A natural person with income exceeding $200,000 in each of the two most recent years, or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
A natural person who has an individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence.
IS MY INVESTMENT LIQUID?
Your investment should be viewed as illiquid and, therefore, a long-term investment. We do not provide any early redemption provisions and there are limits on the ability to transfer or sell units held by investors. Investors should consider their short-term and long-term liquidity needs when considering an investment.
HOW LONG WILL THE WELLS PRODUCE AND HOW LONG WILL MY INVESTMENT LAST?
Some of the wells can produce for 25 to 30 years. That said, Invito anticipates that after year 5, we will consider an exit (sale) of the remaining cash flow followed by a final distribution. We believe the maximum duration of the investment to be 10 years.
WHY SHOULD I CONSIDER A DIRECT OIL AND GAS INVESTMENT?
The upfront tax benefits and built-in return from those benefits make direct oil and gas investments a unique opportunity. Additionally, direct oil and gas investment creates passive income and is traditionally uncorrelated to the public markets, which makes it a valuable tool to manage risk through diversification in a personal portfolio.
WHO SHOULD CONSIDER DIRECT OIL AND GAS INVESTMENTS?
Any accredited investor who, on an annual basis or from a one-time event is facing significant income tax bills and is looking for effective strategies to reduce their tax burden and retain their wealth. Additionally, any accredited investor who is seeking out-of-the-market investments to diversify their portfolio or is seeking to create a flow of passive income.
CAN AN INVESTMENT BE MADE THROUGH MY LLC, TRUST OR IRA ACCOUNT?
Yes. Investors can invest through an LLC, trust, and a self-directed IRA account (SDIRA). We recommend consulting your tax advisor for advice, as any investment that limits liability can affect the ability to offset ordinary income.
WILL I RECEIVE A K-1?
All investors will receive an annual K-1 for their investment by March 15th typically.
HOW DO I INVEST?
The investment documents are held in an online data room through a platform called Tribexa. After reviewing all the documents online, an investor will click the “Invest Now” button and follow the prompts to answer the investor questionnaire and complete the subscription documents. Verification that an investor is accredited will be required. To request access to the online date room, click on “Current Opportunities” on the Home Page.
AFTER INVESTING WHAT DOES AN INVESTOR OWN?
Each investor owns units in a partnership which in turn owns working interest in oil and gas wells.
WHAT TYPE OF COMMUNICATION SHOULD AN INVESTOR EXPECT FROM THE FUND AFTER INVESTING?
Investors will receive quarterly updates, as well as supplemental information as necessary. All communication, tax documents, and investment documents will be accessed through an investor’s online account with Tribexa.
WHAT ARE THE TAX BENEFITS?
Yes, there are two important tax benefits only found in oil & gas.
1. Intangible Drilling Cost (IDC) Deduction: −IRS Section 263 (c) allows for 100% of the tangible drilling costs to directly offset taxable income in the year of investment. IDC’s typically range from 75% to 85% of the total cost of a well.
2. Small Producers Tax Exemption: −IRS Section 613 covers the tax exemption for small producers and investors which allows 15% of all gross income received from oil and gas wells to be excluded from taxation, this is also known as Depletion Allowance.
ARE THERE ANY OTHER TAX BENEFITS?
Yes, the 2017 Tax Cut and Jobs Act (TCJA) allows for bonus depreciation to be elected on the Tangible Drilling Cost which are typically range from 15% to 25% of the total cost of the well. The benefit of electing bonus deprecation is that you can offset taxable income in the year of investment or the following year rather than amortizing these costs over 5 years. The 2017 (TCJA) does begin to sunset starting in 2023 at 20% per year, meaning in 2023 you would only be able to bonus depreciate 80% of the total Tangible Drilling Costs.
SHOULD I CONSULT MY TAX ADVISOR?
Yes, while it is not required, Invito always strongly recommends consulting with your tax advisor before investing.
DOES MY TAX ADVISOR NEED TO KNOW OIL AND GAS TAX?
No, the IDC deduction and bonus depreciation fall under partnership accounting rules which every tax advisor is equipped to handle. Taking advantage of the small producer’s exemption (depletion allowance) will require some education on the part of a tax preparer.
WHAT FEES ARE PAID BY THE INVESTOR?
Our upfront fees are limited to a one-time management fee of 4%, this allows 96% of your investment to go directly into the development of the asset.
HOW DOES INVITO MAKE MONEY?
When distributions are made from the fund, Invito receives 13% of the revenue, with 87% going to the investors. Invito’s share of revenue will increase to 25% when all investors have received 100% of their initial investment. At that point, the investors’ share will be 75%. We believe this structure aligns us with our investors so that we succeed when our investors succeed.
WHAT SHOULD I EXPECT FOR RETURNS ON MY INVESTMENT?
We have provided financial projections in our online data room, all projections are estimates and are not guaranteed. To request access to the online data room click on current opportunities on the Home Page.
CAN I LOSE MY INVESTMENT?
While the risk of losing your investment is possible, we do not anticipate that to be a high probability, which is why we have aligned ourselves with investors in terms of how we make money. Additionally, we believe our track record of success in oil and gas operations and asset development will be essential to our ability to deliver successful returns to our investors. Moreover, the upfront tax benefits all but ensures that a total loss will not happen, but an investor should not make private placement investments if a total loss would create a financial hardship.
HOW FREQUENTLY ARE DISTRIBUTIONS MADE?
Distributions to the investors are made quarterly.
WHEN SHOULD I EXEPCT DISTRIBUTIONS TO BEGIN?
Typically, distributions to investors begin in the second quarter following the close of a fund. However, there may also be distributions made prior to fund closing, even with new investors still entering the partnership.
HOW ARE THE DISTRIBUTIONS TAXED?
If you elect the IDC deduction, the distribution will be treated and taxed as ordinary income, rather than passive income.