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Invest In Oil and Gas: Top 7 Reasons by DDC on J U N E 1 , 2 0 1 0

Compared to traditional opportunities, investing in oil and gas provides

sound returns with regular monthly cash flow. Investment strategies in oil

and gas can also provide tax advantages which aren’t going to be available

with any other strategy of investment, including real estate investment, stocks and

bonds.

Some unique advantages of investments in oil and gas include:

n Minimal risk by concentrating on under developed, under financed or

mismanaged leases

n Repayment of investment typically between 2 to 4 years

n Tax advantages that aren’t readily available to other investments

n Years of normal cash flow

n An investment which is less influenced by the ‘up and downs’ of the stock market

and interest rates

n Diversification of your investments

n Replenishing assets

Investments in oil and gas provide a monthly premium for the oil and natural gas sold

in the course of the month. Some refer to this as ‘mail box’ money simply because it

comes in with no effort on the part of the investor. In addition, oil and gas wells

commonly provide higher revenue during the first few years of production, as a

result, the complete payback of oil and gas investments usually is somewhere

between 2 to 4 years, depending on the particular wells and oil and gas prices.

Working with an experienced oil and gas production company that offers that 

essential -  ”personal touch” has many amazing benefits because making direct

investments into oil and gas comes with a learning curve. It takes an understanding of

the oil and gas industry, along with, professional management of production in order 

to maximize profits and offset prospective risks effectively.

Dependency on foreign oil is a key topic for the United States, especially with the

developments in the Middle East. To promote the production of US reserves,

Congress has sponsored popular tax advantages not available with other forms of

investments.

Investments in oil and gas are less dependent on the economy or interest rates

compared to traditional investments like stocks and bonds. For that reason, these

investments will provide leverage against a downturn in the economy, especially if

the recession is the result of a shortage of oil and gas. In response to the oil spill in the

Gulf Coast, President Barack Obama has applied a suspension on new drilling on our

coastal waters. This action by Obama only strengthens the demand for

domestic land drilling for oil and gas.

Do not forget, not all investments in oil and gas are the same. For many, they think of

investing in oil and gas as ‘wildcatting’ – which is going out into an unproven area in

the hope of being the first to strike oil. On the other hand, there are exceptional

investments into ‘proven fields’ where it is already identified that oil and gas exists.

These production deals are where sophisticated investors are buying into active wells

that are producing oil and/or natural gas. These are characteristically the healthier

investments because the risks are well managed, as are the dividends for the investor.

Diversifying with investments in oil and gas can provide leverage to protect against

the impact of high or rising energy prices and other unfavorable variables linked with

real-estate, bonds and stocks.

As with every investment, there is the possibility of the loss of a portion, or all, of the

investment principal if the well or wells are unsuccessful. For this specific fact, we

highly recommend staying away from drilling new wells and invest in active and

under producing wells that need re-working to bring their output to full potential.

This approach minimizes most of the risk in the investment.

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