Since [there isn't|there is not] a public system of direct oil well investments, [most individuals|most people] [will never|won't ever] have the [opportunity to|chance to] invest directly into an oil or gas well drilling program. Investing directly into oil and gas wells has been a mystery for years [because|mainly because|primarily because] [in order to|as a way to] invest, you [must be|has to be|should be] a member of the "investment club" or investment partnership to [be able to|be in a position to] [participate|take part]. I will explain a little further of [some of the|a few of the] specifics of oil well investing.
Independent oil and gas [companies|businesses] spend significant capital developing oil and gas prospects through geological research and evaluation. If successful, these drilling prospects [will make|will produce] [oil|crude oil|gas|gasoline] and/or natural gas in commercial quantities. The Texas Alliance of Energy Producers has stated "Independents have drilled 96 percent of wells in Texas, and produced 88 percent of the oil and gas in Texas". These independent oil and gas [companies|businesses] [rely|depend|rely heavily|depend heavily|depend considerably|rely considerably] on investment partnerships [to provide the|to supply the] needed capital [to fully|to totally] develop oil fields and produce oil and gas in commercial quantities.
[Generally|By and large|In the main|More often than not|In general], an oil company [will make|will produce] a drilling prospect [which is|that is] [and overview of|a look at] the anticipated drilling operations [which will|that will] be [presented to|given to] [a particular|a certain|a specific] partnership or investment club. The partnership will [commit to|entrust to|invest in|plan to] funding the required capital to cover the drilling, testing and completions costs of the projected well and in exchange, will receive their proportionate share of ownership in the oil well or group of wells. The investment club or individual investor [will generally|will broadly speaking|will more often than not] [receive a|get a] monthly revenue check for the oil and gas proceeds from [the previous|the last|the prior] month.
Since a majority of independent oil and gas [companies|businesses] lack the required working capital to completely fund every drilling prospect, the oil company agrees to [share in|be part of] the revenue from production [in exchange for|in substitution for] the funding of the well. The oil company will [often times|often|frequently|quite often] keep just [a small|a tiny] [interest in|concern in|involvement in|curiosity about] the producing oil well while assigning a bulk of the monthly revenue to the investment partnership or individual investor. This [process of|operation of] [partnering with|hooking up with] investment groups helps to fund multiple drilling prospects and develop oil fields [much faster|much more speedily|quicker] than the oil company self funding each well.
Although direct investments in oil and gas wells [may be|might be|could be|can be|may well be] financially beneficial, [there are other|there are a few|there are different] significant [factors|aspects|reasons] which [should be considered|ought to be looked into|should be thought about] [prior to|before] making such an investment. [Due to|Because of|Owing to|As a result of|Thanks to|Attributable to] the inherent risk involved, most partnerships [will require|will need|will have to have] each investor to be accredited [prior to|before] joining the partnership and [making an investment choice|making an investing choice]. There are [times when|occasions when] drilling [results in|leads to|ends in] non production or a dry hole and each investor should financially positioned [to deal with|to handle|to get on with|to address|to cope with] such risk. [In order to|As a way to] [offset the|cancel out the|counterbalance the] risk [associated with|related to|connected with] drilling domestic oil and gas wells, the U.S. Government has [offered|provided] investors a fairly significant tax advantage for these [type of|sort of] investments.
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