Mid-Continent Revenue Fund - I
The Mid-Continent Revenue Fund - I (MCRF-I) is Merica Oil Company's initial investor offering, consisting of oil and gas prospects in Barber, Comanche, and Rook Counties, in Kansas. The MCRF-I is setup as a Limited Partnership to build portfolio wealth from both oil and gas production. The fund’s prospects are surrounded by proven reserves and include drilling locations that have been identified by geologists and 3D seismic. These factors make the fund economically viable even at $29/bbl oil with significant upside, as demand and prices increase. Operations are being kick-started with a work-over program on 5 existing well-bores, and 10 new well drills are to be commenced consecutively, thereafter.
MCRF-I Facts at-a-Glance
Development Locations: Barber, Comanche, & Rook Counties, in Kansas
Lease Acreage: 3,200 acres
480 acres - Unlimited depth
2,720 acres - Depth limited to 50’ below the Mississippian formation
Program Wells: 15 (5 workovers & 10 new wells)
Pay Zones: 6 Possible Zones - Arbuckle, Cherokee, Lansing, Marmaton, Mississippian, & Pawnee
The State of Kansas ranks 11th in terms of oil production, with annual production of nearly 35 million barrels of oil. To date, over 6.8 billion barrels of oil and 41 trillion cubic feet of natural gas have been produced in Kansas. There are approximately 93,000 currently producing wells and nearly 500,000 wells have been drilled to date.
Oil has been produced in Kansas since before the Civil War, but the discovery of the El Dorado Field during World War I kick-started Kansas’ economy as an oil-producing State. In 1918, the El Dorado Oil Field produced nearly 29 million barrels of oil, which was the largest oil field in the Nation and represented around 9% of global oil production at the time. Called “the oil field that won World War I,” the oil revenue from that field spurred the aviation industry in Wichita and continues to stimulate Kansas’ economy through jobs and tax revenue.
Within the El Dorado Oil Field, the Arbuckle formation is a prominent producer produces in several hundred fields surrounding the Central Kansas Uplift and in other parts of the State.
The Mississippian System produces in fields throughout the majority of Kansas as both conventional and unconventional reservoirs, very popular with public oil companies such as Chesapeake and Sandridge. The vast reserves at under 5,000 feet depth make this a potentially economic resource play, and modern technology is increasing efficiencies.
Pennsylvanian Age pay zones such as the Lansing - Kansas City zones are carbonate zones that are primarily gas solution driven and can be lucrative because of their high flush potential. That means the initial production rates can pay the wells off very quickly and continue to produce oil for many years. In the latter years of a well, waterfloods (injecting produced brine water into the formation in order to build bottom hole pressure and sweep oil into nearby production wells) are a successful method of Enhanced Oil Recovery and can increase primary production numbers by over 50%.
Kansas has a strong oil industry based on generations of economic oil production. The efficiencies of shallow reservoirs that potentially produce for decades create long-term revenue streams. The ability to weather periods of low oil prices and exploit periods of high oil prices make oil exploration in the mid-continent a calculated risk worth pursuing.
Sample Tax benefit calculation
|Amount Invested = 1 Unit in MCRF-I||$160,000|
|Multiply Line 1 by 70%||$112,000|
Intangible Drilling Costs
Multiply Line 1 by 30% then divide by 7
(TDCs* are depreciated over 7 years)
*Tangible Drilling Cost Deduction pursuant to IRS Sec. 179
Add Lines 2 & 3 - Total Tangible & Intangible
Drilling Cost Tax Deductions
Enter your overall Tax Bracket*
*Include Federal, Medicare & State taxes (if any)
|Multiply Lines 4 & 5||$50,514|
Subtract Line 6 from Line 1
Net Investment/1 Unit after Tax Deductions