When it comes to tax-advantages and investments for qualified investors, oil and gas investments offer a safe option. The US government offers tax incentives to private investors to stimulate domestic natural gas and oil production. You can use the tax benefits to achieve your financial goals and grow your portfolio. Although investing in oil and gas may involve certain risks, choosing the right investment partner, such as FIG Tree Capital Ventures, can help you avoid the pitfalls and create a source of passive income while benefiting from a range of tax benefits. Continuing the discussion further, let’s take a look at some recommendations to maximize your returns from oil and gas investments.
Calculate Estimated Expected Cash Flow
Cash flow is one of the deciding factors when identifying lucrative oil and gas investments, especially when it comes to developing well sites. Whether the cash flow will be negative or positive, largely depends on differences in operational costs and spot prices of oil and gas. When calculating a project’s expected cash flow, it is essential to consider relevant data regarding future costs and prices of oil and gas. This will not only help you craft an educated investment strategy but also give you an idea on the profitability of any given project. Usually the different cases are projected in a project’s pro forma. However, learning how to do your own due diligence is also imperative to accredited investors.
Relate Annual Investment to Expected Cash Flow
The oil and gas industry holds strong potential for scaling investors’ annual investments to actual and expected earnings. Official data by the US Energy Information Administration for high market cap FRS companies and mid-size energy companies, shows impressive figures when it comes to earning profits on initial investment. For some companies, annual investments have scaled to more than twice the internal cash flow. That is why, when investing, you need to decide on an initial investment that can help you reach your annual or expected cash flow.
Use a Conservative Price Projection Model
The price guidelines available for predicting future prices of the industry have a mixed record of accuracy. Instead of using aggressive models that predict future prices based on foresight, it is recommended to use a variety of relatively conservative price projection models to make investment decisions. A conservative model uses the lowest price value from the past three years to formulate a more realistic and accurate measure of annual or expected cash flow.
Wrapping Up
Hard assets like oil and gas are not only a safe way to invest your money, but also offer various tax benefits that lower your tax liability. If you need help identifying lucrative oil and gas investment opportunities that can improve your portfolio, look no further than FIG Tree Capital Ventures. We provide expertise derived from years of experience in the development of proven oil and gas fields. To learn more, fill out our contact form or call us at 866-304-9194.
