U.S. Energy ‘Echo’ Project Distributes 61% on Initial Asset Sale
December 12, 2018 – Arlington, Texas – U.S. Energy Development Corporation, an independent oil and gas operator specializing in direct participation programs, has sold a portion of its Echo project to Devon Energy (NYSE: DVN) for a 61.35% distribution net to its Strategic Energy Income Fund V LP; one of the company’s Acquisition Funds. The Echo Project was acquired by the Strategic Energy Income Fund V LP in early 2018 and proceeds were distributed in October 2018.
Strategic Fund V’s original ownership in the Echo project included 1,140 net mineral acres for future oil and natural gas development in the northern Permian Basin in New Mexico. Capitalizing on rising acreage values since the time this project was initially negotiated in the summer of 2017, this asset sale included approximately 17% of the Strategic Fund V’s current assets and a gain of greater than three times the value the company had assigned to the acreage when it was purchased in early 2018. The return on investment, ROI, totaled 345.7% (footnote 1)
“We are very pleased with the results on behalf of our investors as well as our ability to complete full cycle transactions in such a short period of time.” commented Matthew P. Iak who serves as the company’s EVP and Director (footnote 2). “Additionally, with this sale the Fund still retains a sizeable portion of the original asset and we feel we have opened the door to working with other large and reputable companies like Devon Energy (the purchaser in this sale).”
U.S. Energy continues to look at a multitude of options to monetize the remaining Echo assets; whether that be through the potential acquisition of additional assets or by new divestitures. Recently, the Strategic Fund V elected into approximately [$5.5 million / updated April 2019] of new drilling in the Permian Basin inside the Echo project.
The Strategic Energy Income Fund V is U.S. Energy’s fifth in a series of direct investment acquisition funds (footnote 3).
A leader in oil & gas direct investments for clients with tax planning needs, U.S. Energy blends operational and financial innovation with a forward-looking approach. Since 1980, U.S. Energy has invested in, operated, and/or drilled more than 2,400 wells in 13 states and Canada; deploying more than $1.4 billion on behalf of our partners. Today U.S. Energy oversees daily production in excess of 7,500 barrels of oil equivalent (BOE) and holds numerous drilling records across south Texas.
Past performance is not an indication of future results. This information contained in this document is for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can only be made by a Private Placement Memorandum to accredited investors. Oil and gas investments involve a high degree of risk and are not suitable for all investors. You should purchase these securities only if you can afford a complete loss of your investment. Please refer to the Risk Factors section of any specific Private Placement Memorandum. The equipment pictured in this release is not owned by, and will not be owned by U.S. Energy Development Corporation or its partnership(s), unless otherwise noted. The assets pictured within this brochure accurately represent the assets U.S. Energy or its partnerships may own. Please refer to the Areas of Operation section of any specific Private Placement Memorandum.
footnote 1 – The percentage of assets sold is calculated based on the net acres sold divided by the total net acres owned by Strategic Fund V in the Echo project. The return on investment (ROI) is calculated based on the percentage of net assets sold divided by the total return to the partnership; calculated from January 1, 2018 to October 1, 2018. 61% investor distribution reflects a one-time distribution from the sale of 17% of assets in the Echo project. New investors who enter the fund after September 23, 2018 are not eligible for revenue from that asset sale. The distribution to investors in Strategic Fund V is calculated based on the net investor proceeds from the Echo Project sale divided by the total investor capital. The revenue eligible for distribution was calculated based on the net proceeds from the Echo Project sale. Distribution reported is from the sale of assets in the Echo project owned by Strategic Energy Income Fund V LP dated October 2018 and is not an indication of the current or anticipated return from other assets that may be owned by Strategic Fund V or other U.S. Energy Development Corporation.
footnote 2 – Mr. Iak is President of Westmoreland Capital Corporation. Securities sponsored by U.S. Energy Development Corporation offered through Westmoreland Capital Corporation, Member FINRA/SIPC.
footnote 3 – The offering referenced is for Accredited Investors only.
Securities sponsored by U.S. Energy Development Corporation are offered through Westmoreland Capital Corporation (CRD 11469), Member FINRA/SIPC – an affiliate of U.S. Energy Development Corporation.