It goes without saying that oil and gas can be very profitable investments.
Investing in oil and gas can be accomplished in a variety of ways – from purchasing stocks in large public companies to participating in independent projects. All investment areas in oil and gas are potentially profitable; however, as with any investment, there are varying degrees of risk and reward, and every investor should have a good understanding of the type of programs, their structures, and their own levels of risk.
Oil and gas are natural resources that will deplete through extraction – these are not renewable energy sources and tax codes have allowed depletion allowances. In addition, there are intangible drilling costs as well as additional tax benefits.
Participating with oil companies located in different geographic areas can be beneficial; it is not uncommon for oil companies to have specific knowledge or infrastructure in various regions and by sharing in development costs, risk reductions and risk diversification can be achieved.
