Oil and Gas Investment Information:
Below you can find a list of frequently asked questions regarding oil and gas investing. Please click on a question to reveal the answer.
1:When do I start receiving revenue checks? [R.O.I]
Approximately 30 to 90 days from the drilling date. It’s crucial to invest with an oil company that owns and operates its own rigs as there will be no additional draw on corporate revenue (i.e., down time, waiting periods, and costly “term” leases and rentals of various rigs and drilling equipment).
2:What are my tax benefits?
Oil and Natural gas from domestic reserves helps to make our country more energy self-sufficient by reducing our dependence on foreign imports. In light of this, Congress has provided tax incentives to stimulate domestic natural gas and oil production financed by private sources. Drilling projects offer many tax advantages and these benefits greatly enhance the economics. These incentives are not “Loop Holes” — they were placed in the Tax Code by Congress to make participation in oil and gas ventures one of the best tax advantaged investments (See Section 263 of the Tax Code.)
3:Why should I invest in Oil&Gas in today’s market?
Oil prices are back to normal, in fact it is more advantages to invest during a “correction” rather than a “boom” as operating costs are lower and property leases are less expensive. $150 dollar oil not only caused problems for the economy but the oil industry as well (i.e., higher operating cost, employee cost, and property lease cost – all of which is passed along to the investor). Most respected oil men like T. Boon Pickens and Charles Couch made their fortunes when oil prices where between $15.00-$25 dollars a barrel.
4: How long will my oil well produce?
Well logs can give you a good idea on how much oil is available for production; however there is no way to get an exact figure as to how long an oil well will produce. The best way to estimate “oil reserves” is to research existing projects in the surrounding areas with similar formations. Most experienced oil men can tell by utilizing 3D seismic technology to see if a well is worth drilling.
5: Will oil prices go back up?
Oil prices WILL start to rise again! Experienced investors buy during a “market correction”, the same is true for Oil & Gas. Smart oil men drill when it’s inexpensive to do so. If a well (or series of wells) is already producing when oil prices begin to rise again an investors unit (or units) of ownership will increase their revenue/cash flow.
6: What is an accredited investor?
If you have made 200,000 in the past 2 years and expect to make the same in the following year or you have a total net worth of 1 million dollars or more, you are considered accredited. Most reputable oil companies only accept accredited investors but have the option to allow un-accredited.
7: What are my risks associated with oil & gas?
In order to evaluate “risk factor” you must first determine the Oil & Gas Company’s success rate (hit to miss ratio).