4 Reasons to Consider Investing in Oil & Gas

The oil and gas industry is now on a path of steady recovery post the COVID-19 crisis, presenting a lucrative opportunity for accredited investors and HNWIs. The United States, one of the world leaders in oil production, has been performing particularly well, producing 28 percent more compared to the 1970s, widely regarded as the “peak oil production” era. Continuing on the subject, in this blog post, we present a list of four reasons to consider investing in oil and gas. Read on.

1. Exceptional ROI and Passive Income Potential Over time, there have been various advancements in technology, making oil and gas production more efficient than before. These developments have massively lowered the risks of investing in oil and gas. Investors looking to diversify their portfolio and step away from low yield investments with low potential can now benefit from the potential ROI offered by oil and gas investments. What’s more, some oil wells end up being in production for years on end, sometimes stretching up to decades even, giving investors a steady flow of passive, monthly income.
   

2. Generate Fast Cash Flow Oil and gas, unlike traditional investment vehicles, generates cash flow in a shorter period of time than a lot of other investments, making them a preferred choice of alternative investments for many. When you invest in an oil and gas project that is predicted to do well, you can probably expect to receive payments the moment it reaches production, which can be per month or quarter depending on distribution structure. What this means is you not only stand to receive an exceptional ROI but also at a potentially faster pace over other investments.
   

3. A Hedge Against Market Fluctuations Diversifying your investment portfolio is indispensable to tackle short-term market fluctuations. Although there’s no one size fits all advice when it comes to managing your portfolio, oil and gas investment projects are known to historically offer better returns that oftentimes beat inflation. It is, therefore, safe to say that including oil and gas drilling investments in your portfolio can help provide a hedge against market fluctuations.
   

4. Attractive Tax Breaks and Incentives Investors get to enjoy significant tax breaks and incentives when they put their money in oil and gas investment projects. Nearly 60 to 80 percent of well costs, for instance, could be fully deductible as intangible costs. Additionally, 15 percent of gross cash flow of a given oil and gas property is tax free as it is considered a depletion allowance. Uncle Sam has provided several such incentives to encourage private investments in the natural oil and gas industry of the country.
   

The Last Word

Investors looking to enjoy a steady, passive cash flow and attractive return on investments are all flocking towards the best energy companies to invest in. Considering the numerous advantages, most importantly the tax breaks and incentives, it is safe to say that oil and gas investing is one of the most desirable alternative investments out there. If you are looking for oil and gas investment opportunities in Texas, get in touch with a reputable investment company offering alternative direct investment solutions for accredited investors.