Liquidity of Assets

Investing in oil wells is not a short term investment.  Expected well life for wells in the Illinois Basin is in excess of 10 years.  Unlike a publicly traded stock that allows one to buy and sell it in a matter of seconds, selling a stake in an oil well could take several months.  Most investors are concerned only with payback or when they can plan to receive their full initial investment.  These returns typically occur in four years or less.
The following are steps Midwest will take to help you get out of your position:

  • First, Midwest will contact the other investors in the transaction to determine if anyone wants to buy the stake or split the stake equally among everyone.
    • This method could take only a few weeks.
    • Midwest would take no fee for helping you.
  • Next, Midwest will search for qualified buyers outside the group to see if there is interest in entering the transaction.
    • This could take a few weeks to several months.
    • Midwest would take no fee for helping you.
  • Last, Midwest can work with a clearing house in Houston, Texas that can place your working interest on the open market for bid.
    • Midwest will need to hire a petroleum engineer to determine how much oil remains in the reserve.
    • This process will take a minimum of 2 months. The auction sale process can be accomplished in as little as 45 days from property commitment to financial settlement.  Auctions occur about every 2 months.
    • The clearing house uses a sliding scale commission percentage depending on the size of the sale.  The percentage ranges from 2.5% to 10% of the sale price.
    • A minimum bid can be set to retain interest in the occurrence that the bid is not received during the process.

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