Oil Companies' Investors
Are you interested in learning about investments in oil and becoming an oil investor? Trying to figure out how to invest in oil wells?
Investments in oil and gas, although risky, have the potential for big payoffs. Cash flow from a successful well can last more than a decade, and investors can write off nearly the entire investment. Lucrative returns and tax incentives have long attracted investors to investments in oil.
Returns from oil wells can range from anywhere from nothing at all (or even a loss) up though very attractive returns. While direct participation oil investments are generally at the riskier end of the spectrum, investors can limit the degree of risk by careful research into the geology, structure of the deal and the operating parties involved.
While one of the advantages from oil investments is the ongoing cash stream, oil investors can benefit from substantial tax breaks. The intangible drilling costs, which include labor and other unrecoverable costs, usually making up about 60-80% of the oil gas investment, can be written off in the first year. The remaining 20-40% can be written off over time. Also, if the well is a dry hole, the entire investment in oil can be written off.
The Time is Now to Begin an Oil Investment
Investing in oil wells and an investment in oil is typically offered through small and mid-size oil companies directly or through small brokers. Because of the riskier nature of the investment, accredited investors are preferred by most oil companies. Essentially an accredited investor has a net worth of one million dollars or has made $200,000 or more in the past three years. Oil investments should be made with those with substantive income and sufficient financial sophistication.
There are numerous risks to oil investments including but not limited to:
- Drilling a dry hole
- Price volatility
- Oil Investment Scams or bad company management
How to Become an Oil Investor in Oil Wells
All prospective investors who are considering investments in oil and gas should complete due diligence to understand the nature of the investment and all parties responsible for management of the proposed project. Be sure to contact our experts with any questions about an investment in oil or investing in oil wells. When trying to find out information regarding oil investments, gas investments and investments in oil companies, you need a source you can trust.