Investment Objectives

2024 Ordinary Income Tax Deduction

General Partner Investors may receive a tax deduction in 2024 of 75%-90% of the initial investment. The deduction results from intangible drilling costs and tangible equipment/completion costs, offsetting taxable income in the year of investment. Final deductions depend on capital raised and equipment cost allocation.

Targeted Returns and Quarterly Cash Distributions

Projects aim for a minimum 3:1 payback over their lifetime, including tax benefits. Quarterly distributions are expected to start approximately nine months post-offering. Returns depend on well performance, commodity prices, and are split 75% to investors and 25% to the General Partner.

Tax-Advantaged Income

Approximately 15% of gross income is tax-free due to depletion deductions under current tax laws.

Risk Management

Personal Liability

Insurance protections include $2 million in liability coverage for the Fund and $10 million for subcontractors. However, insurance may not fully cover all obligations.

Operator Experience

The General Partner team has 135 years of collective experience in oil well operations. A subsidiary of the General Partner will manage operations, offering better control over costs and production rates.

Joint Venture Partner

USR Drilling LLC, a 35-year-old oilfield services company, will assist with technical evaluations and provide advanced short-radius drilling technology. Additional expertise is provided by CEO David LaPrade.

Fund Investment Criteria and Advantages

Investment Criteria

The Fund focuses on projects where oil is already discovered, using data like well logs and seismic analysis. It aims for a 36-month or shorter payback period for investments.

Advantages

Diversification across up to five projects rather than a single one. Through its joint venture with USR, the Fund has access to multiple investment opportunities, currently evaluating five projects.

Drilling Program Structure

Managed by Black Diamond Energy Group LLC, the Fund acquires a 75% working interest in program wells. A Turnkey Drilling Contract and Operating Agreement ensure operational efficiency.

Partnership Risk Factors

Your investment in the Fund is speculative and subject to certain risks. The following is not a complete list of all the risks related to your investment. See “Risk Factors,” in the Private Placement Memorandum.

• The drilling of oil and natural gas wells involves the risk that the well will not provide enough revenue to return the amount of your investment.
• The revenues are directly related to the ability to market the oil and gas and their price, which is volatile and cannot be predicted.
• If oil and/or gas prices decrease, then your investment return will decrease.
• If you choose to invest as an Investor General Partner, then you will have unlimited liability during the drilling of the wells for partnership obligations until you are converted to a Limited Partner. However, you will continue to have the responsibilities of a general partner for partnership liabilities and obligations incurred before the effective date of the conversion.
• Lack of liquidity or a market for the units.
• Total reliance on the Managing General Partner and its affiliates.
• You may owe taxes in excess of your cash distributions from the partnership.
• The investor’s deduction for intangible drilling costs may be limited for purposes of the alternative minimum tax.
• Distributions may be a return of capital.