Patriot Energy FAQs – What Oil & Gas Investors Ask Most Often
WHAT ARE THE TAX ADVANTAGES OF OIL AND GAS INVESTMENTS?
Oil and gas investing offers some of the most lenient advantages in the entire tax code. Not only can you deduct both tangible and intangible drilling costs, you don’t pay income on 15% of the gross revenue from the well due to the depletion allowance. There are other tax advantages including other completion costs and depreciation.
WHAT ABOUT WHEN PRICES ARE DOWN?
Price fluctuation is part of the oil and gas business. There are times when prices are lower, but there are many times when prices are ultra-attractive for higher returns. Markets move up and down for various reasons, however the long-term trend for oil is definitely up. This has been confirmed by the Energy Information Administration (EIA), ExxonMobil in their comprehensive Outlook For Energy: A View to 2040 and by BP in their Energy Outlook 2035. Each from their own perspective all confirm the same thing: The demand for world energy is going up and supplies are steadily decreasing. Even though the American shale revolution has had a profound impact on inventories and prices, global demand for more and more oil will prevail and it will take all countries, maximizing all sources of oil and gas to supply the fuel to power our modern lifestyles.
WHAT IS THE MINIMUM INVESTMENT?
Minimum oil and gas investments may vary and our consultants will be happy to explain what is available that fits your budget. The one qualifier is you have to be an accredited investor. That means you had individual income of $200,000 or more for the last two years, or if you’re married, you and your spouse earned at least $300,000 of combined income, or you have liquid net worth of $1,000,000 or more not including the equity in your primary residence.
If you meet those qualifications, we will be happy to work out what best oil and gas investments fit your portfolio criteria.
HOW MUCH OF MY INVESTMENT PORTFOLIO SHOULD I USE FOR OIL AND GAS INVESTMENTS?
This obviously depends on each person’s situation, but many of our first-time investors start with approximately 5-percent of their net liquid assets, and can grow from that base to much higher amounts, depending on their particular investment criteria and cash flow needs.
HOW LONG DO SHALE WELLS PRODUCE?
Shale oil wells have an inherent characteristic. They produce large volumes of oil quickly, so it’s important to be in these prospects from the beginning. Then, after a few years of high production, they settle into a flow that can last for decades. Also, because of developing technology, many wells can be re-fracked to further stimulate higher production from an existing wellbore.
ARE ALL YOUR WELLS HORIZONTAL?
No. This is one of our clear advantages and part of our conservative strategy. Horizontal wells are expensive to drill and complete, although prices are coming down. Our team has always done well with conservative vertical wells in proven areas. Sometimes the economics virtually mandate horizontal drilling, and when that is the case for the best production, we drill horizontally. We also will place vertical wells on strategic leases like our farmout in the Permian Basin to hold the acreage, and that gives us many options to maximize those wells later, when the economics warrant.
WHAT ABOUT THESE LOCAL FRACKING BANS – WILL THAT AFFECT YOUR WELLS?
No. Those are mostly small communities that don’t want development in their back yards. This is another advantage to operating in an isolated area in the Permian Basin. We are miles from the nearest community, and there is no risk of any local restrictions interfering with our development. We pride ourselves on corporate social responsibility and we insure we always operate with that in mind.
ARE OIL AND GAS INVESTMENTS RISKY?
All investments contain some risk, and today even the safe-haven of bonds are not subject to having their value depreciate to zero, as we saw during the recent real estate crisis. However, we take a majority of the working interest in most of our projects to help insure operational control. In today’s low interest rate environment and at a time when the stock market is mostly wobbling sideways, that oil and gas investments offer the potential for substantially higher returns than the alternatives. With the long-term trend in place of more worldwide demand for crude oil and diminishing reserves, this is the best place to invest for the next several decades.
HOW CAN I LEARN MORE?
The best way is to speak to one of our consultants. If you will fill out the contact form below, we will be notified and get back with you quickly. Or, you can call (469) 453-7000 and ask to speak to one of our advisors.
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For more information on Patriot Energy’s available oil and gas investments, please fill out the form below