In recent years, the oil and gas industry in Texas and other parts of the US has witnessed remarkable advances in technology as well as operational efficiency. For thousands of high net-worth individuals (HNIs) in the country, oil and gas represents a secure investment option where they can earn potentially handsome returns with lower risks than other investment options. When investors direct their liquid assets such as cash to oil and natural gas exploration, development, or existing reserves, it becomes a vehicle for long-term, monthly cash flows. Let’s now look in greater detail why an increasing number of HNIs are turning to oil and gas investments.
High Profitability
Though the returns of oil and gas investments largely depend on the proficiency of the energy company you invest in; with the right preparatory work and the right team, energy investments can be a great way for wealth creation. Especially if you invest in exploration projects, which are considered the most profitable channel in the energy investment industry, you can expect potentially sizeable long-term returns.
Portfolio Diversity
Savvy investors know that putting all their eggs in one basket can lead to disaster. Oil and gas investments provide them an easy way to diversify their investment portfolios. With diversification, they are able to reduce portfolio risks without necessarily sacrificing potential returns. In other words, investors are able to balance any volatilities in different investment markets. Portfolio diversification also helps investors realize more consistent returns.
Long-Term Sustainability
The leading oil and gas companies in the world are already promoting sustainable practices in the industry. Stringent regulations, in combination with transparent tracking and reporting systems, are tailored to increase sustainability of oil and gas investments. In addition, the evolution of advanced drilling and exploration technologies has paved the way for improved sustainability of oil and gas investments.
Sizeable Tax Benefits
One of the biggest benefits of investing in oil and gas in a place like Texas are the tax benefits that are allowed by the government. There three major levels of tax benefits – intangible drilling cost, tangible drilling cost, and depletion allowance, which allow investors to write-off up to 80 percent of the total start-up cost of oil wells. These tax deductions help investors reduce their overall taxable income. In addition, they enjoy a depletion allowance deductible from their overall income for the life of the producing well.
Wrap Up
Like in any other investment channel, oil and gas investments always have considerable amounts of risk. However, as long as investors team up with a reputable investment company, they can invest with less concern for the safety of their investment decisions. If you’re planning to partner with a Texas energy investment company you can trust, the search ends at FIG Tree Capital Ventures. We help investors identify, analyze, and invest in profitable energy projects. To learn more, fill out our contact form or simply call (866) 300-2170/(866) 894-7309.
