Generational Oil Company

1. Generational Oil Company Disclaimer All materials posted on this site are subject to and owned by Generational Oil Company. Any use or reproduction retransmit, or reprint any part or all of any document expressly prohibited, unless Generational Oil Company has expressly granted its prior written consent to do so.

2. Who We Are Our Partners We are looking for investors who are interested in a long term partnership. A relationship of fiscal reward to pass from generation to generation. To attract that type of relationship / investor the responsibility of management is proven commitment to provide to our partners long-term value of investment dollars, as well as offer opportunities for growth with us. Our strength is in our compliance and ethical standards. Generational Oil Company is committed to being an independent world premier oil. In doing so we will continue to strive, set and attain extraordinary industry standards both fiscally and operationally that produce results!!

3. Company Overview Generational Oil Company is an independent oil drilling company which offers oil investment opportunities. Investors are participants with “working interest” which offer: • Unique tax advantages • Cash flow Generational Oil Company is committed to the highest ethical standards by: • Maintain transparency • Open communication We measure success in the returns we deliver to our investors, long-term planning process.

4. What is Oil “Oil is any of a large class of substances typically unctuous, viscous, combustible, liquid at ordinary temperatures, and soluble in ether or alcohol but not in water.” Some uses of oil include: Cosmetics Cooking Heating Engines Medicine Electricity

5. Oil and Gas Industry cont. Do we “need” so much oil and gas? The United States is the number one consumer of oil. Americans use 23.5 million barrels per day. The U.S. Department of Energy believes that there is perceived need to increase oil.

6. Our Vision: looking ahead • A company that is highly successful in all ways. Delivering its purpose by: • Energizing the world,bettering people’s lives, and our communities! • A company that remains true to its values. • A company that everyone wants to be associated with. • Investors, employees, customers, suppliers, partners, and communities! • A company that has an Incredibly bright future. • A company that does not accept limits.

7. Key Benefits of Product or Service • Unique combination to deliver differential performance • Asset portfolio of a major. • Focus on 5 core areas – 3 operational regions • Scale with running room • Execution of a large independent. • Four major projects delivered on schedule • Managing over $1M in gross investment in 2014 • Growth of a small independent. • Extending 18% production growth rate another year • Enhancing visibility of long-term growth options • Establishing operational leadership in all areas.

8. Our equipment Production

9. Drilling has begun one well has alreadyreached oil the other will be reworked Drilling

10. 10 units of working interest offered at an investment of $10,000 per unit return on investment is 4% of net realizable interest ongoing. The partnership relationship is drilling one well currently producing oil and a re-working of an additional well. These wells are located in Kentucky. There are risk factors associated with the purchase/investment; however, this project has already begun and oil is already being extracted, thus risk is small. SAMPLE One well at 2 barrels of oil per day yeilds: 2 BPD x $100 (Estimated Price) = $200 per day $200 per day x 365 days = $ 73,000 a year* *Gross What We’re Offering

11. Partnership Traditional Strategies: There are two types of ownership in oil and gas – working interests and royalty interests. Working interest investors own participating, or lessee, interests in land. Working interest owners pay capital Expenses, operating costs and royalties to the mineral title owner: They incur all of the costs and liabilities, but share in only part of the revenue

12. Tax Advantages Oil: A Big Investment With Big Tax Breaks By Mark P. Cussen, CFP®, CMFC, AFC on January 10, 2014 A AAFiled Under: Energy, Investment Tax, Oil EconomyWhen it comes to tax-advantaged investments for wealthy or sophisticated investors, one investment class continues to stand alone above all others: oil. With the U.S. government's backing, domestic energy production has created a litany of tax incentives for both investors and small producers.Several major tax benefits are available for oil and gas investors that are found nowhere else in the tax code. Read on, as we cover the benefits of these investments and how you can use them to fire up your portfolio.Striking OilThe main benefits of investing in oil include:Intangible Drilling Costs: These include everything but the actual drilling equipment. Labor, chemicals, mud, grease and other miscellaneous items necessary for drilling are considered intangible. These expenses generally constitute 65-80% of the total cost of drilling a well and are 100% deductible in the year incurred. For example, if it costs $300,000 to drill a well, and if it was determined that 75% of that cost would be considered intangible, the investor would receive a current deduction of $225,000. Furthermore, it doesn't matter whether the well actually produces or even strikes oil. As long as it starts to operate by March 31 of the following year, the deductions will be allowed.Tangible Drilling Costs:Tangible costs pertain to the actual direct cost of the drilling equipment. These expenses are also 100% deductible but must be depreciated over seven years. Therefore, in the example above, the remaining $75,000 could be written off according to a seven-year schedule.

13. Tax Advantages Oil: A Big Investment With Big Tax Breaks By Mark P. Cussen, CFP®, CMFC, AFC on January 10, 2014 A AAActive vs. Passive Income: The tax code specifies that a working interest (as opposed to a royalty interest) in an oil and gas well is not considered to be a passive activity. This means that all net losses are active income incurred in conjunction with well-head production and can be offset against other forms of income such as wages, interest and capital gains.Small Producer Tax Exemptions: This is perhaps the most enticing tax break for small producers and investors. This incentive, which is commonly known as the "depletion allowance," excludes from taxation 15% of all gross income from oil and gas wells. This special advantage is limited solely to small companies and investors. Any company that produces or refines more than 50,000 barrels of oil per day is ineligible. Entities that own more than 1,000 barrels of oil per day, or 6 million cubic feet of gas per day, are excluded as well.Lease Costs: These include the purchase of lease and mineral rights, lease operating costs and all administrative, legal and accounting expenses. These expenses are 100% deductible in the year they are incurred.Alternative Minimum Tax: All excess intangible drilling costs have been specifically exempted as a "preference item" on the alternative minimum tax return.Developing Energy InfrastructureThis list of tax breaks effectively illustrates how serious the U.S. government is about developing the domestic energy infrastructure. Perhaps most telling is the fact that there are no income or net worth limitations of any kind for any of them other than what is listed above (i.e. the small producer limit). Therefore, even the wealthiest investors could invest directly in oil and gas and receive all of the benefits listed above, as long as they limit their ownership to 1,000 barrels of oil per day. No other investment category in America can compete with the smorgasbord of tax breaks that are available to the oil and gas industry.

14. Investment types Investment Options in Oil and GasSeveral different avenues are available for oil and gas investors. These can be broken down into four major categories: mutual funds, partnerships, royalty interests and working interests. Each has a different risk level and separate rules for taxation.Mutual Funds: While this investment method contains the least amount of risk for the investor, it also does not provide any of the tax benefits listed above. Investors will pay tax on all dividends and capital gains, just as they would with other funds.Partnerships: Several forms of partnerships can be used for oil and gas investments. Limited partnerships are the most common, as they limit the liability of the entire producing project to the amount of the partner's investment. These are sold as securities and must be registered with the Securities and Exchange Commission (SEC). The tax incentives listed above are available on a pass-through basis. The partner will receive a Form K-1 each year detailing his or her share of the revenue and expenses.Royalties: This is the compensation received by those who own the land where oil and gas wells are drilled. This income comes "off the top" of the gross revenue generated from the wells. Landowners typically receive anywhere from 12-20% of the gross production. (Obviously, owning land that contains oil and gas reserves can be extremely profitable.) Furthermore, landowners assume no liability of any kind relating to the leases or wells. However, landowners also are not eligible for any of the tax benefits enjoyed by those who own working or partnership interests. All royalty income is reportable on Schedule E of Form 1040.

15. Investment types Working Interests: This is by far the riskiest and most involved way to participate in an oil and gas investment. All income received in this form is reportable on Schedule C of the 1040. Although it is considered self-employment income and is subject to self-employment tax, most investors who participate in this capacity already have incomes that exceed the taxable wage base for Social Security. Working interests are not considered to be securities and therefore require no license to sell. This type of arrangement is similar to a general partnership in that each participant has unlimited liability. Working interests can quite often be bought and sold by a gentleman's agreement.Net Revenue Interest (NRI)For any given project, regardless of how the income is ultimately distributed to the investors, production is broken down into gross and net revenue. Gross revenue is simply the number of barrels of oil or cubic feet of gas per day that are produced, while net revenue subtracts both the royalties paid to the landowners and the severance tax on minerals that is assessed by most states. The value of a royalty or working interest in a project is generally quantified as a multiple of the number of barrels of oil or cubic feet of gas produced each day. For example, if a project is producing 10 barrels of oil per day and the going market rate is $35,000 per barrel (this number varies constantly according to a variety of factors), then the wholesale cost of the project will be $350,000.Now assume that the price of oil is $100 a barrel, severance taxes are 7.5% and the net revenue interest (the working interest percentage received after royalties have been paid) is 80%. The wells are currently pumping out 2 barrels of oil per day, which comes to $200 per day of gross production. Multiply this by 30 days (the number usually used to compute monthly production), and the project is posting gross revenue of $6,000 per month. Then, to compute net revenue, we subtract 20% of $6,000, which brings us to $4,800.Then the severance tax is paid, which will be 7.5% of $4,800. (Landowners must pay this tax on their royalty income as well.) This brings the net revenue to about $3,602 per month, or about $43,218 per year. But all operating expenses plus any additional drilling costs must be paid out of this income as well. The Bottom LineFrom a tax perspective, oil and gas investments have never looked better. Of course, they are not suitable for everyone, as drilling for oil and gas can be a risky proposition. Therefore, the SEC requires that investors for many oil and gas partnerships be accredited, which means that they meet certain income and net worth requirements. But for those who qualify, participation in an independent oil and gas project can give them just what they're looking for.

16. Terminology • Definition of 'Development Well’: A well drilled in a proven producing area for the production of oil or gas. • Exploitation well. • Pinpointing best locations. • Production. • Extract, separate, remove, and sell. • Site abandonment. • Plugging and restoring the site.

17. Partnership with Generational Oil Company • Working Interests. • Investors requirements. • Partnerships and liability. • Net Revenue Interest (NRI) • Gross and net revenue. • Values of investors.

18. U.S. Now Produces 10 Percent of World’s CrudeThe Daily Pickens  |  March 26th, 2014No comments This week the Energy Information Administration announced that domestic production of crude oil had surged to the point that the U.S. is now producing 10 percent of the world’s crude. The figure applied to the fourth quarter of 2013, when domestic production totaled 7.84 million barrels per day.The continued growth in production is attributable primarily to technologically advanced drilling and completion processes that facilitate production of oil from tight formations in fields such as the Eagle Ford and the Bakken Shale. Tight oil refers to oil found within reservoirs with very low permeability, including but not limited to shale. Presently, the U.S. and Canada are the only major producers of tight oil in the world.U.S. tight oil production averaged 3.22 million barrels per day (MMbbl/d) in the fourth quarter of 2013, according to U.S. Energy Information Administration estimates. This level was enough to push overall crude oil production in the United States to an average of 7.84 MMbbl/d, more than 10% of total world production, up from 9% in the fourth quarter of 2012.- See more at: http://www.pickensplan.com/#sthash.XPESAKBM.dpuf

19. Tax Advantage When it comes to tax-advantaged investments for wealthy or sophisticated investors, one investment class continues to stand alone above all others: oil. With the U.S. government's backing, domestic energy production has created a litany of tax incentives for both investors and small producers.Several major tax benefits are available for oil and gas investors that are found nowhere else in the tax code. Read on, as we cover the benefits of these investments and how you can use them to fire up your portfolio.Striking OilThe main benefits of investing in oil include:Intangible Drilling Costs: These include everything but the actual drilling equipment. Labor, chemicals, mud, grease and other miscellaneous items necessary for drilling are considered intangible. These expenses generally constitute 65-80% of the total cost of drilling a well and are 100% deductible in the year incurred. For example, if it costs $300,000 to drill a well, and if it was determined that 75% of that cost would be considered intangible, the investor would receive a current deduction of $225,000. Furthermore, it doesn't matter whether the well actually produces or even strikes oil. As long as it starts to operate by March 31 of the following year, the deductions will be allowed. Tangible Drilling Costs:Tangible costs pertain to the actual direct cost of the drilling equipment. These expenses are also 100% deductible but must be depreciated over seven years. Therefore, in the example above, the remaining $75,000 could be written off according to a seven-year schedule.Active vs. Passive Income: The tax code specifies that a working interest (as opposed to a royalty interest) in an oil and gas well is not considered to be a passive activity. This means that all net losses are active income incurred in conjunction with well-head production and can be offset against other forms of income such as wages, interest and capital gains.

20. Generational Oil Company

21. Tax Advantage Small Producer Tax Exemptions: This is perhaps the most enticing tax break for small producers and investors. This incentive, which is commonly known as the "depletion allowance," excludes from taxation 15% of all gross income from oil and gas wells. This special advantage is limited solely to small companies and investors. Any company that produces or refines more than 50,000 barrels of oil per day is ineligible. Entities that own more than 1,000 barrels of oil per day, or 6 million cubic feet of gas per day, are excluded as well. Lease Costs: These include the purchase of lease and mineral rights, lease operating costs and all administrative, legal and accounting expenses. These expenses are 100% deductible in the year they are incurred.Alternative Minimum Tax: All excess intangible drilling costs have been specifically exempted as a "preference item" on the alternative minimum tax return. Developing Energy InfrastructureThis list of tax breaks effectively illustrates how serious the U.S. government is about developing the domestic energy infrastructure. Perhaps most telling is the fact that there are no income or net worth limitations of any kind for any of them other than what is listed above (i.e. the small producer limit). Therefore, even the wealthiest investors could invest directly in oil and gas and receive all of the benefits listed above, as long as they limit their ownership to 1,000 barrels of oil per day. No other investment category in America can compete with the smorgasbord of tax breaks that are available to the oil and gas industry.

22. Bombshell Oil

24. For years, investors and their accountants have been reducing taxes by using the generous tax benefits available through oil and gas drilling programs. To encourage domestic drilling, Congress and the Tax Code allow high tax write-offs for direct investments into drilling. These offerings are most often sold as DPPs, or direct participation programs, securities. Investors could expect 65 to 95 percent write-offs, dollar for dollar against active taxable income, depending on the structure of the drilling program. Anyone who owes more than $12,000 in taxes could benefit, and certainly high-net-worth individuals often owe much higher than that. • The CPA's Guide to Financial and Estate Planning • Getting Started on the CPA/PFS Credential Pathway • Leverage AICPA Financial Planning Resources Now • Understanding the Net Investment Income Tax • The CPA's Guide to Financial and Estate Planning A hypothetical tax illustration follows: An investor learns he has taxable income of $100,000 (line 36 of the tax return), after meeting with his accountant. In the 28 percent tax bracket, his tax liability is $28,000. He decides to invest $60,000 in a drilling partnership giving 65 percent write-offs, or a $39,000 write-off. His taxable income of $100,000 has now been reduced to $61,000, and his tax liability (now down to the 25 percent tax bracket) is reduced to $15,250. The savings in taxes in this example is $12,750. So again, instead of paying a $28,000 tax bill to the IRS, he will instead pay $15,250 and invest $60,000 (a total expenditure of $75,250) for which he will receive potential future income. He created an asset, potential future cash flow, and he is building his net worth, while diversifying his overall holdings. In another example, a couple in a high tax bracket have high salary compensation and business income. Their taxable income is $360,000 (line 36 of the tax return). This couple decides to invest $100,000 in a drilling program that is structured to allow a 95 percent immediate write-off, or a $95,000 write-off against their active income. The taxable income of $360,000 has now been reduced to $265,000. Had they not invested, their tax would have been $126,000 (35 percent tax bracket). By reducing the taxable income to $265,000, their tax liability will now be $87,450 (down to the 33 percent tax bracket) and they are paying $38,550 less in taxes. The investor will not normally receive any cash flow from the drilling investment for about six months to a year. The investment funds are used to drill the wells and bring them online. As the wells are brought online and the oil or gas is sold, the investor will then experience monthly cash flow from the sales. After the first year, an annual 15 percent depletion tax allowance is given against the income derived from oil and gas. Another more complicated calculation can be used, but most investors choose the straight 15 percent depletion. For investors who may have an alternative minimum tax issue, drilling programs’ intangible drilling costs are included among AMT preference items and can help reduce the overall tax liability. In addition, since oil and gas working interests are considered “active” income rather than “passive” income, write-downs can be used against business income, salaries, stock trades, etc. These tax benefits may go away in 2010 or 2011. This is unknown at the moment, but has been proposed by the Obama administration as one of the revenue raisers to reduce the federal deficit. Hence, 2009 may be one of the last years to benefit from this type of investment in the way we know it today.

25. Citations

26. Oil and Gas Industry: 2014 OutlookAs North America’s energy renaissance gains further momentum, John England, vice chairman and U.S. Oil & Gas leader for Deloitte LLP, discusses some of the opportunities and challenges the oil and gas industry could see in the year ahead and areas where it may be focusing its investments and resources.Q: Where is the oil and gas industry headed in 2014, and what will be among its major challenges?John England: As we move further into 2014, investments in the energy renaissance will continue to shift from the upstream exploration and production (E&P) sector to midstream infrastructure, refinery operations and petrochemical facilities. Upstream operators will focus on harvesting value from recent discoveries and acquisitions through more efficient operations and the application of new technologies. Evidence of this spending shift already appears in company capital expenditure budgets. According to Oil & Gas Journal, upstream E&P capital spending in North America stayed flat over the past year, rising only slightly from $354.4 billion in 2012 to $354.8 billion in 2013. Meanwhile midstream capital spending surged 263% to $46.4 billion in 2013¹ from just $12.8 billion in 2012. Downstream capital spending has also been ramping up, with spending rising 11% in 2013 to $24.7 billion² over 2012.In terms of challenges, five stand out: execution of capital projects, finding capital to finance growth and making capital work efficiently, securing talent ahead of an expected wave of retirements, reducing costs and last, but very important, managing the industry’s public perception. Also, this year will be critical for many companies as they attempt to successfully deliver major capital projects, and the result of the projects could significantly influence their stock price, as well as their liquidity.Q: How can the North American oil and gas industry finance its plans to grow in 2014?John England:  First, for the industry overall, competition for financing will be stiff, as the number of players in the industry continues to increase with the influx of independents. The industry will likely require more complex financing structures to meet the level and breadth of investment forecast and to complete megaprojects, which are consuming a larger portion of annual company cash flows. Even with additional financing, however, the industry will want to keep a close eye on the uncertain government and regulatory landscape. Many incentives and taxing regimes that can significantly affect the economics of these investments remain in flux. Companies investing capital in oil and gas plays will need to navigate government and regulatory uncertainties to maximize their investments, including areas such as:Development of unconventional plays in states that have little experience regulating the oil and gas industry.Federal and state tax regimes aimed at collecting a portion of the economic value generated by the oil and gas extracted from shale formations.Delays caused by the rising tide of permitting requests resulting from the increased number of wells needed to develop an unconventional reservoir.The impacts of existing trade restrictions such as those causing delays in the approval of the Keystone XL pipeline and the ability to export domestic crude supplies.There is also the potential for more environmental regulations to address concerns over drilling processes, possible water contamination related to shale development, drilling moratoriums and offshore regulations regarding production safety systems and equipment.Q: What is your expectation for merger and acquisition (M&A) activity in industry in the year ahead?John England:  I expect the industry to continue taking a cautious approach. This is consistent with findings from Deloitte’s recent CFO Signals™ survey. CFOs from the Energy/Resources sector responding to the survey indicated their organizations are biased toward limiting risk, and this sector is among the most focused on contracting/rationalizing (along with the Technology sector). In 2013, M&A activity in the oil and gas industry declined 29% both in deal value and deal count, indicating companies are focused on project operations rather than inorganic growth.³ Part of the decline in M&A activity was a result of companies seeking to complete transactions in 2012 ahead of possible tax increases in 2013. As we know, those didn’t happen.Furthermore, companies that have acquired large-acreage positions are now focused on optimizing production, streamlining operations and maximizing the return on assets of their holdings. Natural gas prices have also firmed over the past year, giving potential sellers incentive to hold on to their assets and focus on production. As companies see rising liquefied natural gas export approvals, a revitalization of the U.S. petrochemicals industry, increased demand from power generation, and growing adoption of natural gas for vehicle fleets, many natural gas-focused companies may hold on to their stakes waiting for prices to rise further.Q: What are your expectations for engineering, procurement and construction (EPC) resource capacity?John England: EPC spending in North America will continue to rise in 2014, which may cause further backlogs for planned megaprojects. Although the growth in orders is generally good for the EPC industry, backlogged EPC companies will face hiring challenges and will find their technical capabilities stretched thin as they try to maximize the talents of their best people. Given the reliance of the oil and gas industry on EPC companies for megaproject execution, it will be critical to the success of the North American energy renaissance to effectively address the challenges the EPC industry will face.

27. Q: What are your expectations for engineering, procurement and construction (EPC) resource capacity?John England: EPC spending in North America will continue to rise in 2014, which may cause further backlogs for planned megaprojects. Although the growth in orders is generally good for the EPC industry, backlogged EPC companies will face hiring challenges and will find their technical capabilities stretched thin as they try to maximize the talents of their best people. Given the reliance of the oil and gas industry on EPC companies for megaproject execution, it will be critical to the success of the North American energy renaissance to effectively address the challenges the EPC industry will face.Q: Why will talent be a challenge for the oil and gas industry?John England: Consider this: The U.S. Department of Labor estimates that 50% of the oil and gas industry’s workforce will be eligible for retirement within the next five to ten years.⁴ That means there will be a significant number of vacancies that will need to be filled. Competition for skilled talent will put upward pressure on wages, which will pinch project margins. Already, the industry has been hiring at a rate that far outpaces the rest of the economy. According to Bureau of Labor Statistics data, private sector employment has risen 7% since January 2010, while employment in the oil and gas industry has risen more than 25%.⁵ As a result of rising industry employment, hourly wages for the oil and gas industry are up 27.3% since the beginning of the shale revolution in 2006. That outpaces wage increases in the general economy, which are up just 17.8% over the same period.⁶ So controlling fixed costs for projects, including wages, will increasingly be important for the industry as companies look ahead to the ‘big shift change.’ This is an area where talent analytics could be useful in workforce planning.Q: 2013 saw some earnings declines compared to 2012. What does 2014 hold ?John England: Clearly, reducing the cost of operations will be key if companies expect to maximize value. Many partners are pressuring oil and gas companies to cut back on expenditures and focus on buying back shares and increasing dividends. Several of the supermajors have already announced their capital spending may currently be at a peak. This renewed focus on lowering spending could put oilfield services companies and equipment manufacturers under pressure to control costs. As oil and gas companies squeeze contractors to lower costs, oilfield services companies will need to increase operational efficiency as well.Q: With respect to public perception, what can the industry do to enhance its image?John England: While public perception is beginning to turn around with positive perception of the industry rising, according to Gallup Poll research,⁷ public perception remains an overarching challenge for the industry. Public perception influences public policy and regulatory scrutiny, as well as impacts the industry’s ability to recruit the best and brightest talent. In the era of the 24-hour news cycle and pervasive Internet connectivity where individuals have their own Twitter feeds, YouTube channels, and blogs, technology provides an amplifying effect for industry critics. In order for oil and gas companies to maintain the social license to operate, they must communicate a clear commitment to environmental care, safety and community engagement, all of which will benefit the long-term growth of the industry.As can be seen in the industry’s effect on U.S. employment, the oil and gas industry is creating jobs, moving thousands of workers back into the workforce, and increasing wages and standards of living. The industry should continue to brand itself as a high-tech, innovative industry that cares about people and the environment, and is critical to the U.S. economy.Endnotes1. ConglinXu, “Capital Spending in the US, Canada to rise led by pipeline investment boom,” Oil and Gas Journal, March 4, 2013, http://www.ogj.com/articles/print/volume-111/issue-3/s-p-capital-spending-outlook/capital-spending-in-us-canada-to-rise.html.2. Ibid.3. PLS Inc. and Derrick Petroleum Services Global M&A Database.4. Jill Tennant, “Making informed human resources decisions based on workforce outlook,” World Oil Online, September 2012, http://www.worldoil.com/September-2012-Making-informed-human-resources-decisions-based-on-workforce-outlook.html.5. U.S. Department of Labor, Bureau of Labor Statistics, accessed June 4, 2013, http://www.bls.gov/news.release/empsit.toc.htm.6. Ibid.7. Jeff Jones and Lydia Saad, “Gallup Poll Social Series: Work and Education,” Gallup News Service, August 7-11, 2013, http://www.gallup.com/file/poll/164099/130823IndustryRatings.pdf.

28. http://www.einsteinsoilery.com/synthetic-motor-oil-the-lubricant-for-the-modern-car/http://www.einsteinsoilery.com/synthetic-motor-oil-the-lubricant-for-the-modern-car/ http://dictionary.reference.com/browse/oil?s=t http://www.xroilprice.com/Uses_For_Oil.html