Oil and Gas Development Company
2013 Oil Well Investment
Investing In An Oil and Gas Development Company
An oil and gas development company is an organization that specializes in gaining access to old or existing oil and gas well locations in order to drill their new wells. The main strength of this type of venture is in the fact that the field has already been proven to yield oil and gas. The entry of an oil and gas development company into the equation infuses additional cash flow to boost production via the purchase of new and more sophisticated drilling equipment and techniques.
First and foremost, this type of business venture has to be clearly differentiated from exploratory companies that encourage investors to put their money into prospecting for new oil and gas sources. In that scenario, it is easy to see why many consider it a hit-or-bust system. If the venture strikes a rich field, payoff for the investment is huge; conversely, the company can deplete all of its capital resources without ever finding a profitable field.
In contrast, an oil and gas development company is more likely to have positive results since it will be putting its money on a field that has shown significant yield historically. Combined with the latest in drilling technology that is able to squeeze more oil and gas out of existing fields, an oil and gas development company is poised to earn back its investments quicker than an exploratory outfit can hope to profit.
Given the nature of this segment of the industry, it is not a surprise to see investors lining up with companies who have proven themselves to get in on a partnership involving their latest venture.
The tax breaks associated with oil investments also does not hurt; according to current laws, oil and gas investors are in a position to keep most of their earnings to themselves. This is because the government is preaching against oil independence from foreign suppliers by motivating local businesses to invest in local drilling, most notably maximizing existing oil fields. It does not take a business guru to figure out that a low risk investment with high tax breaks is an excellent formula for profiting from an investment.
So consider your options when considering investing in oil and gas wells You can put your money in exploratory oil companies where the hit-or-miss nature of the business can turn your investment to zero in no time, or in an oil and gas development company where your investment has a better chance of doing well, where the tax breaks ensure that you keep a significant portion of your profit, and where your input holds more weight because you are in the company of fewer investors, each with about the same amount of investment.
It is fairly simple to find an oil and gas development company that has proven its worth in the oil and gas investment sector. These are the ones highly sought after by investors looking to spend speculatory capital. However, don't forget that even an investment in an oil and gas development company does carry risks and only accredited investors may participate in the ventures.