G2 Petroleum_Private Investment Book_West Taylor

v

G2 PETROLEUM LLC

WEST TAYLOR LEASE DEVELOPMENT

WITCHITA COUNTY, G2 Petroleum LLC | Confidential TX

www.G2Petroleum.

Toll Free 1 (888)723-2198 | info@G2Petroleum.com Office: 6951 Virginia Pkwy, Suite 100, McKinney, TX 75070 Mail: 4100 W Eldorado Pkwy 100-261 McKinney, TX 75070 Copyright Š G2 Petroleum LLC 2020All rights reserved

Purchase of these units are speculative and involve a high degree of risk. The units offered in this offering have not been registered under the Securities act of 1933, under the securities act of the state of texas, or the securities law of any other state. The delivery of this offering Memorandum shall not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not Authorized. All estimates were prepared using information deemed accurate and reliable as of the issuie date and are intended only as possible Projections of what such results may be expected from this investment under certain assumed and favorable conditions. The information set Forth herein should not be relied upon for any purpose other than as an illustration of the possible revenue benefits that may be realized under Certain assumed conditions. This information should in no way be construed or relied upon as a person’s actual revenue realized from this Investment. These revenues may be subject to alternative minimum tax or other tax considerations. We strongly advise you to consult your tax Advisor.

en er on te m ed in ed ly

Contents

G2 Petroleum LLC

i

Lease Development

4

About Us...

5

Michael R. Villalva

6

Volume Metrics Report

6

Barry Hanks

9

Geologist Report

9

Support infoGraphic

11

Tax Benefit Summary

13 G2 Petroleum LLC | Confidential

W. Taylor Lease Development Offering: Issuer of Offering: Operator:

Project: Proposed Vertical Depth: Primary Objectives:

G2 W. Taylor Lease Development Three Well Drilling Program on 110 Acres G2 Petroleum, LLC

a Texas Limited Liability Company

Newport Operating, LLC

Texas RRC Operator #607883

Three (3) Infield Development Wells & One (1) well converted to SWD/Injection Multiple Zones Down to 4,100 ft.

KMA Lime, KMA Zones 1, 2, & 3 and Goen Lime

Working Interest Capitalization:

$ 1,625,000 Total for Ten (10) Units

Per Unit Capitalization Turnkey:

$162,500 per Unit

Cost to Drill, Test, and Convert Water Injection Well(s)Turnkey:

$125,000 per Unit

Cost to Complete:

$37,500 per Unit ($12,500 per well)

Working Interest Equivalent:

87.5% WI (Per Unit: 8.75% WI)

Net Revenue Interest Equivalent:

70.0% NRI (Per Unit: 7.0% NRI)

Potential First Year Return: 86% ROI PURCHASE OF THESE UNITS ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THE UNITS OFFERED IN THIS OFFERING HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, UNDER THE SECURITIES ACT OF THE STATE OF TEXAS, OR THE SECURITIES LAW OF ANYOTHER STATE. THE DELIVERY OF THIS OFFERING MEMORANDUM SHALL NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER ORSOLICITATION IS NOT AUTHORIZED. ALL ESTIMATES WERE PREPARED USING INFORMATION DEEMED ACCURATE AND RELIABLE AS OF THE ISSUIE DATE AND ARE INTENDEDONLY AS POSSIBLE PROJECTIONS OF WHAT SUCH RESULTS MAY BE EXPECTED FROM THIS INVESTMENT UNDER CERTAIN ASSUMED AND FAVORABLE CONDITIONS. THE INFORMATION SET FORTH HEREIN SHOULD NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN AS AN ILLUSTRATION OF THE POSSIBLE REVENUE BENEFITS THAT MAY BE REALIZED UNDER CERTAIN ASSUMED CONDITIONS. THIS INFORMATION SHOULD IN NO WAY BE CONSTRUED OR RELIED UPON AS A PERSON'S ACTUAL REVENUE REALIZED FROM THIS INVESTMENT. THESE REVENUES MAY BE SUBJECT TO ALTERNATIVE MINIMUM TAX OR OTHER TAX CONSIDERATIONS. WE STRONGLY ADVISE YOU TO CONSULT YOUR TAX ADVISOR.

4

G2 Petroleum LLC | Confidential

About Us...

G2 Petroleum LLC (G2) was founded in 2008 and is

ensure top returns are available to their investors.

located in McKinney, Texas. From inception, G2 has

Our passion lies inside the hearts and minds

acquired interests in some of the top producing oil

of our people. As valuable-asset creators, we

and natural gas fields in the country. The firm has a

are constantly striving to find unique and

staff with decades of experience successfully drilling

innovative ways to increase the rate of oil

and commercializing fields throughout the state of

production, as well as increase the overall

Texas. G2 partners with top reservoir engineers and

return-on-investment for partners looking to

geologists across the state to analyze and evaluate the

find aggressive returns investing in American

best locations for superior returns. G2 uses cutting

energy direct participation programs. Our

edge technology to enhance its success rate and

ability to maintain transparency in every type of

G2 Petroleum LLC | Confidential

5

Michael R. Villalva Volume Metrics Report From: Michael Villalva To: Barry Hanks, Cotton, Billy Fort, Parker Sent: Sun, 26 Jan 2020 23:35:45 -0500 (EST) Subject: Taylor KMA Lease Report (Volumetrics) All, Attached is the volumetrics report based ONLY on the KMA II pay within the Taylor Lease located south of the First National Lease in Wichita County, TX. The estimated oil in place is approximately 1.4 MMBO for the ~100 acres.

Using IHS Production Data, it appears that ~264 MBO of the oil in place has been recovered from all wells that go back to 1953.

This primary recovery is approximately 18% which is similar to the primary recovery numbers reported on the First National Lease immediately to the north.

If we can recover another 12-20% from Zone II, we’d be looking at an additional 172,000 – 289,000 BO for the preliminary new drills (+/-6 locations).

This additional recovery is in alignment with the current plans for the new drill packages for the Pace & First National Leases.

As before, this does not include any additional reserves discovered from the KMA Zone III or the Goen Lime immediately below.

Regards,

Michael R Villalva Owner / Petroleum Engineer EMARVY Resources, LLC D: 972-850-6780 mvillalva@emarvy.com

Michael R Villalva

W. Taylor KMA

EMARVY Resources, LLC

Lease Report (Volumetrics) Thu 2/6/2020 12:26 PM

The

estimated oil in place for Zone I

is 767

6

MBO across the Taylor Lease .

G2 Petroleum LLC | Confidential

W. Taylor Lease Development

Table Calculated on 1 Unit at $162,500

1 Unit = 8.75% Working Interest and 7.00% Net Revenue Interest in 3 Wells

Daily Production Combined Production 3 Wells (BOPD) 180 150 120 90 60 30 0

Cummulative Production Combined Production 3 Wells (BO) 300,000 200,000 150,000 100,000 50,000 42,500 0

Monthly Income Potential

Payout (Months)

$30 Oil

$60 Oil

Payout $60 Oil

$10,518 $8,715 $6,912 $5,109 $3,306 $1,503 $0

$21,336 $17,730 $14,124 $10,518 $6,912 $3,306 $0

9 Months 12 Months 16 Months 24 Months 49 Months 108 Months 0

Total Return Potential

Cummulative Return

$30 Oil

$60 Oil

Potential ROI $60 per Barrel

$591,020 $390,680 $290,510 $190,340 $90,170 $75,145 $0

$1,192,040 $791,000 $591,020 $390,680 $190,340 $160,289 $0

7:1 5:1 4:1 2.4:1 1.2:1 1:1 0

Monthly Income Potential Example Calculation: 120 BOPD x $60 Oil x 30 Days = $216,000 - $9,936 (4.6% Taxes) = $206,064 x 70.0% NRI = $144,245 - $3,000 (Estimated LOE) = $141,245 / 10 Units = $14,124 Potential Monthly Income Revenue per Unit.

Total Return Potential Example Calculation: 150,000 BO x $60 Oil = $9,000,000 - $414,000 (4.6% Taxes) = $8,586,000 x 70.0% NRI = $6,010,200 - $100,000 (Estimated LOE) = $5,910,200 / 10 Units = $591,020 Total Return Potential per Unit.

KMA II Zone Only Return Potential Example Calculation: 100,000 BO x $60 Oil = $6,000,000 - $276,000 (4.6% Taxes) = $5,724,000 x 70.0% NRI = $4,006,800 - $100,000 (Estimated LOE) = $3,906,800 / 10 Units = $390,680 Total Return Potential per Unit from the KMA II Zone.

G2 Petroleum LLC | Confidential

7

LOCATION MAP G2W. Taylor • Lease Development

G2 W. Taylor Lease Development Witchita County, Texas Location Map

8

G2 Pel roleum L LC

G2 Petroleum LLC | Confidential

Page 3

Conftdcnlial Information

Barry Hanks Geologist Report Taylor, W. Lease Wichita County, TX

RRC # 05996 To whom it concerns; The Taylor, W. Lease is located just in the townsite of Valley View in Wichita County Texas.

The lease totals 110 acres, located in the Kemps Wichita Valley Farm Lands (KWVFL) survey block 81, A - 139. The Taylor, W. lease is in the middle of the KMA (Kemp Munger Allen)

Archer, Wichita, and Wilbarger

drilled Taylor, W. # 32 in the

Counties. It is a Strawn sand

northeast corner of the lease

reservoir with limestone pay

pumping from the KMA Zone II

formations above and below

sand at 3883-3900 feet, with an

the sandstones. The individual

initial production of 552 bopd.

potential pays consist of Lime pay

No cumulative production has

at the top of the KMA lime and

been found with the Humble

lower part of KMA lime, Zone I,

well, and it is unknown when

Zone II, and Zone III sands, with

the well was plugged, many

the deepest pay being the Goen

original KMA wells were plugged

lime (Caddo) in age.

in the late 1940’s. Fifteen years

History

later in September 1953 C.T.

The initial deep development

first of 6 wells, Taylor W. wells

for oil production on this lease

#1-6. The initial production

was initiated by Humble Oil

(IP) from the Robertson wells

Company,

ranged from 48 bopd (barrels

starting

Robertson started drilling the

in

1938,

field. It is immediately south of the Newport First National lease. The lease is a deep lease only, the shallow rights 2000 feet and above, are held by another operator. The KMA field extends about 20 miles east to west and 8 miles north to south through G2 Petroleum LLC | Confidential

9

oil per day) to 87 bopd f lowing. The

mechanical issues such as casing

the Taylor, W. lease. The pay section

Robertson wells produced from

leaks, specifically wells # 2, 3, and 6.

of Zone II varies from well to well

KMA Zone I and Zone II, none

At present there are two wells, # 4 and

with

were drilled deep enough to expose

5 as producers and # 1 as the active

Zone III or deeper Goen lime pay

injection well. Recently, a new KMA

formations.

well was drilled east on the offset

“Total production from the Robertson wells is 265,000 barrels through December 2019.”

Hodges lease to test the Goenlime,

“the best pay section usually at the base of the sand with the sand ranging from 12 to 60 feet thick”

Area

lime at 4050-80 feet, as well as 26 feet of potential pay in Zone I and 31

usually tighter in the upper most part

feet of Zone II sand. The completion

of the reservoir. What C.T. Robertson

was

results in this new well will certainly

found while drilling his new wells

initiated in the late 1950’s and early

affect the interest level in drilling

was 10 – 20 feet of Zone I sand along

1960’s in the KMA field by many

new wells on the Taylor lease.

with the Zone II. In addition to the

wide

waterf looding

operators, Robertson converted 3 wells, # 1,2 and # 3 into injection well status over the years. Well # 1 is current the only active injection well. Also, in recent years, three of the old Robertson wells were plugged as noncommercial or had 10

finding possible pay from the Goen

Geology: The primary target for the original operators in this portion of the KMA field was Zone II sand, this massive reservoir extends for miles around G2 Petroleum LLC | Confidential

Zone I being found was the lower section of Zone II appeared to be wet on the electric logs on the wells drilled on the south side of the lease, it is unknown when or if Robertson ever attempted to produce Zone II in the south wells # 3, #4 or #6. He

did produce Zone II in the north wells # 1, # 2, and # 5. None of the wells were drilled to test the deeper Zone III or Goen lime. During the late 1960’s the offset north operator Harwell & Robertson drilled the First National # 3 well. Harwell did choose to drill deeper and found 16 feet of Zone III pay, but not deep enough to expose the Goen lime pay if present.

The new well to the east on the Hodges A & B lease # 23 found 26 feet of Zone III, but it was tight with no show. How far the Zone III pay extends across the Taylor, W. lease from the west to the east, only the drill bit will be able to answer, most KMA reservoirs are deposited in an east to west or northeast to southwest strike direction. The sands come and go with stratigraphic pinchouts and sand becoming too tight to produce with calcium carbonate cementing the sand grains. They generally are large individual reservoirs being hundreds of acres in size. The bottom line is there is notenough well information to predict where there is Zone III or Goen pay on the lease. The good news is that

“it will not be depleted by old wells, and as stated earlier to the northeast the Zone III sand was 16 feet thick ofpay in Harwell & Robertson # 3 well.”

There is a potential to drill additional development wells on the Taylor, W. lease between the old Zone II plugged wells, drilling them deeper to test the Zone III and Goen lime reservoirs found by the north and east offset operators, and there is potential also with the KMA Zone I and II sands throughout the lease, there are several potential undrilled inside locations on the lease, however depletion in the Zone I and II sand from drainage is a major concern for long term commercial production, unless waterflooding repressuring the sand is part G2 Petroleum LLC | Confidential

11

of the overall plan. It is proposed to drill 3 wells on the Taylor, W. lease to 4150 feet to test the deeper KMA Zone III and Goen Lime pay horizons. Zone II is also a target to consider producing. The KMA sand is a long-lived reservoir that has been continuously produced since 1937 and still produces in the immediate area with hundreds of pumping wells on nearby leases.

When more wells are drilled on the lease, repressuring the KMA reservoirs by waterf looding must be an integral part of the

Barry Hanks plan to be developed.

Barry Hanks

12

G2 Petroleum LLC | Confidential

Tax Benefits: Alleviate Your Tax Burden Tax Cuts and Jobs Act of 2017 constitutes once-in-a-generation tax reform. This legislation amended the Internal Revenue Code, reducing tax rates, increasing the standard deduction, and limiting various deductions. In addition to these muchpublicized changes, the law also changed the tax treatment for the recovery of tangible equipment costs, allowing for an immediate deduction for the costs of certain types of tangible

Tangible costs are the costs of equipment.. that potentially have salvageable value, for example casings, tubing, pumps, and tanks.

Total drilling costs typically consist of 60%-80% IDCs and 20%-40% tangible costs.

property.

“This change in tax treatment has a significant bearing on the potential tax benefits associated with oil and gas drilling partnerships, which may also impact the manner in which drilling partnerships raise and deploy capital.”

Recovery of tangible drilling costs One of the reasons that oil and gas drilling partnerships have been so prevalent in the alts space is that they typically provide

As we’ve previously discussed, the primary tax benefit for

investors significant tax benefits, including deductions for

drilling partnerships is the ability for investors to deduct 100%

intangible drilling costs (IDCs) and tangible equipment costs.

of IDCs as a current business expense in the first year eligible

Let’s review the difference between intangible and tangible

costs are incurred. Additionally, prior to the Tax Cuts and

costs:

Jobs Act, the tax code allowed for investors to recover tangible drilling costs through depreciation deductions under a seven-

IDCs are expenses that are necessary for drilling and preparing

year modified accelerated cost recovery system (MACRS). As

oil and gas wells for production but have no salvageable value,

such, when evaluating the potential tax benefits associated with

such as labor, fuel, chemicals, and installation costs.

drilling partnerships, tangible costs have historically been an afterthought compared to IDCs because they did not provide a

G2 Petroleum LLC | Confidential

13

significant upfront write-off.

However, thanks to the Tax Cuts and Jobs Act, when it comes to tangible equipment costs, the times, they are a-changin’.

Specifically, the law amended Section 168(k) of the Internal Revenue Code to allow a depreciation deduction equal to 100% of the costs of “qualifying property” in the year the property is placed into service. (Qualifying property includes tangible property that has a recovery period of 20 years or less). The 100% bonus depreciation rate will remain in effect for tangible property placed into service prior to January 1, 2023, and will be phased out 20% each subsequent year through the end of 2026. This means that, for the near future, investors in drilling partnerships may deduct 100% of their tangible drilling costs in the year the partnership places tangible equipment for wells into use, which significantly condenses the timeline for writing off tangible costs.

Potential impact on drilling partnerships Now that the tax code allows for immediate recovery of all

long as the wells associated with those IDCs are spudded (i.e.,

tangible costs, when will investors in drilling partnerships

drilling begins) in that year or within the first 90 days of the

actually receive those deductions—in year 1 or year 2? For

following year. In other words, drilling partnerships only need

investment programs, the answer may depend on when during

to prepay IDC costs by the end of the year in order for investors

the year the sponsor syndicates the program and deploys the

to receive the full IDC deduction in the year of their investment,

proceeds.

and the partnership does not actually need to start drilling until the beginning of the following year.

The Tax Cuts and Jobs Act did not alter the tax treatment of IDCs, and the ability for investors to deduct IDCs in the first year they are incurred remains the primary tax benefit associated with drilling partnerships. IDCs that are paid to an operator, without recourse, are deductible in the tax year they are paid as 14

G2 Petroleum LLC | Confidential

Pu reg sta in and thi up ass fro

www.G2Petroleum.

Toll Free 1 (888)723-2198 | info@G2Petroleum.com Office: 6951 Virginia Pkwy, Suite 100, McKinney, TX 75070 Mailing: 4100 W Eldorado Pkwy 100-261 McKinney, TX 75070 Copyright © G2 Petroleum LLC 2020All rights reserved Copyright © Extracted Creative LLC 2020

Purchase of these units are speculative and involve a high degree of risk. The units offered in this offering have not been registered under the Securities act of 1933, under the securities act of the state of texas, or the securities law of any other state. The delivery of this offering Memorandum shall not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not Authorized. All estimates were prepared using information deemed accurate and reliable as of the issuie date and are intended only as possible Projections of what such results may be expected from this investment under certain assumed and favorable conditions. The information set Forth herein should not be relied upon for any purpose other than as an illustration of the possible revenue benefits that may be realized under Certain assumed conditions. This information should in no way be construed or relied upon as a person’s actual revenue realized from this Investment. These revenues may be subject to alternative minimum tax or other tax considerations. We strongly advise you to consult your tax Advisor.

G2 Petroleum LLC | Confidential

15

www.G2Petroleum.

Copyright Š G2 Petroleum LLC 2020All rights reserved

Toll Free 1 (888)723-2198 | info@G2Petroleum.com Office: 6951 Virginia Pkwy, Suite 100, McKinney, TX 75070 Mail: 4100 W Eldorado Pkwy 100-261 McKinney, TX 75070

Purchase of these units are speculative and involve a high degree of risk. The units offered in this offering have not been registered under the Securities act of 1933, under the securities act of the state of texas, or the securities law of any other state. The delivery of this offering Memorandum shall not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not Authorized. All estimates were prepared using information deemed accurate and reliable as of the issuie date and are intended only as possible Projections of what such results may be expected from this investment under certain assumed and favorable conditions. The information set Forth herein should not be relied upon for any purpose other than as an illustration of the possible revenue benefits that may be realized under Certain assumed conditions. This information should in no way be construed or relied upon as a person’s actual revenue realized from this Investment. These revenues may be subject to alternative minimum tax or other tax considerations. We strongly advise you to consult your tax Advisor.