Proposal for the Lease Bank

•  $36,000 of the $100,000 lease bank will be paid to Don Shepherd and Jon Selby ($18,000 to each) for professional services rendered.  This sum represents reimbursement for up to 240 hours for landman and  project management time of Don Shepherd and up to 240 hours of geologist time for Jon Selby.  Don and Jon have each already worked 100  hours on these projects, so in the event either Don Shepherd or Jon Selby should work more than 140 additional hours in regard to either of these tasks, then they would be compensated by the Lease Bank at the rate of $75 per hour for each hour of additional time worked.
  
• Any  travel expenses or other normal business expenses incurred by either  Don Shepherd or Jon Selby will be reimbursed by the Lease Bank.
  
•  At  the discretion of Stardust, a portion of the Lease Bank funds may be  spent on services to be performed by a landman other than Don Shepherd  and/or on services to be performed by a geotech. 
  
•  All  or a part of the balance of the funds will be spent on lease bonuses  for oil and gas leases within the area defined by the Prospect. We anticipate that oil and gas leases can be acquired on most of these prospective tracts for very reasonable terms. Many, if not most of the lease bonuses should be $50 per acre or less. And most of the lease royalties should fall between 1/8 and 1/6. Also, we anticipate the title should be fairly simple and straightforward. In this area, most of the surface owners will own 100% of the minerals.
  
•  At the sole discretion of Stardust, any funds remaining after the paying of the above expenses will either be returned to the Lease Bank Participants, or spent on lease acquisitions for additional prospects  identified by Jon Selby’s expanded geological evaluation.

After the leases have been acquired and additional prospects identified, Stardust will promote the drilling of the prospects to other industry participants. At this time, it is anticipated that Stardust will sell 100% interest in the oil and gas leases acquired covering the  Prospect at a per-acre price that will return all Lease Bank funds plus a  profit. The terms of the sale will also include a commitment to drill at least one test well, and potentially several more. In the assignment,  Stardust will reserve an override and also a back-in after the payout, both of which will be shared 50-50 with the Lease Bank Participants.

Additionally,  the parties who agree to drill the Prospect will receive an option to  acquire leases on any additional prospects identified by Jon Selby’s supplemental geological evaluation. At this time, it is anticipated that  Stardust and the Lease Bank Participants will be compensated for granting this option by receiving the same overriding royalties and back-in after payouts that we received on the Prospect plus a very reasonable $25,000 prospect fee attributable to each prospect identified.

In the event Stardust is able to secure leases and sell them to industry participants, any proceeds from the sale will go to the Lease Bank Participants until they have received 100% of their investment back plus a profit of $25,000. In the event the sale price is less than that amount, then the Lease Bank Participants will receive 100% of the proceeds from any overriding royalties reserved in the sale, and/or from any back-ins after payout attributable to the leases, until such time  as the Lease Bank Participants have received 100% of their investment back plus a profit of $25,000. After such time, all such proceeds will be shared on the basis of 50% to Stardust Energy, Inc. and 50% to the  Lease Bank Participants. 

Ideally, Stardust will have the Prospect leased and the additional prospects identified within two to three months from the receipt of funding. The next step would be to begin the process of bringing in industry participants to fund the drilling program. Potentially, the Lease Bank Participants could have 100% of their investment returned through the sale of the Prospect leases, along with a nice profit within six months. Then, the ultimate return on investment (ROI) would depend upon the success of the drilling program, and also how big of an override Stardust and the Participants would share in each successful well. If the Prospect is successful, we could end up with an override and back-in in five wells on that prospect alone, which ultimately could represent more than 100,000 BO, with our part being in the neighborhood of 10,000 barrels. In this scenario, the Lease Bank Participants would receive better than a three to one ROI, even at $40 oil. And that ROI could easily double, triple, or quadruple with more successful wells drilled on additional prospects and/or with a higher oil price.

Unfortunately, there are no guarantees, but we can tell you that we are very confident we can acquire these leases and then sell them to industry participants for a profit, a reserved overriding royalty interest, and a back-in after the payout, plus a commitment to drill a test well on the Prospect. This type of project is very common in the oil and gas exploration business. Furthermore, the geology behind these prospects is not terribly complex. We have well logs and scout tickets from more than 100  wells on which to base our conclusions, and at this shallow depth, that is plenty. Also, the industry participants will be very happy with the economics, and with the close-in, low-risk nature of the well we are proposing to drill. What Stardust can guarantee is that our intention is to provide each of the Lease Bank Participants with a fun and hassle-free experience, and hopefully, a nice profit as well. For us, this is not a one-off. Rather, we see this as the beginning of a long and mutually beneficial relationship with the Lease Bank Participants.  It is our sincere goal that each Lease Bank Participant will not only participate in many other projects offered by Stardust in the future, but they will bring their friends with them when they re-invest the profits from this one.  

Have you opened a new location, redesigned your shop, or added a new product or service? Don't keep it to yourself, let folks know.

Customers have questions, you have answers. Display the most frequently asked questions, so everybody benefits.