Easy Steps To Beginning Oil Well Investment

[Posted on July 9th, 2014 by Michael L. F. Slavin]

Oil and gas investments provide you with a flow of passive income. Choosing a development well, one that has been deemed by a geologist to contain subsurface traps that contain accumulations of oil and gas, likens the chances that your oil well investment will pay off and provide you with a valuable source of additional income.

If you have ever considered the possibility of investing in an oil well investment in one of the key tight oil and shale gas regions in the country, as determined by the U.S. Energy Information Administration, now may be the time to consider investing. When considering this type of investing, you should be willing to accept the potential risk of losing all of your principal capital invested (which may be offset by certain tax advantages associated with oil and gas ventures, such as deductible intangible drilling and development costs in accordance with IRC 263(c)); however working  with a reputable joint venture partner such as U.S. Emerald Energy may help minimize risk and maximize profit potential. The steps for investing in an oil well venture include performing necessary due diligence.

Determine If You Fit the Investor Profile

Gas development and oil well investment should be undertaken by individuals who have money to invest and are looking for ways to diversify their current investment portfolio of fixed and equity securities. For some projects you may have to meet the requirements for accredited investors; to determine if this is the case with a proposed oil and gas development well project, contact the promoter such as U.S. Emerald Energy directly to see if you qualify to invest.

Performing Due Diligence

The steps involved in oil well investing begin with an evaluation of the project and its potential risk. This due diligence should be performed by all partners involved in a proposed venture in order to provide key insight regarding the potential for profit as well as the downside risk of loss of principal should the venture fail.

Part of the due diligence process should also involve an investigation of the partnership offering the investment opportunity. Such ventures should be able to provide you with verifiable information concerning their investment track record, experience and be free of language that guarantees success or oversells investment results. All investing includes risk including the potential for loss and downplaying this fact may lead to an unrealistic expectation of the potential in any opportunity you choose to invest in.

Contact Promoter for Specific Investment Information

Once you have completed your due diligence and review, including any registration requirements for a given venture filed with the state, contact the promoter for information about a specific development well opportunity. Because risk is best minimized by spreading out your investment, consider investing in multiple opportunities in order to increase the likelihood for success. Ask questions of the promoter regarding how funds are maintained (preferably in an escrow or separate account specific to the project). You also want to ask about tax incentives associated with dry-hole situation and the pass-through of any deductible intangible drilling costs.

Investing in a development well project may be a potentially lucrative way to earn investment income. The steps for becoming involved are easy and can lead to additional opportunities through a promoter such as U.S. Emerald Energy.