How to Break Into Investing in Oil Wells

[Posted on May 9th, 2013 by Michael L. F. Slavin]

Direct investing in oil wells offers a number of benefits. First, it can produce results more quickly than simply investing in oil and gas stocks. If a well results in the discovery of a commercially viable amount of oil, monthly revenue checks may start going out to investors within a matter of months. Then, such payments have the potential to continue for many years.

Investors are often attracted to directly investing in oil wells, especially if the drilling company has both a proven track record and solid methodologies in place for selecting which wells to drill. Those interested in getting involved in direct oil well investing can go to U.S. Emerald Energy’s website to request information about the latest project. Investors often look to Emerald because of their over 20 years in the business. Furthermore, the company received an A+ rating from the Better Business Bureau.

Should I invest in an oil drilling program?

There is risk involved in this type of investment. Despite due diligence, any well can result in a dry hole. One way to address this is to plan on investing in about three or four different projects. This approach can also account for the fact that not every well that does strike oil will demonstrate the same productivity. Wells that do produce oil may do so for a couple of years or a couple of decades. Because of the long-term potential, investors do not have to be concerned about short-term fluctuations in oil prices.

When it comes to dry holes, losses are ameliorated by a couple of factors. First, U.S. Emerald Energy remits to you a completion refund. Second, the amount invested above and beyond that refund is a 100 percent tax deduction. Therefore, downside risk is offset to a degree. At the same time there is an upside tax benefit as well. Should the well produce oil, 15 percent of the gross profit made off of the well is tax-free, and you still get to deduct your investment into the well.

If the well hits, when would my first check arrive?

There are several steps prior to commercial oil production. First, the well typically takes 2-3 weeks to drill. Then, it is tested for commercial viability. If it is found to be viable, then the well is completed and it goes online. That process takes another couple of weeks on average. Once oil or gas is being produced, the first oil revenue checks usually go out in about 60 days, and the initial gas revenue checks are distributed in about 90 days.

Once the monthly revenue checks begin to go out, they will fluctuate in relation to both the current oil and gas prices and the well’s production levels. Investors will often see checks actually increase later even when the well’s production may be slightly declining, due to long-term price increases for oil.

Strong producing wells can often allow an investor to recoup the initial investment made in a short amount of time.

Open Door Policy

One way to assess the operations of a well drilling concern is by the level of operational transparency. At U.S Emerald Energy, investors are always welcome to plan trips to actual well sites or to visit U.S Emerald Energy’s Houston offices. At a well that is currently drilling, an investor can don a hard hat, get a tour, and even enjoy taking photographs and videos if desired. Visiting your well site is truly an experience you will never forget! For more information, contact U.S. Emerald Energy at 1-800-783-9059, or through the contact form on their website.