[Posted on July 23rd, 2014 by Michael L. F. Slavin]
Expanding your investment portfolio helps you to manage risk, and gives you a chance to earn more money. Investing in gas and oil is a great addition to an investment portfolio, and it will help you to have high-risk and low-risk investment options. Here are some things you must know when you are considering oil and gas investments. Many investors use exchange-traded funds (ETFs) and mutual funds to invest in gas and oil. Other people use unit investment trusts (UITs) and limited partnerships to help expand their investment portfolio. What are the benefits of investing in gas and oil, and how can you get started? Here are some tips that will help you understand the importance of gas and oil.
Should You Invest In Oil and Gas?
Investors looking for a direct way to participate in oil and gas investments need to consider UITS as it gives you a tax-advantage. Energy-focused mutual funds only buy equity interest in oil and gas, and energy companies. Most investors buy interest but do not have direct participation in the way investments work. Oil and gas UITs will not post taxable gains until the trust has matured.
The gas and oil UITs are similar to real estate and stock market investing. The different trusts are units that are sold to investors. Trusts sold as units are sold to investors and represent an undivided interest in the various oil and gas properties that are held by the trust. Trusts will come with a maturity date that ends up with gains or losses from the sale of the assets to unit holders.
Should you invest in developmental wells? They too pose a unique way to get the money you need to boost your investment portfolio. It is important to seek out a company with a good reputation to know the developmental wells are going to be a good investment. Research the history of the company to know how long they have been in service and to find out what technology they are using to locate and drill for oil. A developmental well can be a risk, but it can have major returns if you find the right one.
It helps to compare returns over a period of a year or more to know if you are able to see positive cash flow. Changing mutual fund investments can help to improve returns, but it is important to be patient with a lot of the developmental wells as they do take time before they yield results.
The pass through tax status is a major pro when it comes to investing in oil. A number of investors will choose this option as it does allow them to have significant tax credits so they do not end up paying as much. The energy trust investments are similar to limited partnerships or direct working interests. The income derived will be eligible for depletion deductions.
When you compare various gas and oil investments, it is important to consider what is best for your situation. Income from the gas and oil investments is subject to fluctuation as energy prices fall and rise. There is some risk, but it can be offset if you find the right oil and gas investment option.
Joint Venture Investment
U.S Emerald Energy, based in Houston, Texas, is an industry leader in oil and gas investments, with decades of experience in the business. Their latest, and third project in 2014 is the Sunshine Joint Venture. This prospect drilling is located in Louisiana, and projected to reach a total depth of 9,100 feet. This joint venture has excellent subsurface control, USEE has utilized 3D seismic technology to targeted five separate formations. Check out their website for a visual of their drilling plan, and any upcoming projects.
A prospect is developed first by the recommendation of a certified geologist acquiring a base map as well as a well log for the area the driller is interested in. These logs help the geologist create a map with cross-sections who show the different layers beneath the surface, and best target the most likely source of oil or gas, based on science and knowledge of the area.
Development drilling, such as the Sunshine Joint Venture are some of the most successful operations, striking black gold for its investors. By choosing to invest with USEE, a trusted leader in the industry, investors have a better chance of return. With risk comes reward.