Transactions I, II, and IV above do not reflect the structural changes enacted by Midwest Energy Partners on September 1st, 2011. Beginning with transaction V, Midwest required operators to provide a minimum of five different leases within each transaction so that drilling events would not be effected by poor sub-surface/geological conditions such as poor porosity, frequent fractures, and low bottom hole pressure.
The description of why two of the first four transactions have performed below expectations to date are as follows:
Transaction II and IV
Both of these transactions involved purchasing production on one property only. While oil was located in each of the wells that were drilled, they all had poor sub-surface issues limiting their production of oil. The lower than anticipated of oil production combined with the up-front costs to acquire the production has resulted in below expectation results. While the strategy to acquire the leases for future drilling was sound, the error made was to acquire single leases in each transaction. As the sub-surface problems existed throughout both leases, we had no opportunity to mitigate these wells with other drilling events on other properties.
All info as of 12/31/2014
1) These dates are estimates and could change.
2) Can’t be determined at this time.
3) Midwest uses Average Invested Capital for ROI on funds that have not had all their capital deployed yet. Once fully invested will only show straight ROI.
4) Estimated Payback is determined by Annual ROI Net of Midwest Fee
5) Can’t be determined at this time, since 100% of the principal has not been deployed yet.
6) Sold Transaction IV back to Operator in December 2013 due to lower than expected performance, additional capital needed, and time required to successfully develop property. Total Raise was $1,341,628 and sold for $704,000.
7) Half of the proceeds raised in this LLC went to acquire a number of leases with existing production. Only a small portion of these leases have been drilled to date and additional capital will be needed to complete the project so that production can significantly increase.