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1031 Energy: O & A about exchanging from real estate into oil and gas

Question: Doing a 1031 from rentals into oil property appear to be a desirable apporach. To give me a sense of liquidity/cost/profitability could you let me know:

The proceeds of a rental property into an oil and gas producing lease is an option. The oil property would be held under an oil and gas lease, and can be sold via an oil and gas auction, private sale etc., similar to real estate, but you dont have to engage a real estate agent. Search the web for The oil and gas Clearinghouse, energynet.com etc., there are a few auction companies out there. The profitability depends on the price of oil and gas and the status of your property, similar to real estate. We have no control of prices. The cost depends on the current production, upside of the well(s) etc. We try to offer our properties on a 12% rate of return, however, the price of oil and gas dictates the ultimate RR, therefore we have no control, similar to real estate (supply and demand).

a) What has been the average Days On Market for these tenant in common interests to sell for the ones that you have listed/sold this year?

The days on the market do not really apply to our sales. We could put the properties in an auction and theyd be sold that day. We specialize in placing 1031 exchange monies from real estate owners, such as yourself. Therefore we do not have a multi listing for the properties.

b) How many such listings do you currently have?


At this time we have available interests in the Louisiana. The minimum investment is $200k.

c) How much commission do you charge if I decided later to sell it thru you? Or alternatly, who can I sell it thru?


Youre welcome to sell through anyone you wish. There are several options in which to sell a property, to other interest owners within the property or through an auction. We dont focus on selling properties of others, but wed definitely try to steer you in the right direction.

d) If oil/gas prices were to stay unchanged, how much would a typical decline in price per year be because of depletion of the product?

Every oil and/or gas well is different when it comes to decline curves. Granted, those that are in the same field, have the same characteristics will be similar. Secondly, oil and gas owners enjoy interesting tax benefits; check out the tax calculator on our web page, comparing real estate tax burdens and/or benefits and oil and gas tax benefits. Oil and gas offer an automatic 15% depletion of the gross revenues.


Thanks again for your interest, please call anytime to discuss 1031 oil and gas exchanges.

Dana Veitch

303-829-7306 direct

www/1031energy.com

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