Massive reserves of oil and gas are locked beneath the earth, scattered in places like the SCOOP and STACK, Bakken, Eagle Ford, and Permian Basins. In fact, there could not be a more opportune time for investors to entertain oil and gas investments. Direct investment opportunities in oil and gas allow investors to diversify their portfolios, enjoy a potential long-term cash flow, and leverage significant tax benefits allowed by our government. The American oil boom is not letting up, according to reports by the EIA. The OPEC decision to cut back on oil production also indicates a stabilization in worldwide crude prices that may take global oil prices to over $60 a barrel, as suggested by a report from Bloomberg. Continuing the discussion, the post discusses the intricacies of direct investments in oil and gas.
The Permian Basin Forecast
The Permian Basin, located in West Texas, is a massive oilfield that has a number of other shale plays within it’s confines including Avalon, WolfCamp, Spraberry Field and the Yeso Oil Play. The Permian Basin is one of a few shale reserves for which the EIA has predicted an increase in production and output is expected to increase by one thousand oil barrels a day. Other yielding basins, on the other hand, such as the the Bakken and the Eagle Ford, are likely to witness a decrease in production, according to the drilling productivity report issued by the EIA. The Permian Basin oil production has taken centerstage, as the hottest oil and gas field in the US for two years in a row, and the trend is unlikely to slow down, thanks to increased efficiency in drilling operations.
How to Invest?
Direct investments in oil and gas wells are a lucrative option, as they allow investors to directly take part in the well drilling and completion process. In a direct investment model, an investor owns a portion of the well through fractional ownership and is entitled to receive a share of the income generated by the well. If the well production continues to grow, investors can expect the venture to become a long-term, steady source of income for years to come and also enjoy special tax deductions. To enhance drilling efficiency and convert the project into a long-term prospect, many investment companies share profits in exchange for upfront capital. Private, accredited investors can directly take part in the well drilling process, which essentially means that there is an associated inherent liability with the exploration and production process.
Direct investments in oil and gas are considered long-term risky investments, therefore, only accredited investors are allowed to take part. An accredited investor can be someone with an individual income over $200,000 or more than $300,000 in joint income with the spouse. The income should be consistent for at least two years at the time of investment and projected income should suggest similar income earnings in the current and coming years. Or, if you have $1 Million in total assets, not including physical property or your vehicles, then you would qualify as well. Generally, net revenue checks are sent every month; however, there may be a disparity depending on fluctuating conditions across the globe or with the individual project(s).
The Bottom Line
American oil industry is flourishing once again; thanks to massive reserves of oil and gas in the Permian basin and other shale reserves becoming more profitable with the advent of fracking and horizontal drilling techniques. The next five years promise the biggest ever oil and gas boom in the U.S. with investors having the opportunity to diversify their portfolios while enjoying lucrative tax benefits. Of all shale reserves, the Permian basin is one of the formations leading the pack, with 1.6 million barrels of oil produced every day. If you are also looking for reliable investment opportunities in oil and gas, look no further than Fig Tree Capital Ventures. To learn more about our investment criteria, fill out our contact form. You can also call us at (866) 300-2170.