Are oil and natural gas investments risky?
A. All oil and natural gas investments are risky. Exploratory or Wildcat drills carry the highest risk and most potential for above average reward. Developmental Drills have a lower level of risk but usually dont possess the potential for high rewards. However, the use of technologically advanced 2D or 3D seismic reports reduce the level of risk in exploratory wells and enhances the potential for returns in Developmental wells. Q. What are the tax benefits with an oil and gas investment and why does the U.S. Government give them preferential treatment? A. Investors in qualified domestic oil and gas projects are allowed to write-off 100% of all monies spent on intangible drilling and developmental cost. Investors also depreciate equipment purchases, usually over a 5 to 7 year time period. Up to 75% of the total investment amount quite often can be written off in the first year. This write-off may be taken in the first year or amortized over 60 months. The amortization option is especial
