WHY INVEST IN OIL AND GAS DRILLING VENTURES?

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1 WHY INVEST IN OIL AND GAS DRILLING VENTURES?

2 PECOS DEAN DEVONIAN FORMATIONS CLINE SHALE WOLFCAMP WOLFBONE SPRAYBERRY ELLENBERGER OPPORTUNITY KNOCKS IN OIL AND GAS IT S AN ENERGY-CHALLENGED WORLD Foresighted investors, take heed! The top players in oil and gas have enjoyed up to a 10:1 return on their investments in recent years. It s clear, growth in oil and natural gas is being fueled by the world s changing energy needs. Worldwide demand is increasing and will continue to increase over the coming decades. Sophisticated investors recognize that. Individual and institutional investors from all over the globe entrust billions of investment dollars in the drilling for oil and gas in the United States. Look to the oil and gas industries to deliver longterm economic value, cash flow, dramatic upside potential and permanent tax benefits. The global population s energy needs are expanding exponentially on a daily basis. Consider this: BY 2035, WORLD ENERGY CONSUMPTION IS PROJECTED TO GROW BY 58% WITH OVER HALF OF THAT ENERGY SUPPLIED BY OIL AND GAS. Investors couldn t be happier with the long-term economics of oil and gas as supply-and-demand of global energy tips to the demand side of the scales. Smart and sophisticated individuals, prestigious U.S. and foreign investment houses both here and abroad, pension and government funds, major industrial companies and banks and looking increasingly to oil and gas to deliver consistent profits and guaranteed growth.

3 WORLD POPULATION PROJECTIONS, 2050 The world s population, today numbering some 7.2 billion people, may approach 12 billion by the end of this century. By the year 2020, it will most likely have increased by about 1 billion to a total of 8.2 billion people. By 2050 the global Population will grow from 7 Billion to 9.8 Billion = 1 Billion People Over 93 percent of this growth will take place in the developing countries. As former Communist countries enter a world of free market enterprise, emerging markets, powered by a low-cost workforce and ever-increasing consumer demand, look to oil to fuel GDP growth. In the light of predicted life expectancy increase and global population rise, consider the unstoppable demand to fire the factories, fuel the cars, light the new houses spark the home entertainment systems and launder the clothes in Southeast Asia and Eastern Europe which in turn will feed countless new business opportunities in the oil industry. But it s not just growing demand for the product that makes investment in oil and gas a no-brainer. Oil and gas fields boast a high intrinsic value, one that, as tried and true as an exceptional red wine, increases with age. Field production is expanded regularly as new wells are completed, as production techniques are refined, as secondary recovery options are improved. Productive zones previously bypassed are often redeveloped. The advent of new technologies is paving the way to guarantee supplemental yield to gradually replace that from primary reserves which, having been actively producing for decades, are now slowly depleting. Tech giants like IBM exploring smart -field approaches through improved data integration and business analytics are well on their way to creating systems linking a field s business functions into one smooth system. The outcome: upstream oil and gas producers can look in the coming years to raise production levels, recovery rates and cost efficiencies. As the field value increases, so does the product value. The steadily climbing value of the gas and oil industry will come as no surprise to anyone who experiences first-hand at the gas pump or when paying their home heating bill the rising cost of petroleum and gas products.

4 OWNING JUST A FEW POINTS, OF NET REVENUE INTEREST OF AN OIL AND GAS WELL, CAN BE EXTREMELY VALUABLE The Permian Basin is considered the blue chip oil field in the U.S.A. - Pipeline capacity from Midland is 2.3MPOD Oil and natural gas, as easily-valued commodities, have proven time and time again to be one of the most essential basic commodities of the worlds growing industrial societies. So great is the economic power of oil that it has propelled relatively small countries to commercial and financial preeminence. Oil and gas are the largest business in the world. Of the top five Fortune 500 companies, three of them are oil companies. Exxon s net income alone was greater than the sales of more than half of the Fortune 500. As worldwide energy prices continue to rise, blackgold and gas owners are seeing a surge in profits. Today, the person who owns a relatively small natural gas well or two with recoverable reserves (500,000 Mcf ) of natural gas is a multi-millionaire. Oil and gas investing is a particularly attractive medium to guarantee an ongoing cash stream. Revenue checks are issued on a regular basis once production starts. Let those profits grow organically with auto-reinvest, and enjoy the income tax benefits today. With appropriate professional advice and foresighted, pre-investment research into properties, their geology, production history, drilling company and deal structure, investors can assure themselves of the quality and look at projected return on their specific investment choice. All types of investments, of course, carry a certain risk factor look to lower your own risk in oil and gas by doing your homework.

5 UNLIKE OTHER INDUSTRIES, OIL AND GAS DRILLING CAN BOAST A HUGE UPSIDE POTENTIAL. The exciting opportunity of producing high-yield oil and gas fields sets oil and gas investments apart from all other investment types. Look at a theoretical potential return in this example: An oil and gas well with 700,000 barrels of recoverable crude oil at $45 per barrel has a gross value of $31.5 Million for a single well. A single well in a field may have reserves of 300,000-2,000,000 barrels of oil per well and in many cases the wells will have multiple reservoirs that also contain hundreds of thousands of barrels of oil. Do the math, and marvel at the gross value of $13.5 million $90 million for one single well! All subsequent drilling in this field is no longer high-risk exploration, but rather a low-risk developmental activity. This is when the real profits start to roll in when drilling low-risk offset development wells in a known, high $$-valued reservoir. As of 2015, oil holds the largest share of the global energy mix, at approximately 33% of the world energy use. Trailing just behind it are coal and natural gas each taking up approximately 32% and 24% of the total energy consumption in the year Renewable energy sources today only make up less than 11% of total energy usages.

6 Partner Directly with the Operator for a greater chance of success and profits. 7S Oil & Gas has Direct Participation Programs as active joint ventures designed to allow investors/owner to participate directly in the cash flow and tax benefits of the underlying investment. Increasingly America needs ongoing domestic oil and gas production for its own security and economic future. Informed financial advisors are recommending oil and gas DPP s as part of a balanced portfolio. The two most common ways for investors to profit from the oil and gas markets are: investors can buy publicly traded stocks or participate directly in ownership in oil and gas production companies through DPP s. Generally, when investing in publicly traded stocks, these companies re-invest the majority of their profits back into the Company, focusing on their business objectives. This deprives an investor of a higher yielding return on investment. A DPP offers the strongest possible opportunity for high returns and considerable tax benefits. Oil and gas DPP s are more investor/owner valuable today than ever before. DPP s were once considered the exclusive domain of institutions and wealthy individuals, however not anymore. The U.S. tax reform act of 1983 allows accredited individuals the potential for substnancial tax savings. In fact, American citizens who invest/own in oil and gas DPP s earn tax benefits for the production expenses and income from the revenue and profits generated by the oil and gas produced from the JV's wells. Investors with well-balanced portfolios who invest/own may recieve excellent financial returns and long-term cash flow. A disciplined plan such as this allows the investor/owners the greatest opportunity to prosper from private oil & gas.

7 Let s get back to the tax benefits. For example, intangible drilling costs, including labor and other unrecoverable expenses, can comprise up to 85% of the investment, and typically can be written off. Over time, remaining costs may be written off. As well, fifteen percent (15%) of the tangible oil and gas income generated from successful wells is deductible from federal taxable income. As with all tax matters, each individual is urged to consult their own advisors as to the benefits of an investment in oil and gas and how it may apply to their individual tax situation. The demand for energy, particularly in the last 10 years has escalated as the rate of technological advancements accelerates. The increasing use of electronic devices along with our global usage increase of heating and air conditioning pressures utility companies to increase output. Electricity suppliers throughout the country, have built & are building new natural gas-fired combined cycle turbine generator power plants to meet consumer expectations. Supply of natural gas is forced to increase to meet suppliers demand just as those same suppliers adapt to increase their output to meet an ever-growing demand globally and in the U.S. The United States consumes an average of 19 million barrels of oil a day. Of the crude oil is consumes, 70% is imported. As demand continues to rise and the push toward energy independence intensifies, it is a no-brainer that domestic oil production must increase, particularly in the area of land-based fields. Currently, onshore production accounts for just 5% of our national oil and the door of opportunity is wide open, inviting investment in an exciting and durable industry supporting America s soaring energy demand. We can expect our politicians to support tax benefits and incentives well into the future. Eager to achieve energy independence in a world seeing constant shifts in economic and political power and influence, the U.S. is now looking to tackle its own its own supply-and-demand conundrum: DRILLING FOR OIL AND GAS IS THE VERY BEST TAX ADVANTAGED INVESTMENT Remember, the sooner you invest, the sooner you see the potential profits. The longer you hold your investment in oil and gas, the more you compound your profit. Learn more today by calling toll free:

8 It s time for success, diversify your portfolio with oil and gas investments today. 7S Oil and Gas LLC Phone: Fax: Corporate@7sOilAndGas.com Corporate Office 4310 S Highway 349 Midland, Texas, 79706