Investing In Oil And Gas Opportunities Investing in direct participation, or working interest ownership in new oil & gas prospects being offered by only the very best oil & gas independents, and broker/dealers is now a pretty common way to beat the stock market, and just about any other passive investment being offered to you today...particularly when...but only when...you can do it correctly...
Cash flow is always king, and making money when oil & natural gas prices are going up, and to be able to do so while not having to sell your working interest ownership to make a profit, is a chief advantage of investing in only the most successful of the developmental, and exploratory oil & gas drilling prospects being offered to private & industry investors today...
First, you need to be investing with the right companies...only the most successful...those who are fully aware of all the risks associated with drilling for oil & gas, and they must know how to control them...for example...by being aware of the absolute requirement to diversfy, and spread-out the risk of dry holes, and poorly performing wells...by picking the very best and most lucrative oil and gas options by using only the best technology we have, and by working with only the best drilling companies, and contractors, etc. etc...
Don't fall for quick estimates of establishing cash flowing distributions from new wells drilled, completed, and placed on line...unless they are very shallow, and simply offsets to other wells already in production. You must normally wait at least 90 days before you begin to receive income from new development activities in a lease hold interest, or Area of Mutual Interest (AMI)...purchase contracts must be negotiated, and fine tuning of new wells is typically required before steady revenue can be established and maintained...6 to 12 months is often needed for cash flow to begin...this is especially true when drilling deep on shore, or off shore wells with big commercial reserves...however, the major oil companies, and large independents are targeting very big recoverable reserves of both oil & natural gas...and their prime objective is to 'book large reserves'...and maintain revenue streams over a relatively long period of time after bringing their new wells on line...in other words they are looking to establish long term cash flow, and value...as opposed to getting short term 'bragging rights'...it can be pretty easy to quickly drill a shallow well and find a little production...only to find these same wells falling-off, or declining rapidly...you then find you are just 'trading dollars'. rather than discovering big new commercial quantities of oil & gas...drilling wells with rapidly depleting reserviors isn't why the more successful oil & gas professionals are in the business...
You must be 100% sure the tax write-offs are being properly listed as legitimate tax preference items in the yearly K-1 reports, which are prepared by the development companies and sent to the IRS each year...you are then certain of getting all of the legal tax benefits, and be assured of taking every one of these tax write-offs you are entitiled to receive 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.
Dennis Stutes is an oil and gas investing insider with over 20 years of experience. He is currently writing about http://www.oilandgasinvesting.com/services.html opportunities.
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