[Posted on May 6, 2014 by Michael L. F. Slavin]
Today, 95% of commodities in any economy are linked to crude oil products. Examples of these oil products include gas for your car, energy for the home, cosmetics and plastics. To be successful in an oil well investment, however, it is imperative to determine an appropriate and effective method for oil drilling. Oil companies always strive to maximize profits and as such, they opt to invest in oil wells that have high profitability and lucrative growth prospects.
Difference between Wildcat Wells and Developmental Wells
According to the Institute for Energy and Environmental Research, there are various types of oil well investments that can be pursued and drilled in different locations to obtain oil and natural gas. Among them are Developmental wells, wildcat wells, and exploratory wells.
The exploratory wells are drilled in either a new area with no previous indication of oil presence or near existing wells to identify other reservoirs for oil and natural gas. The drilling occurs in areas where seismic testing has already occurred and the potential of the place is determined. However, there are instances when drilling occurs in explanatory wells without any prior seismic testing. Such wells are known as the wildcat wells.
Development wells on the contrary are well-established prospects with gas and/or oil production nearby and in the same field. Exploratory or wildcat wells may end up becoming developmental wells, though not in all cases.
Advantages of Investing In Developmental Oil Wells
Research shows chances of increasing returns on investment in the oil industry with corresponding improvements in oil well drilling. It is only through the help of a good company that you will be able to achieve this. The company must have the latest, up to date equipment to heighten the wells’ success rate. It is imperative that you look for a company with good BBB ratings in order to maximize your gains in the oil drilling business. Here are four essential advantages of investing in developmental oil wells.
Reduced Risks of Failure
According to Alliance Affiliated Equities Corporation, developmental oil wells are worth investing in because they are less risky and present high chances of success. The developmental oil wells are drilled in well proven oil and gas fields where the risk of dry holes is minimal.
Revenue and Tax Advantage
Investment in Developmental oil wells generates a steady and regular flow of income and other revenues to the individual investors. These revenues are normally subjected to reasonable taxation that is waived by the government. Most precisely, the income and revenue that accrues to the investors is partially tax sheltered.
Returns on Investment
Appropriate utilization of modern technology in the developmental oil wells gives the investors assurance that investing their money in the developmental oil wells ultimately yields supernormal profits. According to U.S Emerald Energy Company LP, investing in developmental oil wells also may provide consistent monthly income to the investors and potentially large returns on the invested capital.
Decision Making Power
In the case of partnerships, you occasionally may be in a position to have a vote over the well and contribute in decision-making. Do not hesitate to invest with a trustworthy oil well company that utilizes professionals to improve its performance and profitability. This is an important way through which you will benefit from oil screening and evaluation of a prospective well.