CrowdFunding News Wire, EnergyFunders.com Announces Historic Launch,
UPDATE: The first ever oil and gas well to be crowdfunded was the Wilson #2, just 9 days after the launch of EnergyFunders.
EnergyFunders.com is a new proprietary platform to allow accredited investors to participate in pre-vetted oil and gas drilling projects submitted by reputable operators.
EnergyFunders was founded by three Texas lawyers who felt oil and gas investing could be done more efficiently. Never before has there been one online platform offering investors access to oil and gas drilling projects pre-vetted by Texas lawyers with all due diligence documents available for review and easy online signing and payment options.
Executing the agreement to invest in an oil and gas project for verified accredited investors is as simple as
1) Choosing your Buy-In Amount,
2) Signing Electronically, and
3) Paying via E-Check (or mailing a check, wiring funds or payment using Bitcoin)
As a result,Investing in Oil and Gas projects is now Online, Simple and Transparent.
You may have heard of the success of real estate crowdfunding websites which allow accredited investors to increase their returns in an investing environment characterized by low interest rates and low returns. Investors responded positively. We think that oil and gas investing is the next logical investment category to bring to an online, simple and transparent platform.
Why Oil and Gas?
Investing in oil and gas wells yet to be drilled, or wells that need to be re-worked to stimulate production, offers potential returns that outsize traditional investments – including real estate REIT’s – by hundreds of percentage points. Oil and gas projects offer diversification and potential high returns to any investment portfolio and come with tax benefits included.
The downside for off-line oil and gas investments has traditionally has been that investors have been faced with sky high buy-in amounts, lack of transparency and inability to diversify.
EnergyFunders reduces the buy-in needed to participate in drilling projects, allowing investors the ability to diversify risk across multiple wells. You can rest assured your projects are being managed by lawyers working hard to manage and protect your investment. The upfront negotiating work has been done for you. All documents are ready to sign electronically. Payment can be made electronically or via check or wire transfer, whichever your preference. Bitcoin owners can even pay directly using their bitcoin.
How it Works
EnergyFunders receives a proposed project from an oil and gas operator, vets the project and negotiates terms with the operator. EnergyFunders and the operator sign an agreement to allow EnergyFunders’ investors a set time period (30, 60, 90 or 120 days) to raise funds. Under certain circumstances the term can be increased, but generally those are the times frames we work under. For projects not funded, investors receive their money back. For projects funded, the terms have been negotiated and EnergyFunders moves forward with the operator to finance the project. On successful wells, EnergyFunders receives 10% of revenue as its sole compensation for putting the deal together and managing investor interests. We anticipate payments to be made quarterly, but sometimes prudent management will require reserve funds to be maintained to maximize the opportunity for revenue generation.
Why Operators Should Use EnergyFunders
Crowdfunding has already proven itself as a method for raising large sums of money. Oil and gas operators who want to focus more on exploration and production and less on raising funds would be well served to try crowdfunding.
Financing is free for oil and gas operators because our 10% stake burdens investors only. We even allow operators preferential rights to purchase when EnergyFunders seeks to divest – on behalf of investors – a well that was once productive but has since become marginal.
Finally, an operator working with EnergyFunders is able to deal with one working interest owner, as opposed to many. EnergyFunders is the record title owner for any wells it finances.
Quality operators like you can now make their case directly to the serious investor.
How Do I Get Started?
Investors should simply sign up an “Investor”. Before viewing projects, you must submit documentation verifying you are an accredited investor. Securities laws requires that we know you are accredited. The full definition can be found here but, for individuals, accredited investors are generally:
- A natural person who has 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 of such person; or
- 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.
Operators should simply sign up as an “Operator” with an oil or gas project. You’ll have to tell us a little bit about yourself and wells you’ve drilled. Reputable operators will be approved and allowed to upload projects to the site for EnergyFunders to further vet.