the Travino family. So
it's a third generation oil and gas family that, with investments,
have then been able to expand you know, their current
you know, operating opportunity of which again returns to investors.
This is in the Jack County, Texas area, and so
you know, very well versed in terms of you know,
how oil can be you know, produced as well as transported.
So it's not in some you know, boomy kind of
place where it's a gold mine, but you know, by
the time it comes back, it's you know, you're you're
using gas to kind of transport the gas kind of thing, right,
So that's a little bit about it.
Speaker 2: So all right, so, hey, what's the minimum investment in
these types of syndications.
Speaker 1: All over the board? Again, just kind of from an
education standpoint, fifty tends to be the minimum for this
and kind of another project, it's really been the minimum
of one hundred thousand, and you know, we've done different
projections so that people can kind of play with numbers
of Hey, if I invested one hundred or two hundred,
what you know, could that really turn into and again
from people coming from real estate to oil, this tends
to be the easiest you know, transfer of amount invested,
especially because at least with this project you are able
to invest with ten thirty one exchange money, which kind
of changes the game, right if you've done a ten
thirty one, or anyone else who's done a ten thirty one,
like I get stressed from it. I'm in the process
of maybe schooing another one right now. So just already
knowing what I'm gonna invest in and not have this
like unknown sort of piece is just in comforting to
say the least.
Speaker 2: So sure now I could see that for sure. All right, So, uh,
you have to be accredited for this type of thing
or unaccredited?
Speaker 1: Yeah, I mean, for like, we've we've a couple of
projects that are both non accredited and accredited. For myself
as well, it's just to say like, hey, like, let's
have a conversation. The reason why I'm saying that is
because I've looked at a number of thing of leveraging
my own finances where oftentimes it's like do I have
fifty grand like in the bank to invest? Maybe maybe
not right, but there's things like iras that you can
you know, transfer into or you know, getting maybe a
he lock on your primary to invest. And I'm not
saying like you need to do these things, or my
point is, you know, certainly want to just be a
resource to educate individuals around oil and gas because it
is a nuance and some people are to the level
of sophistication in terms of explaining and education as well
as operating right. And so really just want to ensure
regardless of where and how you're investing, to ensure that
you know, you have a great investment with amazing operators
and you're able to do it. Sometimes people don't feel
like they can. But by golly, if you're using this,
especially for tax savings, like are you just going to
pay the I R S or going to invest in
something that then offsets you know that that income, right,
and so playing with that working with your CPA. We
work with a number of CPAs to help just support
that for either you know, this tax season or you
know even next so you actually know what's possible and
you can do this thing called planning, because there have
been years of my life where it's like, oh, don
I really should have done that last year, and then
I don't do. So that sort of planning sort of
piece is uh is an important aspect. But like I said,
you know, we have everything tighten it and button up.
That's at least why I put my name on it,
because I want to always do the best that's possible
within just life but also just you know, with relationships,
with returns, things like that. And so that's why we
really enjoyed working with a third generation you know family
oil and gas family.
Speaker 2: That is so good. So what's the profit split between
the promoter and the ters? How does that work?
Speaker 1: Yeah? So I mean there's a bunch of different What
am I trying to say that? Yeah, I mean I
R I r R is kind of the best way
to go about it, because this isn't a when you
compare truly like apples to apples, right, there's different nuances.
So it's just to say from an IRR standpoint, you know,
twenty six percent of sorts of leases from you know,
our underwriting and uh, you know, depending on what's invested
and what's then return in terms of expenses. It's not
like a traditional waterfall type model in the short explanation,
So okay.
Speaker 2: Gotcha, all right, So obviously it's so how have you
seen these deals pay off in the past to have
they all worked out? All your deals?
Speaker 1: So all of ours? Yes, all oil and gas. No,
again from my explanation of just kind of like poke
on the ground, right, like that's a one hundred percent
well maybe one hundred percent risk, but that's not a
risk I'm willing to take. I take calculated risk. That
just seems like gambling to me personally. So again reworked
wells and drilling into understanding like what the reserves, so
knowing how much oil is underneath, right, again, you drill
into that. But the other piece to add that, you know,
really makes us successful with the investments we've you know,
done as well as raised for is the idea of
portfolio of wells. So just like a property, there's a
difference between a single property right who may be doing well,
may not be doing well, but the combination of all
of them are really then the opportunity to have i
mean really just you know, security. Again, this thing this
concept called like a rent roll right to you know,
stabilize the overall investment, not just that single well, single asset.
Speaker 2: So very difference being you have a lease of tenants
beside leases, and I can't say, well, the price of
housing down this month, so you're getting less money from me,
but maybe next month it'll go up, so I'll pay
you more in rent. Obviously there's market risk here, as
there is a market, but sure it's more immediate. Whereas
rents might go down in a given area, you're not
going to have to worry about it till the lease
renewal comes up. But with the oil, your impact from
market to fluctuations is more immediate.
Speaker 1: Right, Yes, it is impactful in the sense of the
direct barrel price of oil. Right again in my earlier
comment on really levers, right, so if prices are high, well,
then great, Like what does that mean in terms of
how the operator is going to maybe reduce some of
the production on some wells or maybe all wells, So
that way, again it's maximizing returns. So even though yes,
ideally you want the highest price barrel of oil, there's
also something to consider a rent because it is oil
and there's only so much oil within that you know,
specific reserve. At least with that technology we have today,
we initially weren't able to go more than like a mile.
Right now we're going all which ways and whatnot and
constantly finding oil. My point is that just because oil
is high doesn't necessarily mean that we're going to produce
at all you know, heights and just you know max
it out right, And that's not you know, my role
essentially like as an operator. But it's something to understand
for operators that they understand this thing called basic economics,
right supplying demand to your point to then city to.
Speaker 2: A few people understand that.
Speaker 1: I mean, hey, I I took it. I took a
class or two in high school. Then you know, going
up and curve going down. Then sometimes it's kind of
a lime and a coconut. But really it's just to say,
like netting, like the operator for how they think that's
also going to be you know, how they are in
the decisions they make, right, same thing with multifamily, Hey
are we going to do you know, cap calls? Are
we going to do even you know, all renovations of
all the property, or are we going to do over time, Like,
it's really then understanding what's possible and then being comfortable
with the risk that someone is taking on with the
investment and how they're going about that as well, because
you can maybe vastly disagree how they're approaching it. But again,
if you're getting the returns, do you care? But again,
understanding how they could you know, pull those levers is
an important for any investment, right. This is regardless of
oil and gas. So and that's just what I found
from investing in PACID type investments or raising funds in general.
Speaker 2: So this is not for the faint of heart, right,
I mean you think somebody who's been a real estate
investor twenty thirty years, how do you feel? You know
what I'm saying, I hear it.
Speaker 1: So my parents were in education and were you know
lockeed Martin kind of security, right, just like had to
be consistent, like just you know, ucracy to the m degree. Right.
My point is just like people will go outside of
their threshold with more information, and with more information then
it's giving themselves permission to make a decision, right, and
so say hey, like here's the type of returns, here's
the benefits. It's this thing called oil and gas again. Education. Now,
will the twenty thirty year veteran do this or do that?
I'm not sure what's their risk portfolio, what's you know,
their available cash? Are they looking to sell a property.
I've seen people who were house flippers who had a
seasoned career with it sell everything, stop the business, put
everything into oil and gas and is now coaching individuals
on mindset and success. And he's doing well not only
for his business but also for his investments. And it
really gave him the opportunity to live the ideal life
that he really felt like he could. And that's my
main mission reason behind just like talking about investments or
just like bringing education, like two people, because oftentimes we're
maybe one investment that is vetted very well right away
from a different type of life. Maybe it's on the
beach right with the lines in the coast nuts. Maybe
it's just you know, a little you know, Disney World
type of play money, right, or maybe it's more security,
maybe those type of things. It's definitely not for the
faint of heart. But if anyone has wired over, you know,
fifty to five hundred grand buying their primary residence, you've
already done the same garden thing. It's really just an
investment in yourself and in your future than necessarily in
the four walls that you're you know, really spending kind
of the day to day around.
Speaker 2: So's totally get what you're saying. And you know, I
agree with you, but you know, and I see some overlap,
but you know, it's not like you're investing in a
business invest in the oil field, although you are to
some extent, but you know, it's just a different, different mindset,
I guess is the term I'm looking for. All Right,
so you involved in this? How do people connect with
you on the web and how do you uh, how
do you get how do you buy your first oil?
Speaker 1: Well you can, I mean, if anyone's going to buy themselves,
you know, good luck. But jokes aside, it's just saying that,
you know, yeah, I hear you. It's just to say that,
you know, for us, you know, the best way to
connect and like have that conversation is going to Traveno
Resources dot com slash invest reason being is just gonna
give you the highlights of like y oil and gas
and you know, an opportunity to schedule a you know
call with myself as well as the main operator of
the company to give the information and resources you need
to make the best decision for yourself. I'm all all
over you know, social media, what have you LinkedIn? Can
be a good way to connect with me.
Speaker 2: Paul H.
Speaker 1: Graham last name spelled that Graham Cracker and you know,
happy to help with anyone for education as well as
I mean really just even conversation on capital raising. Sometimes
it's kind of tough right now, right in the twenty
twenty four market, we're kind of holding back. But we've
really seen how people have been holding back, waiting and
then come you know, election, and I mean there's at
least from some capital institutions or kind of levels like
they're kind of waiting to then just you know, press play.
So some good opportunities out there.
Speaker 2: Okay, Hey, you got a question for Paul and myself,
shoot me an email kl at carrie lets dot com.
I find the oil of investing very intriguing. I've done
pretty well in the past when I've done similar types
of investments. And hey, you'll find a link right to
Paul's site, go over to Financial Survival Network dot com
and while you're there, just click the button and subscribe
to our free newsletter. All really intriguing investment opportunity option
and we'll look forward to having you back on again.
Speaker 1: Harry, thanks so much for the time, got a blast.
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than ever,