How the Johnson Hedge works

If your business is hurting because of high-energy costs, we can help you dramatically
lower your costs.

How does it work?
We will purchase oil or natural gas production in existing oilfields for you, roughly equivalent to the amount you are now using. The present price of oil in the ground is $10-$12 per barrel, selling at the wellhead for $60 per barrel.

How many years of production can you purchase for me?
We can purchase several years depending on the field. Once we purchase, it is yours.

What other costs can we incur?
You will have to pay the monthly operating costs of the wells. This should be no more than 15-20% of the monthly income.

How do we get our money?
You will be paid monthly from the well revenue.

Who will manage the wells after the purchase?
Anglo-European will manage the wells for you. We will form a limited liability company, which you will own and will be totally managed by Anglo-European.

Why a limited liability company?
A limited liability company makes neither a profit or a loss and the profits can be distributed to the owners without double taxation of dividends.

What are the tax advantages?
With a limited liability company, the depletion allowance would come directly to the owners of the company. The depletion allowance is in the range of 15-30% of the yearly profit of the well.

Give an example of how this hedge could work for me:
Suppose you use 1,000,000gallons of fuel oil per year and are now paying $2 per gallon and the price is rising. One million gallons is approximately 23,800 barrels (42 gallons/barrel).
We would attempt to purchase about 240,000 barrels in the ground or about 10-years of fuel for you. At $10 per barrel this would cost you about $2.76 million.
Your monthly fuel costs overage would be about $170,000. We will try to get wells that produce about 3,260 barrels per month. If we received $60 per barrel, this would equal $195,600 minus $29,340 for operating costs equal to $166,260.
In summary, if your fuel costs for the next 10 years are $2 per gallon, then your total costs will be $20 million. If you hedged with us, your total costs for the next 10 years would be $2.76 million. If the fuel costs go up for the next 10 years (which it probably will) and fuel averages $4 per gallon, your costs will total $40 million. If you hedge with us, your total cost will still only be $2.76 million.

Click here to learn more about the Johnson Hedge