Saturday, February 10, 2007

I'm getting out of the oil and natural gas business

As I noted back in November, I have a tiny bit of old IRA money in some Geodyne oil and natural gas production limited partnerships dating from back in the late 1980's and early 1990's. The limited partnerships were due to terminate years ago, but have been extended at management's option several times now. Back in November they finally started selling off some properties for their oil and natural gas. Now, I've just received a letter (actually a separate letter for each limited partnership) informing me that all of the limited partnerships would be terminating and liquidating by the end of this year. We'll get some or most of the proceeds this year, and the remainder next year. The potential proceeds are unclear.

These Geodyne limited partnerships that I'm in have returned in the form of income the full original investment plus over another 68% return over these many years.

Currently, you can sell the limited partnership units back to Geodyne, but for only about 20 cents on the dollar, depending on the specific limited partnership. Some are as low as 9 cents, some at 20, 21, 33, and the highest at 41 cents on the dollar. There is no ready and liquid market for such limited partnership units.

We might get twice as much as those stingy buyback numbers, or we could do significantly better, or we could do much worse. What a crap shoot. I'll be glad when this stuff is gone. I'll also miss them since they've been such a quirky investment.

The good news is that oil prices are still relatively high and there are still plenty of people who think commodities are "hot."

Lucky for me, these limited partnerships are in an IRA, otherwise I'm sure there would be quite a mess of tax forms to deal with.

My total investment in these limited partnerships is actually quite small. Even so, now I need too start thinking about what to do with the proceeds, as minimal as they will be. I'm also thinking of converting that IRA to a Roth since all my other retirement accounts are Roth now.

-- Jack Krupansky


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