Drilling and producing hydrocarbons from proven oil and natural gas fields is a time-tested, consistent, and low-risk avenue for qualified accredited investors. With direct investment opportunities booming in domestic oil and gas drilling, the dynamics have never been more promising for investors. For an accredited investor, investing in direct investment projects and proven reserve leasehold acquisitions not only provides long term returns, but also entails numerous tax benefits. An accredited investor is an individual who either has a net worth over $1 million or an income in excess of $200,000 (or $300,000 combined with a spouse) for the current and last two years. Continuing the proposition further, in this post, we look at the ways a high net worth individual can receive the accreditation status and qualify to invest in oil and gas.
1. Certified Letter
An investor can obtain written confirmation from either a registered investment advisor, a broker-dealer, a licensed attorney, or a certified public accountant (CPA). The letter must certify that all reasonable steps were taken to verify the credentials of the investor, deeming them accredited within 3 months prior to the issuance of the confirmation. This method is beneficial for investors who have an accountant or lawyer to draft a written statement of accreditation.
2. Income Method
An investor can also choose to prove their credentials as an accredited investor through written records of their income. Such individuals can provide solicited documents, such as pay stubs or tax filings, that prove that their individual income exceeds $200,000 in each of the two most recent years. Investors can also provide documents proving a joint income with a spouse in excess of $300,000, for two most recent years and the current one.
3. Net Worth Method
A HNWI may be an accredited investor by the status of his/her individual or joint net worth, which must be in excess of $1M. This method requires the disclosure of the investor’s assets and liabilities for calculating their net worth. However, the value of the investor’s primary residence is not accounted for in the net worth calculation, the debt incurred in the last two months against the primary residence – and any debt in excess of the value of the primary residence – factors in as the depreciated value from their net worth. Also, this may not include the value of any vehicles in the individual’s ownership.
In order for a firm to protect themselves from current financial regulations and penalties, the potential investors credentials must be documented and verified before any potential prospect can be brought on to a project or firm. In addition to the methods we have discussed, investors can also provide credit reports, bank statements, real estate appraisals, and brokerage statements to verify their accreditation. To find out whether you qualify as an accredited investor, simply call (866) 545-1225 or fill out our contact form and we will get back to you, shortly.