1. The answer is both.

The LSOG II investment generates cash distributions to investors through their working interest ownership in producing wells, through their ownership and receiving overriding royalty payments from the producing wells.  The Investor will also receive ownership in the membership interest (Equity) in the Company which may distribute cash distributions to its members at the discretion of the manager. 

Investors also have the ability to reinvest their cash distributions through their participation in future wells through the Manager 160 program, growing working interest payments.

The term Working interest represents an ownership interest in either an oil and/or gas well. As a Working Interest owner you are entitled to tax benefits and cash payments proportional to your ownership from the well’s oil or gas production.

An Overriding royalty is a property right stated in a mineral lease owner to receive a stated percentage of the oil and gas production of    It entitles holders to a portion of the production revenue from the leased area without any investment.  For example, a typical government royalty is 12.5% of the revenue, yet the government is not responsible to pay for the well that is producing.  All wells drilled in the asset will yield the overriding royalty payment with no cost to the royalty holder.  This investment assigns an overriding royalty to investors, as described in the private placement memorandum.

Overriding royalty being tied to the minerals, will last for as long as the minerals are developed.  This is for all wells, ever drilled in the asset, regardless of time.  As the wells in the lease produce, the royalty is paid.  If Lost Soldier is sold, or acquired by another company, the wells drilled by the successor company, even if drilled many years in the future, will still pay the royalty on those future wells.  There is no cost associated with these payments, which continue as long as the production occurs.

Potential tax benefits which are associated with having a working interest in oil and gas wells include:

1. Intangible Drilling Costs (IDC):  100% Tax deductible in the year incurred or they can be amortized over a 5 year period starting in the year incurred.  IDC’s typically amount to 65 -75% of the cost of a well.
2. Tangible Drilling Costs:  100% deductible over the life of the well.  (May be accelerated due to recent legislation)
3. Depletion Allowance:  15% of production Income is tax free over the life of the well.
4. Active Income Deductions:  Can be taken against business income, salaries, capital gross income, and interest income.

Lost Soldier Oil and Gas II Master Series LLC is a series LLC company. This means each well is a separate LLC in which investors are members. In this way should there be an issue with one well (LLC) the other wells (LLC’s) are not affected. This gives investors security due to the structure of the company and the wells.

In short, it is a way for investors to continue to invest in future wells once their investment in the PPM is exhausted.  At the discretion of the manager, as the wells drilled with PPM funds are drilled the manager may designate a surface location as a “Manager 160”.  Any future well drilled from that 160 acre square around that location will be eligible for investment by investors in their proportionate share.  That way investors can continue to add to their working interest payments from wells even after the PPM investment is spent.  Since most wells are drilled from pad locations with 10 to 30 wells drilled from one surface location, the Manager 160 program gives investors the ability to invest in potentially many future wells.

It is similar. A public company has stock and an LLC has membership interest.  The company is allocating 10% of the company’s non voting membership interest for the full $350.1M PPM investment.  Each $150,000 unit will be issued 4,285 membership interests.  When a liquidity event such as an IPO occurs, these membership interests are converted into non voting stock in the company.  At that time investors will have the opportunity to convert all or a portion of their working interest, or overriding royalty interest into shares as well. This gives the investor a way to go “all in” on stock and then have an efficient exit strategy by selling their shares at an appropriate time on the market.

Lost Soldier is an LLC and all proceeds flow down to the LLC members, since LLCs do not have retained earnings.  Should the company have profit after investing in all the capital projects necessary to grow the company for our members, then the LLC members will have cash distributions in their proportionate share. Investors will also receive cash distributions from your ownership of the Overriding Royalty interest.

Returns depend on the pace of development and production milestones; no guaranteed timeline is provided. The company intends to be producing from our first two wells by the end of 2025.

Investors receive regular reports, quarterly updates, and invitations to investor calls.

The goal is to fully develop the Wild Mustang Federal #1 Unit, maximize cash flows, and pursue options such as an IPO, ongoing distributions, a field sale, acquisitions or other strategic transactions.

Yes, investments are illiquid with no public market. Investors should plan for a long-term hold.

Reg D 506(c) is a federal exemption allowing private companies to raise capital from accredited investors without registering the securities with the SEC.

It allows companies to raise capital faster and more cost-effectively while remaining compliant with securities laws.

An accredited investor meets SEC-defined income or net worth thresholds, indicating they can bear the risks of private investments. Please see the SEC Website (https://www.sec.gov/resources-small-businesses/capital-raising-building-blocks/accredited-investors) for a definition.

No, the SEC does not review, approve, or guarantee Reg D 506(c) offerings.

Yes, Reg D investments are restricted securities and cannot be freely resold without meeting certain conditions. Please review the Private Placement Memorandum for these restrictive conditions.

Private investments are illiquid, higher-risk, and dependent on the company’s success. Investors should review Private Placement Memorandum offering documents carefully.

A Reg D 506(c) investment is a private investment sold only to qualified Accredited Investors versus a public stock listed company that is listed on a stock exchange by which you can purchase the public stock and you do not have to be an Accredited Investor.

You may provide tax returns, bank statements, present your Financial Statement or a letter from a qualified financial advisor confirming your status.  You can research the definition on the SEC website (https://www.sec.gov/resources-small-businesses/capital-raising-building-blocks/accredited-investors) for qualifications.

An Investment in Lost Soldier Oil and Gas II Master Series, LLC  is long-term with no guaranteed exit timeline.

The Company shall cause to be prepared for the Member’s, at the Company’s expense, financial statements and reports of the Company in a form approved by the Manager, on an annual basis.