What Makes Direct Investing in Oil and Gas an Ideal Investment Strategy?

[Posted on June 6th, 2013 by Michael L. F. Slavin]

Oil and gas are hot commodities, not just in the U.S., but in most of the developed world. Investing money in a product everyone wants and needs is a good idea, since it’s unlikely that the demand will decrease rapidly and the bottom will fall out of the market. Even with the economy in a slump, gas and oil continue to be used not just for fuel but for the production of plastic and other industrial uses. Directly investing in oil and gas wells can continue to pay dividends to savvy investors’ month over month and year by year. What makes direct investing in oil and gas such an ideal investment strategy?

What is Direct Investment?

Direct investment in oil and gas means investing in the wells themselves, rather than investing in oil and gas stocks more indirectly. This means that if a well results in the discovery of a large quantity of viable oil, the investor starts receiving monthly revenue within a matter of months. These payments have the potential to continue coming in for years, or for as long as the oil is flowing from that particular development. Investing directly in the wells means that the fluctuations of the market won’t have a catastrophic effect on the investor’s stock portfolio; as long as oil is in demand (and that demand shows no sign of slowing any time soon), the investor is likely to see monthly revenue.

What Makes Direct Investment Ideal?

Companies like U.S. Emerald Energy that have a proven track record and solid methods in place for selecting which oil wells to drill make ideal candidates for those looking to invest directly in oil and gas. As with any investment, there is some risk involved. This risk can be mitigated by investing in more than one project at a time. This will account for oil wells that produce oil more slowly as well as those which do not strike oil in commercially viable amounts. At the same time, there are benefits to investing directly in oil and gas; should the wells produce oil, 15% of the gross profit from those wells is tax-free, and the investment is 100% tax deductible. Strong producing wells often allow investors to recoup their initial investments in just a short amount of time.

Potential investors will also be interested to know that there is not cap on the income potential from direct investment in oil and gas. There is every likelihood that the price of oil will continue to increase as the resource becomes scarcer globally. Investing in oil and gas is like a hedge against the stock markets and the global economy, both of which are continually fluctuating in these uncertain economic times. Perhaps especially when so little is certain, investing in a commodity sure to remain in high demand is the best choice any investor could make.

Where to Get Started

Don’t just invest with anyone; choosing a company with good practices and a solid track record is important. Choose a company that only drills safer developmental wells, not one that takes big risks when drilling. Contact companies you’re considering investing with and ask what kind of testing they do before they start drilling; if the testing sounds minimal, invest elsewhere. Companies like U.S. Emerald Energy pick only the best sites to drill and use a suite of high-tech tests to determine which are the most promising. It’s your money, and it’s important: don’t forget to do your homework.

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