The operating objective of each core Fund from First Keystone is to enable an investor to participate in approximately 25 to 30 independent oil & gas exploration projects. An investor will only write a handful of checks over 3 or 4 years to fulfill a predefined capital commitment. Therefore, this commitment has a cap.
Each Fund is a "full pass-through" entity. Also, when a discovery is achieved, usually production will ensue shortly thereafter. Thus, commencement of a cash payout to our LPs (in respect of that "producer") will occur within a few months of the discovery.
Because of the substantial risks inherent in investing in this field, managing them is a critical part of First Keystone's mission. The most important thing that we do is to select the projects in which our Funds will invest. However, we also set aside almost half each Fund's total capital as RESERVES to (1) handle potential cost overruns on a particular project and (2) take into account capital requirements to develop a field where there has been a successful discovery. We also arrange for debt capital to help defray the burden of sizable developmental drilling programs that could otherwise absorb a disproportionate share of the Partnership's total equity capital.
In summary, the Fund represents a turnkey vehicle to invest in a highly diversified portfolio of distinct exploration projects.