Oil and Gas Investment Opportunities: Direct Participation Programs

Advancements in technology have allowed energy companies to discover developed and proven oil fields more efficiently. The energy industry shows high returns owing to the continuous increase in demand; and as a result, there has been a significant surge in the number of qualified individuals turning into oil and gas investment opportunities. Aside from its high return of investment potential, energy investments have great tax benefits and help diversify the investor’s portfolio.

You can always count on a solid, trusted, and reliable energy investment firm like DW Energy to maximize the benefits of direct participation in oil and gas production and exploration. However, it’s also essential to have a good understanding of the industry.

As an investor, there are a number of oil and gas investment opportunities available to you, and this includes direct and indirect programs. Those who want to go for a pooled entity that offers access to a company’s tax benefits and cash flow invest in Direct Participation Programs (DPP). This program is for those who want to invest directly in oil exploration and production.

DPP allows the investor to take advantage of the following:

  • Great tax incentives
  • High ROI potential
  • Long-term passive income generation
  • Portfolio diversification

In a Direct Participation Program, the investor owns a percentage of assets and interest of the operating company (also known as working interest). It is generally considered a passive investment and can give the investor a financially lucrative experience. In a DPP, the investor enjoys all the benefits of owning a percentage in the company without the stresses of setting it up, being an expert in the oil and gas space, and managing the day-to-day operations.

Directly investing in oil wells is certainly a more focused approach. There are two options for direct investment: Limited Partnership Ownership and Working Interest Ownership.

Limited Partnership Ownership

  • Typically delivers a high ROI, as the working interests get wrapped together.
  • The investor incurs the backend and management costs.

Working Interest Ownership

  • Also carries a potential for high returns. 
  • The investor owns a piece of the oil well; hence, their risks and obligations are higher. 
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Below are other Direct Participation Programs you can be involved in.

  • Developmental Drilling Program – considered as the most common type of DPP, investors typically choose this program to take advantage of the immediate tax write-off against their income in the same year. The investor partners with a company that drills wells in an already-proven area.
  • Exploratory Drilling Program – considered as a ‘high risk, but high reward’ kind of investment. This could also be thought of as the riskiest kind of program. Here, the investor partners with an operating company that strikes a deal to explore a new vicinity for oil – an area that has no previous drilling or activity. There is a chance that exploratory wells can yield insane returns, but there is also a chance that the well will produce little to no oil.
  • Rework Program – this is the least common type of program. It involves operators that re-work or revitalize already producing wells that have low production rates. The process typically involves drilling into new zones, cleaning the well, making tubing repairs, and restimulating. 

Overall, investing in oil and gas can prove to be a very lucrative venture for qualified investors. A reputable oil & gas investment company like DW Energy can help you decide on the many oil and gas investment opportunities available and can help pinpoint the most promising opportunities with great tax benefits and assured returns. 

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Want to learn more about oil & gas investing? Our expert team can provide you with more information or schedule a consultation to talk about diversifying your investment portfolio.