One of the best ways to invest in oil and gas is through royalties that offer wells already in production with rights to future production, all inside of one investment vehicle called a “Royalty Project”.
15% of the income is tax free due to the depletion allowance.
Your money goes to work for you right away.
A royalty interest is the right to collect a stream of future royalty payments, often used on oil projects to describe a percentage ownership of future production or revenues from a given project.
When you buy a mutual fund of stocks(oil wells in this case), whatever those stocks send out through dividends(in this case royalty payments) you get as income.
The land owner owns the rights to the product under the ground.
The oil company pays the owner to drill on the land.
The land owner has NO drilling cost and NO drilling risk.
Investors buy into royalties for the following reasons:
1. One time buy in price. (No completions, no cash calls, etc)
2. Want additional monthly income.
3. The solution to high energy prices is to own energy. Buying royalties should solve the high energy price crisis most folks feel at the gas pump, through higher food and transportation costs and higher heating/cooling costs.
4. Hedge against inflation.
5. You can bet on the price of oil without taking a drilling risk.
6. 15% of the income is tax free due to depletion allowance.
7. As additional wells come on line you receive revenue from those wells also.
8. Being on one royalty project in the area gives you rights to the next royalty project we are on in the area.
9. Trading dollars- Right now there are more opportunities than oil companies can afford to participate in. For that reason oil companies are allowing private investors like you in. You win because oil companies let you share in their profits and tax deductions.
10. You are able to invest alongside large public and private companies.
The oil companies win because they can use your investment dollars to grow their business and take advantage of all of the strong opportunities in front of them.
