From the Ground Up: How to Invest in Oil – Made Simple

[Posted on June 7, 2014 by Michael L. F. Slavin]

When it comes to planning for the future, it’s important to make wise investments that create steady, long-term income. An oil well investment is one such vehicle which offers the possibility of creating an income stream that could last for years or even decades. If you’re not familiar with the ins and outs of oil well investing, keep reading to learn more about what makes this type of investment a viable option for nearly every American.

Explaining the Process

U.S. Emerald Energy works with individual investors through structured direct partnership, joint-venture arrangements. These binding contractual agreements carefully lay out the responsibilities of each party. In summary, the investor agrees to provide financial backing for a specific oil well investment, and U.S. Emerald Energy provides the necessary knowledge, research, equipment, supplies and labor. Investors are free to visit their well projects during or after drilling and may choose to vote on buyouts but are not required to do anything after providing the necessary funding in accordance with their agreement.

Generating Steady Income

In return for making the initial investment, investors can expect to receive a monthly income from each productive well that they are a party to. The proceeds are issued as monthly distribution checks by U.S. Emerald Energy, and they’ll keep coming as long as the well remains in operation.

It’s almost impossible to predict the productivity of a specific well, but recent estimates from the U.S. Department of Energy indicate that newly drilled wells average between 20 and several hundred barrels each day. Productivity and the length of time a well remains productive are generally based upon the formation in which the well is located, natural variations from well to well and a variety of other factors that are more difficult to qualify.

Benefiting From Tax Breaks

The Tax Reform Act of 1986 included some special tax breaks for investors who back American energy production. Even in the case of an unsuccessful project, also known as a dry hole, the amount of an investment in an oil production well is 100 percent tax deductible. Tangible assets, including equipment, tanks and piping generally make up between 15 to 30 percent of the initial investment, with intangible expenses comprising the remainder. Tangible assets are depreciated like other types of business equipment, and intangible expenses are eligible for deduction immediately. Most investors also qualify for a tax break on 15 percent of each monthly distribution check.

Diversifying Your Portfolio

Oil well investing offers one more perk to individual investors; the opportunity to diversify.  Participating in even one well project allows an investor to put money into something besides the stock market, government bonds or real estate, and taking part in multiple projects provides an additional layer of diversification. From fuel to electricity to plastics, the worldwide economy is heavily based on petroleum and petroleum products, and demand is only projected to grow in the immediate and long-term future.

The information you need to get started in oil well investing is just a phone call or mouse click away.  The U.S. Emerald Energy website contains a wealth of photographs, project summaries and other details that you can access when deciding on what investment is best for you.

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