What Are The Tax Advantages of Oil and Gas Investments?
Oil and gas investing offers some of the most lenient advantages in the entire tax code. Not only can you deduct both tangible and intangible drilling costs, you also don’t pay income on 15% of the gross revenue from the well due to the depletion allowance. There are other tax advantages including other completion costs and depreciation.
What About When Prices Are Down?
Price fluctuation is part of the oil and gas business. There are times when prices are lower, but there are many times when prices are ultra-attractive for higher returns. Markets move up and down for various reasons; however the long-term trend for oil is definitely up. This has been confirmed by the Energy Information Administration (EIA), Exxon Mobil in their comprehensive Outlook For Energy: A View to 2040 and by BP in their Energy Outlook 2035. Each from their own perspective all confirm the same thing: the demand for world energy is going up and supplies are steadily decreasing. Even though the American shale revolution has had a profound impact on inventories and prices, global demand for more and more oil will prevail and it will take all countries, maximizing all sources of oil and gas to supply the fuel to power our modern lifestyles.
What Is The Minimum Investment?
We are looking for an initial investment of $40 million for current acquisitions and leases and we would like a commitment of up to $100 million for additional acquisitions and leases. However, we are interested in what best oil and gas investment both equity or credit fits your portfolio criteria.
How Long Do Vertical Wells Produce?
Vertical oil wells have an inherent characteristic. They produce large volumes of oil quickly, so it’s important to be in these prospects from the beginning. Then, after a few years of high production, they settle into a flow that can last for decades. Also, because of developing technology, many wells can be re-fracked to further stimulate higher production from an existing well-bore.
Are All Your Wells Horizontal?
No. This is one of our clear advantages and part of our conservative strategy. Horizontal wells are expensive to drill and complete, although prices are coming down. Our team will always drill conservative vertical wells in proven areas. Sometimes the economics virtually mandate horizontal drilling, and when that is the case for the best production, we drill horizontally. Also we will place vertical wells on strategic leases to hold the acreage, and that gives us many options to maximize those wells later, when the economics warrant.
What About these Local Fracking Bans – Will That Affect Your Wells?
No. Those are mostly small communities that don’t want development in their back yards. This is another advantage to operating in isolated areas. We are miles from the nearest community, and there is no risk of any local restrictions interfering with our development. We pride ourselves on corporate social responsibility and we insure we always operate with that in mind.
Are Oil and Gas Investment Risky?
All investments contain some risk, and today even the safe-haven of bonds are not subject to having their value depreciate to zero, as we saw during the recent real estate crisis. However, we take a majority of the working interest in most of our projects to help insure operational control. In today’s low interest rate environment and at a time when the stock market is mostly wobbling sideways, that oil and gas investments offer the potential for substantially higher returns than the alternatives. With the long-term trend in place of more worldwide demand for crude oil and diminishing reserves, this is the best place to invest for the next several decades.
How Can I Learn More?
The best way is to speak to one of our owners:
Tim Vogl (651) 797-2025 or Steve Van Hauen (505) 881-6460.