Since most investors won't ever have a venture to invest directly into a person well since there is not a public format for finding such investments, I wanted to spell out a little further on a few of the key points in finding alternative oil and gas investments, specifically investing directly into the wells themselves.
Independent oil and gas operators account for a considerable amount of drilling in the United States. In point of fact, the Texas Alliance of Energy Producers has indicated "Independents have drilled 96% of wells in Texas, and produced 88% of the oil and gas in Texas." Since the majority of these independent oil and gas businesses invest a lot of their own resources on determining the viability of a drilling location, acquiring oil and gas leases and gathering the basic framework for the drilling, they permit the opportunity for outside investors to participate in the drilling process.
When an oil or gas company has completed the preliminary synopsis, they will assembled what is know in the industry as a "drilling prospect" which incorporates a look at the possibility drilling location. These drilling prospects are normally only accessible to select investment clubs or partnerships which have the sufficient capital to drill and finished the well. It could be tough to find these investment partnerships since they are in general comprised of a tiny group of high net worth individual investors. The individual members will assess the merits of the drilling program and if the job looks viable, they will invest in the funding of the well.
While a majority of independent oil and gas operators are not fully capitalized to fund each and every drilling prospect, they depend considerably on these investment partnerships once they have a developed prospect in an effort to make it a win/win scenario for the firm as well as the investment group. The investors and investment group agree to pay for the cost of the drill and in return, they share in the monthly revenue from the producing well. By and large the person investors are paid a monthly revenue check for the prior months production. This process helps to drill multiple oil and gas prospects in a much faster pace than might be drilled with the company dollars alone.
Numerous investors choose to invest directly into these types of partnerships as they have the chance to receive monthly oil and gas revenue checks for the life of the producing oil well or until the wells are purchased out by another company. It is important to note that because of the risk involved like a dry hole or non producing well, nearly all of the investment partnerships require each investor to be an accredited investor. One thing also to think about is that there are significant tax benefits connected with these types of partnerships such as depletion allowances as well as intangible drilling costs.
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For other detailed information or to find out more information about a variety of types of rework programs have a look at oil brokers or view this overview on oil well photography for additional information.
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