Geothermal Energy Project
369 Funds presents “Green Barrels of Oil and Gas,” a $300 million hybrid energy project in Texas’s Haynesville shale region. This innovative venture combines shale gas production with geothermal energy, leveraging Opportunity Zone (OZ) tax incentives and repurposing orphaned wells to deliver a sustainable, high-return investment opportunity.
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369 Exploration Project- Green and Black Combo
GEOTHERMAL INVESTMENT STRUCTURE
● Total CAPEX: $300 million
● Investor Equity: $100 million (33%)
● 369 Funds Contribution: $200 million
● Structure: Debt-free OZ fund
Project Timeline
● 2025: Project launches with 10 gas wells (15 MMcf/d initial production) on pre-drilled Texas land
● 2026-2027: Expansion to 20 geothermal wells (50 MW total capacity)
○ 10 newly drilled geothermal wells
○ 10 repurposed from abandoned orphaned wells
Revenue Model
● Bitcoin Mining: 35 MW capacity
● Grid Electricity Sales: 15 MW at $200/MWh
● Infrastructure Sales: $100 million
Financial Projects (2025-2035, Base Case: $300,000 BTC)
● Total Revenue: $1.851 billion
○ Bitcoin Mining: $1.596 billion
○ Gas and Grid Sales: $155 million
○ Infrastructure: $100 million
● Bitcoin Holdings: 5,543 BTC ($1.66 billion at $300,000/BTC)
● Investor Returns: $354 million after-tax, plus 1,498 BTC
● Internal Rate of Return (IRR): 36%
● Payback Period: Approximately 2.61 years
● 10-Year Return: 253.98%
369 Exploration Project
Tax Advantages
● Opportunity Zone Benefits:
○ Defer capital gains tax until 2026
○ 15% gain exclusion after 7 years
○ 0% tax on gains after 10 years
● Qualified Small Business Stock (QSBS): Tax benefits after 5 years
● Investment Tax Credit (ITC): $59.2 million in 2028-2029, fully allocated to investors until initial investment recovery
Orphaned Wells Solution
○ Context: Texas has ~8,580 orphaned wells, contributing to methane leaks and environmental costs exceeding $300 million to plug
○ Solution: Repurpose 10 abandoned wells into 2 MW geothermal wells
○ Benefits: Reduces geothermal CAPEX to $10 million per well (vs. $15 million for new wells), mitigates environmental impact, and eliminates plugging liabilities
Geothermal Advantages in Texas
○ Ownership: Surface owners hold geothermal rights, ensuring secure access
○ Incentives: Texas Enterprise Zone credits (up to $2.5 million per site)
○ Environment: Texas’s business-friendly climate and deregulation efforts enhance project feasibility
Scenario Analysis
○ Base Case ($300,000 BTC): $354 million, 36% IRR, 5,543 BTC
○ Conservative ($100,000 BTC): $196 million, 21% IRR, 5,543 BTC
○ Low ($250,000 BTC): $339 million, 33% IRR, 5,543 BTC
○ High ($500,000 BTC): $642 million, 42% IRR, 5,543 BTC
○ Moon ($1,000,000 BTC): $636 million, 43% IRR, 5,543 BTC
○ Grid Max ($10/MMBtu Gas): $339 million, 22% IRR, 0 BTC
Conclusion
The Green and Black Project offers investors a unique opportunity to benefit from the integration of traditional energy, renewable geothermal power, and cryptocurrency mining. By repurposing orphaned wells and utilizing Opportunity Zone incentives, it delivers exceptional financial returns while addressing environmental challenges. With diverse revenue streams, robust financial metrics, and significant tax benefits, this project is a compelling proposition for investors seeking both profitability and impact.
Geothermal Pilot Project
369 Funds Opportunity Zone Fund I has spent the past 18 months identifying plots of real estate in the Fund’s targeted Texas Region. The combination of affordable land, and a business-friendly environment made this the most attractive area in the United States to take advantage of the tax benefits the US Opportunity Zone legislation and Inflation Reduction Act provides. Multiple wells to central power generation lowers CAPEX per MW and can size to 500 MW. Additionally, Thousands of existing horizontal wellbores are near end of life with over $300,000 in plugging liability each and present an unprecedented opportunity to repurpose for large-scale geothermal power generation projects.
- Build time of less than 90 days per project
- Federal credits unlock additional revenue
- Can be located in Federal Opportunity Zone and/or in Coal Impact Communities to unlock
additional tax benefits
Geothermal Project Advantages
369 Funds Exploration- Qualified Opportunity Zone Business
Summary of Benefits: 369 OZ Fund
This project presents a unique opportunity to leverage Opportunity Zone (OZ) incentives and geothermal energy tax credits from the IRA for significant financial benefits. Here’s a breakdown:
Capital Gains Investor:
- Can invest capital gains into a Qualified Opportunity Zone (QOZ) fund, like the proposed 369 OZ Fund. This defers capital gains taxes and potentially eliminates them if held for at least ten years.
- By participating in a QOZ fund focused on renewable energy, like geothermal development, Impact Investor aligns with the fund’s goals and potentially benefits from the project’s success.
369 Opportunity Zone Fund:
- Pioneering energy development around all forms of energy creation.
- Tackling a nationwide problem of abandoned/orphaned oil and gas wells.
- New forms of “baseload” power
- Geothermal development within the QOZ can create jobs and economic growth in the designated area, fulfilling the OZ program’s objectives.
Geothermal Project (GEC JV):
- Benefits from both OZ incentives (through the 369 OZ Fund) and federal tax credits for renewable energy development under the IRA.
- The IRA’s Production Tax Credit (PTC) reduces ongoing operational costs.
- The Investment Tax Credit (ITC) helps offset upfront capital expenditures.
- QSBS…. $10 million exclusion after 5 years
This combined approach offers significant tax advantages for capital gains investor, fuels economic development through the QOZ program, and promotes clean energy production via geothermal exploration and development.
Connect with Us
369 Funds presents “Green Barrels of Oil and Gas,” a $300 million hybrid energy project in Texas’s Haynesville shale region. This innovative venture combines shale gas production with geothermal energy, leveraging Opportunity Zone (OZ) tax incentives and repurposing orphaned wells to deliver a sustainable, high-return investment opportunity.
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