Here are some things you should know about the Oil & Gas Investment Programs offered by our affiliates:
According to the Energy Information Administration (EIA), the world’s daily consumption of oil has increased dramatically from 85 million barrels of oil per day in 2005 to over 100 million barrels per day in 2019.
U.S. Drilling technology and efficiency has improved dramatically over the past 10 years. We can drill faster, farther, and into oil and gas reserves we couldn’t get to before.
The objective of most of these types of programs is to establish long-lived oil and natural gas reserves via a developmental drilling program. Developmental wells are wells drilled in proven oil and gas areas where the risk of drilling a dry hole is reduced.
Our affiliate’s oil and gas investment programs can provide investment participation in numerous horizontal wells in prime drilling areas within the U.S.
Many of these programs offer a significant tax deduction. These deductions can vary, depending on how the program is structured. You should consult your tax professional if you have questions about how this works.
View the video above to learn more about modern horizontal drilling technology and how it works!
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. Investors should be able to bear the potential loss of their entire investment.
Why you should take advantage of oil & gas investment opportunities:
You must be an accredited investor to participate in the investment opportunity offered by one of our affiliates. (Click here to learn more)
Our affiliates believe the best funds for investors to consider are ones that include a substantial number 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 reduced.
Even though dry holes are less likely with today’s technological improvements, 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 attractive tax benefits to investors.
- Under current tax law, most programs provide a 70-75% write-off of the investment against non-passive income (if invested as a general partner) 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 $70,000 – $75,000 tax deduction over the first few years.
- If you are in the top federal tax bracket (37%) and pay a 5% state income tax rate, your $100,000 investment can reduce your personal income tax bill significantly (approx. $30,000) in the first few years of the investment.
In addition, the producing wells from these programs should 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 and how this could apply to you). 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 the current administration’s push towards renewable energy; oil and gas will be the backbone of world energy supply for years to come.
Oil & Gas Supply and Demand:
A joint study by the International Energy Forum and Boston Consulting Group highlights the need for future oil and gas investments with the following quote:
“Lower [investment] levels appear to be insufficient to deliver the volumes of oil and gas needed to maintain market stability…Even if oil demand were to flatten, the industry would still need to make significant investments to compensate for production declines (natural oil and gas production decreases over the life of a well as the deposit it taps is depleted).”
Below are two exhibits from the report showing the risk of peak investment and risk to demand and supply: