The oil and gas market moves in cycles, but for those with a long-term view, those shifts can offer more opportunity than uncertainty. Prices rise and fall, yet the fundamentals of oil and gas investing remain strong for qualified investors who stay focused on value, real asset ownership, and strategic timing.
By investing across market cycles, long-term investors can build resilient, income-generating portfolios that aren’t as vulnerable to short-term volatility. Learn why energy prices tend to recover, how ownership in tangible assets like producing wells supports portfolio stability, and what unique advantages domestic investors can tap into, especially when positioned with the right operator and strategy.
Weathering Cycles, Reaping Rewards
Oil and gas go through natural ups and downs, but downturns often lead to recovery when demand rebounds and supplies tighten. For instance, the strong market rebound after the 2020 downturn demonstrates how resilient the sector can be and why investors who stick to the long view often benefit from the next cycle.
Major producers such as BP, Chevron, ExxonMobil, Shell, and TotalEnergies are increasing exploration and development, supported by projections that oil and gas will still make up about half of the global energy mix by 2050.
Domestic Energy Independence Supports Stability
Domestic energy production gives the U.S. more control and reduces risks tied to international conflicts and supply disruptions. In 2023, fossil fuels, mainly petroleum and natural gas, made up approximately 84 percent of total U.S. energy production, highlighting a strong domestic supply.
Real Assets Deliver Ongoing Income
Oil and gas ownership isn’t just paper – investors get real stakes in production. Many wells generate cash flow for years, creating passive income that helps maintain stability through market cycles.
Strong Tax Benefits Lighten the Load
Upfront deductions and ongoing tax relief help investors keep more of their returns.
- Intangible drilling costs often make up 60 to 80 percent of well costs and can usually be fully written off in the year paid.
- Tangible costs, like casing, rigs, and equipment, must be capitalized and depreciated over time (commonly using a seven-year schedule under U.S. tax rules). This follows the Modified Accelerated Cost Recovery System (MACRS), which sets depreciation timelines for tangible assets, including petroleum drilling equipment, over seven years.
- Depletion allowances provide ongoing tax benefits -investors can deduct 15% of gross production income or recover actual costs over time, depending on the method used.
These deductions improve after‑tax returns and help buffer cycles of lower prices.
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Portfolio Diversification and Risk Reduction
Energy assets often move independently of stock or bond markets. That makes them effective hedges during periods of market volatility. This diversification can help keep a portfolio more stable.
Expert Oversight Without Operational Burden
As a non-operating partner, investors can participate in oil and gas projects without managing daily operations. To make informed decisions, it’s standard practice to conduct thorough due diligence, reviewing geology, drilling costs, operator history, and infrastructure. This careful approach helps protect capital, maintain project quality, and manage risk through market cycles.
Inflation Protection
Oil and gas revenues often rise with inflation. As prices increase, cash flow from production typically grows too, helping investors preserve their purchasing power over time.
Supportive Policy Environment
The U.S. is now the world’s largest crude oil producer, supported by policies that encourage domestic energy development. Measures such as expanded land leasing, infrastructure investment, and streamlined permitting can make energy projects more viable for long-term planning
Long-Term Demand Remains Strong
Even with the expansion of renewable energy, global demand for oil and gas is expected to stay high. The U.S. Energy Information Administration projects steady energy use worldwide, and the International Energy Agency forecasts oil demand reaching more than 103 million barrels per day in 2025. This consistent demand supports the long-term value and income potential of energy investments.
Exclusive Opportunities for Qualified Investors
DW Energy works only with qualified and approved investors. This focus grants access to projects that aren’t available through general channels. That exclusivity can mean higher-quality opportunities tailored to long-term goals.
Long-Term Value Backed by Expertise
Investing across energy cycles can create lasting value through real assets, steady income, tax advantages, inflation protection, and portfolio diversification. These benefits are strengthened by disciplined project management and the reliability of domestic production – two key factors in long-term success with oil and gas investing.
To learn how DW Energy Group identifies and manages opportunities for qualified investors, visit our DW’s Approach page. You’ll see how experience, strategy, and clarity come together to help you invest with confidence across every phase of the energy cycle.
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Sources:
“Built to Bounce Back: What the 2020 Recovery Tells Us About Oil and Gas Resilience Today,” DW Energy Group, https://www.dwenergygroup.com/built-to-bounce-back-what-the-2020-recovery-tells-us-about-oil-and-gas-resilience-today/
“Big Oil heeds call to ‘drill, baby, drill’ in bet green transition will slow,” Financial Times, https://www.ft.com/content/867562e1-2c67-4b8d-85c6-da1afa3c26c6
“U.S. energy production has been greater than U.S. energy consumption in recent years.” EIA, https://www.eia.gov/energyexplained/us-energy-facts/
“Intangible Drilling Costs (IDC): Overview and Example,” Investopedia,
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https://www.iea.org/policies/3513-modified-accelerated-cost-recovery-system-macrs
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https://www.investopedia.com/terms/d/depletion.asp
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https://www.pimco.com/us/en/insights/the-strategic-case-for-commodities
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