Why you should take advantage of these oil & gas drilling investment opportunities:
- You must be an accredited investor to participate in the investment opportunity offered by affiliates.(Click here to learn more)
- Our affiliates believe the best funds for investors to consider are ones that include dozens of “developmental” wells in the program. Developmental wells are wells drilled in proven oil and gas areas where the risk of drilling a dry hole is unlikely.
- Even though dry holes are unlikely, it is smart to invest in programs with multiple wells because all wells are different. The goal is to generate a good average result from the wells collectively.
- Developmental drilling programs can provide very attractive tax benefits to investors.
- Under current tax law, most programs provide a 70-75% write-off of the investment in the first few years. (See IRS Code Section 469(c)(3)).
- For example, you invest $100,000. In this case, you may receive a $50,000-70,000 tax deduction over the first few years.
- If you are in the top federal tax bracket (39.6%) and pay a 5% state income tax rate, your $100,000 investment can reduce your personal income tax bill significantly in the first two years of the investment.
- In addition, the producing wells from these programs may generate a regular revenue stream to investors that is partially tax sheltered (You should consult your tax advisor regarding the oil and gas depletion allowance). Many horizontal shale wells can generate cash flow returns to investors for 20-30 years depending on long term pricing for oil and gas. Despite the development of alternative energy sources, oil and gas will be the backbone of world energy supply for years to come.
Oil & Gas – Where are we now?
Below is a quote from John Walker, founder and Executive Chairman of EnerVest, the largest owner of oil and gas wells in the US (29,000 wells) from his company’s quarter earnings call in August, 2015:
“In 2008, the IEA studied the (oil production) decline rate of the world’s 800 largest oil fields, including the 54 super-giants. That decline rate was a surprising 6.7% per year. Assuming that the IEA is right on 1.4 million barrels per day of demand growth this year, and 1.2 million barrels per day next year, how are we going to, as a world, meet that demand growth as we replace the decline rate of 6 million barrels per day (from existing production) in each of the next two years. It’s my belief that all of us are swamped in negativity currently and probably are not currently assessing the one to five year outlook objectively. The commodities markets of today have less liquidity and more volatility with the imposition of Dodd-Frank and the Volcker Rule. We have witnessed this in the most rapid decline in oil prices in history (and a 20% jump over the past two days?). When the real demand for oil is correctly assessed in forthcoming months, and worldwide decline rates are at least taken more into account, do you think that the price of oil will inch its way up—as the consensus would forecast—or rise rapidly, as it always has in the past? It is my belief that the price pendulum, when it starts swinging, will surprise us on the upside, just as it surprised us on the downside.”
Walker is questioning how the oil industry is going to generate about 14-15 million barrels per day of new oil production over the next two years, without a significant increase in oil prices and when oil companies have announced capex cuts of 40% globally over the next few years.
Consider each of the following oil price corrections that have occurred since 2000, followed by corresponding price recoveries:
Every investment has risks. Click here for information about the risks associated with this type of investment opportunity.
The securities are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities; the investment is highly illiquid. Investing in securities involves risk, and investors should be able to bear the loss of their investment.