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Creating Exceptional Value with
Producing Oil and Gas Royalties
Working Interests
Non-Operated Interests
Master Limited Partnerships

Business Summary
JUNE 2015

AMERICAN MINERALS GROUP (AMG) specializes in acquiring and
managing Royalty Income Properties such as producing and non-producing
mineral Royalty Interests (RI) and Overriding Royalty Interests (ORRI). AMG
also acquires non-operated Working Interests (WI) in producing oil and
natural gas regions throughout the United States, building diversified
portfolios of assets that have the potential to generate steady cash flow and
a significant wealth-building portfolio. Non-operated Working Interests and
Royalties Programs are a percentage ownership entitlement in the production
from oil and gas wells that provide income to investors. The attractiveness of
these types of investments is that they generate cash off of the oil and gas
revenues, and usually prior to any operating responsibility or expenses that
occur when managing operations of the oil or gas wells.
In the oil and gas industry this refers to ownership of a portion of the
resource or revenue that is produced. A company or person that owns a
royalty interest does not bear any of the costs of the operations needed to
produce the resource, yet the person or company still owns a portion of
resource of revenue produced.


The term "overriding royalty interests" means fractional, undivided
interests or rights of participation in the oil or gas, or in the revenue
proceeds from the sale of the oil or gas, produced from a specified tract or
tracts, which are limited in duration to the terms of an existing lease and
which are not subject to any portion of the expense of development,
operation or maintenance.
A royalty interest, in addition to the basic royalty, created out of the
working interest; it is, therefore, limited in its duration to the life of the lease
under which it is created. An overriding royalty is the right to receive

revenues, in addition to the basic royalty, from the production of oil and gas
from a well without paying the drilling or monthly operating expenses from
the well. Overriding royalty interests are not connected to an ownership of
minerals under the ground. Rather, it stems from ownership of a portion of
generated revenues from oil and gas. Owners of overriding royalty own only
proceeds from the production of minerals and not the minerals under the
ground. An overriding royalty interest expires once the lease has expired and
production has stopped, whereas, minerals and royalties owners maintain
their ownership after production stops.


Working Interest means an interest in an oil and gas lease that gives
the owner of the interest the right to explore, drill and produce oil and gas on
the leased mineral acreage. It requires each working interest owner to pay a
proportionate share of the costs of drilling and production operations. The
ownership position of the WI can be from 1% to 100% of the non royalty
ownership portion of a well. The share of production to which a working
interest owner is entitled will always be smaller than the share of costs that
the working interest owner is required to bear, with the balance of the
production accruing to the owners of royalties. For example, the owner of a
100% working interest in a lease burdened by a landowners mineral royalty
of 20% would be required to pay 100% of the costs of a well but would be
entitled to retain 80% of the production revenues.
A Non-Operated Working Interest owner holds a percentage interest in a gas or
oil well but does not participate in or have any management responsibilities for actual
operations of the well. An owner with a non-operating working interest is usually made
an insured under the insurance coverages written on the operations. Most NonOperated Working Interest Owners are passive investors which receive good tax
deduction benefits from investing their capital in an oil and gas property.


AMG has an Investment Fund for investors to participate in acquiring
Royalty Interests and Non-Operated Working Interests. This current Program


FUND). The Fund is an open-ended fund that AMG will acquire qualifying
properties in Oklahoma, Texas and Louisiana. Other areas may be considered
if the investment is a superior opportunity for our company and partners.
AMGs first objective is the acquisition of several million dollars of
producing royalty and mineral interests to provide sufficient cash flow for
AMG to achieve the second phase of its business plan. If AMG takes the path
of being a Publicly Traded entity, then we will file a registration statement for
a $3 to $10 million IPO of common stock. AMG will engage a well-qualified
financial investment firm to underwrite the offering at $3.00 to $5.00 per
share. (Estimated)

AMG will actively and aggressively begin discussions with various

private equity groups for preparation of our planned MLP. Most of the cash
proceeds from this target capital raise will be used to purchase additional
producing royalty interests. The acquisition of $6 to $7 million of producing
royalties will provide sufficient cash flow to cover AMGs annual corporate
overhead costs for Phase II of its business model.
Business Model Phase II
The additional capital will also provide AMG with the financial resources
required to create a royalty acquisition Master Limited Partnership (MLP),
of sufficient size, to trade on a national securities exchange. The MLP is the
cornerstone of AMGs business model. AMG will become the managing
general partner of the MLP.
The MLP will utilize a combination of unique economic and tax advantages to
acquire and accumulate over 100 Million Dollars of producing royalties. As
its general partner, AMG will not compete with the MLP, and will focus on
managing its royalty assets and being the acquisition arm for the MLP,
identifying and evaluating producing royalties for purchase by the MLP. The
MLP will create four sources of income and growth for AMG:
AMGs general partner ownership interest in the MLP 5%.
Management fee based on MLPs monthly net cash flow 5%
One acquisition fee based on the purchase price of royalty interests
acquired 3%.

Cash distributions paid by the MLP on units directly owned by AMG.

After the MLP has commenced its business, its growth from royalty
acquisitions will be the catalyst for AMGs earnings growth. We believe that
AMGs outstanding shares will be capped at 5 to 6 million after Phase I has
been accomplished. AMG will have increasing net earnings quarter to
quarter, year to yearyet the number of shares outstanding will not
The MLP can acquire royalty interests in exchange for its MLP units,
which is a far superior acquisition method than purchasing royalties for cash.
First, the exchange of a royalty interest for MLP units is a non-taxable
transaction. The royalty owner gains liquidity because the MLP units will
trade on a national securities exchange and can be used as collateral for an
overnight margin loan. He also retains most of his income stream through
cash distributions from the MLP. After the exchange of producing royalties
for MLP units, the life span of his income stream will significantly increase,
because his ownership in the MLP is a percentage of a larger, significantly
longer life oil and gas reserve pool, due to the MLPs ownership in several
thousand wells.
AMG believes that the MLP can acquire a very significant amount of
royalty interests in a four to five year period. Please read the next section of
key points to understand the size of the royalty sector and for additional
information on AMGs business model.
The subsequent pages of this Business Summary contain detail
information about AMGs business model that is organized as follows:
The Superior Way to Invest in Oil and Gas Key Points
The Royalty Interest What is a Royalty
Pages 8-9
The Power of
the Partnership
Pages 10-11
MLP Investment Funds

The Superior Way to Invest in Oil and Gas

The securities markets tend to assign superior valuations to publicly
traded general partners, because the GPs earnings growth is
derived from the MLPs ongoing acquisition program. The royalty
MLPs acquisitions literally may be never ending.

The United States is the only country in the world where the
Why sector
Did We
AMG? owner of the rights to drill
is Create
the predominant
To produce
become the
of the first Master Limited Partnership,
oil and
gas reserves.

which can exchange registered free trading MLP units for producing
royalties tax-free.
The new MLPs acquisition program will be unique because it uses a
powerful combination of economic and tax advantages.
About 4 million individuals in the U.S. receive oil and gas royalty
income well in excess of $100 billion annually.
The royalty business is the only segment of the oil and gas industry
that never has experienced a consolidation.

AMG, General Partner of the MLP

AMG was created to become the managing general partner of a newly
created oil and gas royalty acquisition MLP that should qualify for
listing on a national securities exchange such as the AMEX or NYSE.
As the MLPs general partner, AMG will receive both acquisition and
management fees from the MLP.
AMG will be perceived as a growth stock because its earnings should
increase each quarter as the MLP grows from acquisitions.
AMG expects to complete an IPO of its common stock in early 2008,
immediately followed by a post-IPO equity placement.
AMG has identified eleven institutional sources for significant post-IPO
capital. This final round of financing should provide AMG with the
necessary resources to create the royalty MLP with its IPO during the
first half of 2008.

The MLP is the Perfect Acquisition Vehicle

The MLP allows royalty owners to exchange royalty interests for
registered units in the MLP in a tax-free transaction.
Owners that exchange their royalty interests for MLP units retain
most of their monthly income from cash distributions, while gaining
liquidity because units will be listed on a national securities
exchange (NYSE).
The royalty owner increases the life span of his income stream by
exchanging for Partnership units because his ownership becomes a
percentage of the larger, significantly longer life oil and gas reserve
pool owned by the Partnership.
The MLP intends to acquire only true loyalty and overriding royalty
interests, which generate passive income for tax purposes.
Therefore, ownership of the royalty MLP units will not create
unrelated business income (UBIT) for the investor.
In fact, our royalty MLP will be the only MLP that does not generate
UBIT to its owners, making it eligible for direct investment by
pension funds, IRAs and 401(k) plans.

Why Acquire Oil and Gas Royalty Interests?

Oil and gas royalty income is not burdened by any costs or operating
expenses. Royalty income is paid to its owner off the top from the
gross oil and gas revenues paid to the oil companies. It is literally
the crme de la crme.
New royalty interests are created every day when new producing
wells are drilled at no cost to the royalty owner.
Currently, the private sector receives oil and gas royalty income well
in excess of $100 billion annually.
The potential consolidation of the oil and gas royalty segment is
huge, with an estimated value in excess of $800 billion.
If the MLP acquired just of 1% of the royalty interests in the U.S.,
the MLPs royalty income could be in the $475 to $500 million range
annually, with some $3.8 to $4 billion in value.
Why AMG is an Exceptional Investment
AMGs income is tied directly to the growth of the MLPs oil and gas
royalty acquisition program an almost unlimited growth potential, 4
million individual and corporate owners.
AMG will invest a portion of its after tax net earnings to purchase
MLP units in the open market, thereby increasing AMGs income from
cash distributions by the MLP.
We believe that AMG should continue to grow without debt or the
need to sell additional equity capital.
AMGs business model is low risk, because it is based upon a
completed IPO, plus substantial follow on capital from the MLP
investment funds and no debt.
Various significant MLP investment funds with combined capital of
over $50 billion have been created since 2004. AMG believes that
one of the funds will provide the capital to AMG that is necessary to
complete its IPO and to create the MLP.


What is a Royalty Interest?

In the United States, ownership of land, a fee simple estate in land, may be
divided into two separate real property estates, the surface fee and the mineral
fee. When U.S. was formed, the lands surface rights and its mineral rights were
owned by the same individual or entity. However, over the years, in many cases the

mineral rights have been severed from the surface ownership, resulting in tracts of
land having different owners of the surface and mineral rights. The owner of the
surface fee has the right to use and possess the surface of the ground, while the
owner of the mineral fee owns and has the right to extract the minerals situated
beneath the surface. The mineral fee owner creates a royalty interest from his
mineral interest by conveying or reserving a royalty interest, when granting an oil
and gas lease to a drilling company.
A drilling and exploration company must obtain an oil and gas lease from the
owner(s) of the mineral fee rights prior to the drilling of the well. The oil and gas
lease is granted for an initial cost, usually based on a dollar amount per acre, called
the lease bonus, for a term of years, renewable each year for an amount called
the delay rental. The lease provides for a specific payment (a percentage of the
gross revenues) to the mineral owner if a well is drilled and proves to be a
commercial producer of oil and or gas. This payment, known as a royalty
interest, being a percentage of the gross revenues typically ranging from
12.5% to 33.3%, comes, off the top, before the operating expenses of the wells
are deducted.
The drilling company pays all the costs of drilling and equipping the well, and
assumes all monetary risks if the well is a dry hole. If the well is a commercial
producer then the oil company is responsible for all the expenses associated with
the monthly operation of the well. The mineral owners royalty interest bears
none of these costs hence the term: a percentage of the gross revenues. As
new successful producing wells are drilled on the lease, additional revenue is
created for the royalty interest at no cost to the mineral owner.
Oil companies without fail make monthly payments to the royalty owners to
ensure that leases on producing properties are not cancelled. Due to this fact, the
cash flow from producing royalty interests is the most secure income stream in the
United States.

Illustration of a Royalty Interest


Farmer Jones signs

an Oil and Gas Lease
with an Oil Company
and retains a 20%
Royalty Interest.
The Oil Company
then drills a
producing oil well.


Oil is produced from a

formation below the surface
and flows from the wellhead
into storage tanks.


Each barrel is sold

to a refinery or
other purchaser
who pays the
royalty owner and
the operator of the

Royalty Owner
payment for
20% of the
income off the
top no
expenses are
Oil company
payment for
80% of the
income and
must pay 100%
of the monthly
operating costs
to keep the well
Minerals Group
and its MLP will
acquire only
pure cost free
royalty and

Crude oil has experienced a significant upside move from $15/bbl in 1999 to $100/bbl.
Royalty owners receive all of this increase because the Royalty Income is free of any and all
costs. The operating oil company pays 100% of the third party drilling and production costs
of every well, such costs have increased dramatically during the past two or three years.


The Power of the Partnership

(Proposed General Partner)
A New Royalty Master Limited Partnership

In the past new publicly traded entities have faced the dilemma of not being able to
achieve asset growth and concurrently increase their earnings per share. Adding
assets to a companys business has traditionally been accomplished by incurring
debt, having high levels of overhead, and the issuance of additional shares of
equity. These factors make earnings per share growth difficult to accomplish and
American Minerals Group will utilize two entities in its business model to
simultaneously achieve significant asset growth and ever increasing earnings per
share for its stockholders. Asset growth will occur in a new separate entity, the
royalty Master Limited Partnership (MLP), which will payout most of the royalty
income generated from its assets to its public owners in the form of quarterly cash
distributions. This entity will be the Asset Accumulator. The market value of its
equity units will be yield driven.
American Minerals Group (AMG) will receive income from the Asset Accumulator in
the form of management and acquisition fees plus cash distributions from MLP units
owned by AMG. These income sources will increase as the Asset Accumulator
continually acquires additional royalty interests. The main key to AMGs success
is the ability to earn an increasing level of fee income from the Asset
Accumulator without issuing any additional shares of common stock.
Here is how it works..
AMG believes that a rare opportunity exists to consolidate the overlooked royalty
segment of the energy industry. The objective of our business model is to achieve
earnings growth from the accumulation of high quality income producing oil and gas
royalties by the MLP. The founders and initial shareholders envision AMG (the
corporate General Partner (GP) of the MLP) to be the Capital Gain Vehicle.
The following key points are reasons that AMG will create increasing value for its

After AMG has completed its IPO of common stock, it will add additional
equity in the form of convertible preferred stock for $8 to $10 million. AMGs
Board of Directors at this point will place a cap on the number of shares of
outstanding stock at 6 million shares or less. The only additional shares

issued would come from underwriters warrants and stock options held by
officers and directors.
AMG will be the corporate general partner which is responsible for identifying
and evaluating producing royalties for acquisition by the MLP. Acquisition
guidelines will be developed and approved by AMGs Board, our petroleum
engineers and the MLPs Board of Governors.
The royalty MLP will be the Asset Accumulator, which will acquire producing
royalties using two methods of financing. The MLP will exchange units of
ownership in the MLP for royalty interests and additionally, it will use cash
proceeds from the sale of MLP units to purchase royalties. The MLP units will
be the currency that finances the MLPs acquisitions.
Quarterly cash distributions will be paid to the unit holders from the income
generated by the MLPs producing royalties. We anticipate that the MLPs
units will be listed on a national securities exchange, such as NYSE, and will
trade as a Yield Security.
AMG will receive income from three sources:
1. A management fee paid by the MLP based on the MLPs ever increasing
distributable income generated from producing royalties acquired;
2. AMG will be granted a 5% GP ownership interest in the MLP for creating the
partnership. Also, AMG will use most of its net after-tax income to regularly
purchase MLP units in the public market, thereby increasing its equity
ownership in the MLP.
3. AMG will earn and receive a one-time acquisition fee on each acquisition
completed by the MLP.

Royalty interests are non-operating assets and do not require a high level of
personnel and G&A expense to manage.
As the MLP accumulates additional producing royalty assets, the distributable
income will continue to increase thereby increasing AMGs distributions based
on the MLP units owned by AMG. As the MLPs royalty assets continue to
grow, so will AMGs management and acquisition fees. Therefore, AMG will
report sustained increases in its quarterly earnings. This increase in AMGs
per share earnings should cause the market value of AMGs common stock to
increase value, over time.
AMG does not anticipate paying cash dividends, but instead, it intends to use
its net after-tax income to purchase MLP units in the market.
compounding effect of reinvesting AMGs profits by purchasing additional MLP
units is a key ingredient which will create exceptional stock market valuation
for AMGs shareholders.

Here is the Power of Partnership that creates the ultimate Capital Gain
1. There will be no operating divisions in AMG thus requiring limited personnel.
2. There will be separation of the Asset Accumulator (MLP) from the Capital Gain Vehicle
3. Before the MLP is created, AMGs outstanding shares will be capped at about 6 million
4. No debt will be incurred by AMG.



As the MLPs income increases, AMGs management fees will increase.

No cash dividends will be paid by AMG.
AMG will purchase additional MLP units with its net after-tax income.
Reinvesting in MLP units causes a compounding effect on AMGs earnings.
By year 2 it is anticipated AMGs cash distributions from the MLP will exceed its
management fee income.
10. Because royalty income is passive in nature and the royalty business is not
operational, the MLP will not generate unrelated business income tax (UBIT) to
investors that own MLP units.

All of the above factors combined create increased quarterly

earnings thus causing significant gains in AMGs stock market
valuation per share. This is why we refer to AMG as the ultimate
Capital Gain Vehicle.