Energy Investing 101
Direct investments in oil and natural gas may provide current cash flow, tax benefits and portfolio diversification. Only general information is provided herein. Investing may not be appropriate for the general public and specific investment opportunities are not discussed on this website.
Increasing Global Demand
Simply put, our modern world runs on oil and natural gas. Electrical power, transportation fuel, fertilizers, industrial materials and fabrics are dependent on large scale and economical production of domestic oil and gas.
With a growing world population of seven billion people reaching for better living standards, everyone contributes to increasing industrial development, greater dependence on mechanized transportation and greater per capita energy use.
Diversification
Portfolio Diversification
Direct energy investments allow investors to diversify their portfolio into assets with a traditionally low correlation to stock and bond market performance and a positive correlation with inflation.
Tax Benefits/Long-term ROI Potential
For fifty years or more, Congress has provided tax incentives to stimulate domestic natural gas and oil production financed by private sources. Current tax law allows:
• Intangible Drilling Cost Deduction Intangible expenditures of drilling (labor,chemicals, mud, grease and others) typically 50% - 80% of well cost which is 100% deductible during the first year.
• The Small Producers Exemption/Fifteen percent of certain oil and gas production revenue may be received tax-free.
• 1031 Exchange Eligible Capital gains tax may be deferred by usingoil and gas royalty ownership as replacement property in a 1031 exchange.
This content is provided for informational purposes only. Information on this website is not intended to be a solicitation of any kind. Nothing herein shall be construed as tax, legal or accounting advice. Investing in real estate and oil and gas is highly speculative and could result in substantial losses. Potential investors should consult their attorney, accountant and financial advisors before investing in oil and gas. Past performance is not a guarantee of future performance or returns.
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