Investing in direct participation or working interest ownership in new oil and gas prospects offered by only the best oil and gas independents and broker/dealers is a common way to beat the stock market and almost any other passive investment you can get today, but only if you do it right.
Cash flow is always king, and when oil and natural gas prices go up, you can make money without having to sell your working interest ownership. This is one of the main benefits of investing in only the best development and exploratory oil and gas drilling prospects that are currently being offered to private and industry investors...
First, you need to make sure you're investing with the right companies—only the most successful ones. These companies should be aware of all the risks that come with drilling for oil and gas, and they should know how to control them. For example, they should be aware of the need to diversify and spread out the risk of dry holes and poorly performing wells. They should also know how to choose the best and most profitable oil and gas options by using the best technology we have and by working with the best people.
Don't be fooled by quick estimates of how much cash will flow from new wells that have been drilled, finished, and put online, unless they are very shallow and just add to other wells that are already producing. Usually, you have to wait at least 90 days before you start getting money from new development activities in a lease hold interest or Area of Mutual Interest (AMI). Purchase contracts have to be worked out, and new wells have to be fine-tuned before steady income can be set up and kept. It usually takes 6 to 12 months for cash flow to start. This is especially true when drilling deep onshore or offshore wells with large commercial reserves. However, the major oil companies and large independents are aiming for very large recoverable reserves of both oil and natural gas. Their main goal is to "book large reserves" and keep getting money from their new wells for a long time. The most successful oil and gas workers don't go into the business to drill wells with quickly running out of oil and gas. Instead, they go into the business to find big new commercial amounts of oil and gas.
You must be 100 percent sure that the tax write-offs are listed correctly as legitimate tax preference items on the yearly K-1 reports that the development companies send to the IRS. If they are, you will be sure to get all of the legal tax benefits and take all of the tax write-offs you are entitled to in order to lower your taxable income from all sources.
Compounding your cash flow from oil & gas monthly revenue distributions, and knowing what your return on investment really is...also...by knowing internal rates of return, and trusting the companies you do business with to be well aware of the 'time value of money'...when calculating the total returns on your money over time...really is the key...this level of sophistication is only possessed by the top people in our business...if this sounds interesting, and makes good sense...just give us a call, or sign-up for the newsletters, and updates we send to people making inquiries about oil & gas investments.
