A family member was recently approached about an investment opportunity (Working Interest/Non Royalty Interest in Irion County). The company is Fusion Resources and the well is the Hoyt No.1 CH. The Texas Railroad Commission identifies the area as Lease #12553. It was a vertical well drilled by Comstock Energy. Fusion is looking for investors (minimum buy-in of $50,000) to develop the well as a horizontal drill. I don’t see any horizontal drilling in this part of Irion County. Anybody have any information on this company or this area? Thanks in advance.
Run away! Run away!
Ok, just kidding. I don’t know the Company involved nor do I know the particular area.
What I do know is that retail-level drilling partnership interests are rarely a good deal. Many (again, I do not know this Company specifically) of these deals are so loaded up with fees that even if a decent well is drilled, the returns to the investors are minimal. Most non-industry participants simply do not know what is customary and what is not. Read the fine print, particularly the Joint Operating Agreement. If the JOA is not on a standard AAPL Model Form, that is a red flag for me.
If this is play money, fine, but if this is real money to your family member, I would seriously advise you to have an industry professional advise you.
Good luck.
1 Like
I looked the property up on an API map and the property is East of Hwy. 67. There appears to be a little oil field on the Crews property that a lot of the wells have been drilled as far back as 1993. There is only one horizontal well shown next to the property and it has only been approved as a permitted location with no drilling. It appears that the Horizontal play lies South and West of Hwy. 67 with no activity other than the one mentioned. The common knowledge is that this area is close to, if not on, the Eastern Slope. My wife’s family has property app. 2 miles further east and we have acreage still unleased so it would be interesting to see what the permitted well does, if it ever gets drilled. Good luck.
Steve_Durrett, I could not agree more.
My major client’s CFO was offered to join in a well where he and his sister had a major portion of the minerals. His sister was hot to trot and he was more cautious. I told him that the Operator would likely make a well, but just because you had an AFE does not necessarily mean that is the end of your financial responsibility, even if they drilled the well at or under AFE costs.
I also told him that if they made a well, it was likely that a compressor would be required to put the gas into the sales line.
He decided to pass and his sister went all in, to the tune of a $300K buy in. It made a piddly gas well, that was drilled into a partially drained reservoir. The compressor rental was more than the value of the income stream, so she was on the hook for plugging and abandoning costs.
It cost her $500K to believe the promoter/Operator whom she went to church with. Also, he had the property pledged as collateral prior to her buying into the deal. I don’t know about you, but that is a lot of money to me.
The moral of the story is that when a deal hits the tertiary market, where telemarketers are trying to sell shares to doctors, lawyers and Indian chiefs, it is because the prospect cannot and will never stand industry scrutiny.
Let the buyer beware. If you made your money in the restaurant business, invest in that business, where you have experience. Leave the pro explorationists deal with their own kind.
Don’t fall for a smooth talker with a sure thing.
Regards and Happy New Year.
Buddy Cotten
1 Like
Where is your wife’s family property? I may have someone who would be interested in leasing it.
This topic was automatically closed after 60 days. New replies are no longer allowed.