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Case Study: How a Kingdom Program Works
The Slocum Hollow Oil Project is a 30-well conventional vertical development in Cattaraugus County, New York, positioned just north of our Wing Hollow and West Five Mile projects — two 40-well conventional programs in the same shallow sandstone trend.
This program is fully funded and closed. Nothing on this page is an offer to sell or a solicitation of an offer to buy. It is published so that a prospective investor can see, in advance of the next program, exactly how one of these deals is assembled: what a unit is, what a unit owns, how money comes back, and what obligations come with it.
Slocum Hollow was development drilling rather than exploration. The acreage sits inside an established field with offsetting production, and each wellbore was drilled to test up to six shallow sandstone formations that have been produced in this area for decades.
Adjacent Project: Wing Hollow
Our 40-well Wing Hollow Project sits just south of Slocum Hollow and targets the same shallow pay zones:
- 40 wells drilled — 30 producing, 10 in completion phase
- Six shallow sandstone pay zones, same trend as Slocum Hollow
Well counts are point-in-time figures as last published on the Wing Hollow project page, not a live feed. Ask us for the current well-status report before relying on them.
Watch: Project Overview
Recorded while the program was open. It describes Slocum Hollow, which is now closed.
How the Program Was Structured
Development, Not Exploration
Acreage inside an established field, surrounded by producing wells, targeting six formations already produced in the area.
Operator
Vertical Energy, which has drilled over 1,500 shallow wells in the region.
Stacked Pay Zones
Up to six sandstone formations between 500' and 1,800' per wellbore.
Year-One Deductibility
Intangible drilling costs are deductible in the year incurred. A deduction lowers the tax on income you have already earned — it is not a return on the investment and does not reduce the risk to your capital.
Direct Ownership
3.333% working interest and 2.5% net revenue interest per unit. The revenue interest is smaller than the working interest because production is burdened by lease royalty and overriding royalties — roughly a 25% load. That gap is normal, not a typo.
Well Cost
$185,000 per well, budgeted, fully loaded drilling and completion — which is also the price of one unit, because a unit is 1/30th of a 30-well program. Actual costs can exceed budget.
What a Unit Is, and How It Pays
The unit
One full unit in Slocum Hollow was priced at $185,000 — the fully loaded cost of drilling and completing one well, and 1/30th of the 30-well program. That buys a 3.333% working interest across the program (1 ÷ 30), not ownership of one specific well, so a unit is spread over all 30 wellbores rather than riding on a single hole. Thirty full units make up the whole program: 30 × 3.333% = 100% of the working interest. If a program’s unit count multiplied by its stated working interest does not land at or under 100%, the numbers are wrong — check that on any offering you are shown, including ours.
Working interest vs. net revenue interest
The working interest (3.333%) is your share of the costs — drilling, completion, and ongoing operating expense. The net revenue interest (2.5%) is your share of the revenue from oil sold. Revenue interest is smaller than working interest because production is burdened by the lease royalty owed to the mineral owner plus overriding royalties, which together take roughly 25% off the top. You carry 3.333% of the cost and receive 2.5% of the revenue. Any program that quotes only a working interest percentage is telling you half the story; ask for the NRI.
How distributions are calculated and when they begin
A well pays nothing until it is drilled, completed, connected to a tank battery, and selling oil. Once it does, oil is sold to local buyers at WTI-based pricing, and your distribution is your net revenue interest applied to the revenue from oil sold, with your working-interest share of operating expenses charged against it. Distributions therefore move with production volumes and with the oil price, and they decline as the wells decline. There is no fixed payment, no coupon, and no guaranteed schedule — the payment mechanics and timing for any program are set out in that program's offering documents.
Minimum investment
$185,000 was the full-unit price for this program. Minimums and unit sizes vary by program and are stated in the offering documents for the program you are considering.
Project Specifications
What a Working Interest Owner Takes On
A working interest is direct ownership, and it carries direct liability. This is the part of the structure most first-time participants miss:
- The interest is assessable. If drilling, completion, or operating costs run past budget, working interest owners can be asked for additional capital — a cash call — in proportion to their interest. Your exposure is not automatically capped at your subscription amount.
- Operating costs come out first. Your share of lease operating expense, workovers, and repairs is charged against your revenue. A well that produces but does not cover its operating cost distributes nothing.
- Plugging and abandonment liability. Every well eventually has to be plugged and the site restored, under state rules. Working interest owners are responsible for their share of that cost, and it comes at the end of a well's life when it is no longer generating revenue.
- Wells can fail mechanically or be uneconomic. A well can encounter oil and still not be worth completing. Drilling in a developed field reduces geologic uncertainty; it does not eliminate mechanical failure, disappointing rates, or wells that never repay their cost.
- Price and illiquidity. Distributions track the oil price and decline with the wells. There is no public market for a working interest, no redemption right, and you should assume you cannot sell it when you want to.
- Regulatory. Wells in this program are located in New York State and are subject to state permitting, operating, and plugging requirements. New York prohibits high-volume hydraulic fracturing; the wells described on this page are conventional vertical wells drilled to shallow sandstone formations between 500' and 1,800'. Permit status and any well stimulation are addressed in the offering documents for a program, not on this page. Regulation can change, and changes can affect operating cost, timing, or the ability to drill at all.
- Total loss is possible. You can lose your entire investment.
The full risk factors for any program are set out in that program's offering documents, and the obligations above are governed by the operating and participation agreements you sign. Read them with your own counsel and CPA before you commit capital.
Slocum Hollow Is Closed. The Next One Isn't Open Yet.
There is nothing to subscribe to on this page. If the structure above is the kind of thing you want to participate in, join the first-look list — when the next program opens, that list sees the geology and the offering documents before anyone else.
Disclaimer: This page describes a program that is fully funded and closed. It is provided for information only and is not an offer to sell or a solicitation of an offer to buy any security. Kingdom Exploration offerings are private placements made only to accredited investors under SEC Regulation D and only by means of a confidential offering memorandum. Oil and gas investments involve substantial risk, including cost overruns, assessability, plugging liability, and the loss of your entire principal. Past results of any project do not guarantee future results. Nothing here is tax or legal advice — consult your own CPA and attorney regarding IDC deductions and working interest ownership.
