ADVANTAGES OF PARTNERING IN OIL AND GAS DEVELOPMENT


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ADVANTAGES OF PARTNERING IN OIL AND GAS DEVELOPMENT


WHY PARTNER IN OIL AND GAS DEVELOPMENT?

As an accredited investor, partnering in oil and gas development can come with great advantages. The oil and gas industry is generally a high-risk industry but it is also known for having high return potential. It is important to understand both the upside and downside before partnering in oil and gas exploration or development.

ACCREDITED INVESTOR

First, you must be an accredited investor. To be an accredited investor, an individual must make $200,000 in annual income for the past two years, make $300,000 in annual income for the past two years combined with a spouse or have a net worth (individually or with a spouse) that is $1 million or more and excludes the value of the primary residence. Once meeting this standard, an individual(s) can apply to become a partner in an oil and gas partnership.

WAYS TO INVEST

There are several ways to invest as an accredited investor. As mentioned in “All You Need to Know About Investing in the Oil and Gas Industry” blog, there are various options to invest but none get you closer to the action than a general partnership.

GENERAL PARTNERSHIP/JOINT VENTURE

A general partnership, otherwise known as a Joint Venture (JV), is a partnership between two or more individuals, business, government agency or non-profit enterprise. Within a general partnership/JV, the partners control the project closely and make most decisions with a simple 51% majority vote. The business is jointly owned by sharing all profits, assets and finical liabilities. All partners are responsible for all costs, lost and/or gained associated with the project.

ADVANTAGES OF PARTNERSHIP IN OIL AND GAS

CASH FLOW

As a partner in a Joint Venture, revenue is typically distributed monthly to the partners. Drilling wells that are in produce could bring in revenue for decades to partners and new wells can start producing revenue within two to three months following completion.

TAX DEDUCTION

Tax deductions can be significant benefits for Joint Venture partners. For example, JV partners gain the same active tax deductions as someone who paid to drill a well individually.

Tax deductions may include: intangible drilling costs, tangible drilling costs and active income deduction.

INTANGIBLE AND TANGIBLE DRILLING COST

Intangible and tangible drilling costs are 80% to 100% deductible in the year the costs are incurred.

ACTIVE INCOME

Active income is things such as wages, interest and active gains.

DISADVANTAGES

Of course, there are disadvantages when partnering in a Joint Venture as well.

  • There are scammers within the industry that can appear to be legit.
  • The marketplace and prices are always changing and are dependent on local and national factors.
  • Fees for investment may be higher than most investments, but that also means there is an opportunity for higher returns.
  • It is not a quick turnover investment. If you are wanting to invest in something and get money quickly, partnering in oil and gas is not for you.

It is vital that you do your research to understand the upside, as well as the downside that comes with a Joint Venture in oil and gas development.

DEMAND INCREASE

There is still a demand for oil and gas, a global demand, that has increased in recent years. The oil and gas industry is continuing to grow despite what some may think. The industry is a worldwide industry that has an impact on the global market, with the demand highest in the U.S., and China second.

Oil and gas are a part of our daily lives producing light, plastic, medical devices, air conditioning, gasoline for our cars and other things used day-to-day. With the increase and improvements in technology for the use of drilling wells, it has lowered the risk for partners in the industry and increased the amount of investment opportunities.

PARTNERING WITH SWAN ENERGY, INC.

Swan Energy, Inc. has formed and funded over 60 Joint Ventures, with over 100 Joint Ventures under management in 2017 and over 500 wells owned and/or managed.

Swan Energy, Inc. is based in Houston, Texas and accepting new partner applications. With new operations developing, now is as good a time there has ever been to start your oil and gas partnership portfolio.

For more information about a Joint Venture partnership with Swan Energy, Inc. click on the link below and Swan Energy, Inc. will contact you.

http://www.swanenergyinc.com/landingpage/simple