Investing in oil and gas in the U.S. has, at times, intimidated investors, thanks to its relatively high costs and potential risks. For those who want to create wealth within low or moderate risk environments, and who wish to generate cash for future reinvestment, however, investing in oil and gas in the U.S. can be a good fit that yields profitable results.
Investors who want to learn more about how U.S. oil and gas investments can help them create the kind of wealth they desire should first consider the three biggest reasons for making such investments. Then, they should consider how they wish to step into direct investment in mineral rights or oil and gas drilling and development investments or both, a decision that Redhawk and its low to moderate risk projects, can help them to make.
Investing in oil and gas in the U.S. comes with generous tax benefits.
The U.S. government is motivated to encourage U.S. oil and gas investments because they contribute to greater domestic production of these natural resources and, subsequently, less dependence on foreign oil. As a result, investing in oil and gas in the U.S. comes with generous tax benefits that can offset many of the expenses of these investments.
For example, deductions can typically be taken from intangible drilling costs, which generally include everything but the drilling equipment itself. These costs, which can constitute 65 to 80 percent of the total cost of drilling a well, may be deducted. And, this deduction is allowed regardless of how the well performs, and regardless of whether or not it ever strikes oil.
Other tax benefits that may apply to U.S. oil and gas investments include deductions based on the tangible drilling costs (which can be deducted on a seven-year depreciation schedule), passive vs. active income deductions, and a 15 percent oil depletion allowance for oil revenues.
Investors should always look into how these tax benefits will apply to the specific investments and projects they are considering. However, when applied correctly, they can make investing in oil and gas in the U.S. less of an expensive burden and more of a profitable and desirable way to create wealth.
Investing in oil and gas in the U.S. provides protection against the effects of economic downturns on investors’ portfolios.
Diversification is the bedrock of many successful investors’ strategies. Investing in multiple industries and projects in different forms of ownership can lessen the negative impacts of a downturn in one area by increasing the chances that at least some parts of the portfolio will continue to perform well in other areas.
When it comes to protecting one’s portfolio (and one’s wealth) against broad-based economic downturns, U.S. oil and gas investments provide a useful form of diversification. In particular, oil and gas investments within the U.S. tend to perform well when oil and gas prices rise, and the rest of the economy stumbles.
Thanks to this trend, the negative effects of an economic downturn can be mitigated at least in part by an improvement in oil and gas stocks performance. As a result, oil and gas investors, enjoy a portfolio that is stronger and more likely to withstand the ebbs and flows of the market, making these types of investments an appealing way to solidify and diversify a portfolio.
In addition, oil and gas investments in the U.S. can take a variety of forms. For example, investors may choose oil futures investments, oil drilling investments, mineral investments, and more, depending upon the type of investment and risk they find most desirable. As a result, there are ways to diversify one’s oil and gas assets as well, a fact that many investors find appealing as they seek to build and protect their wealth through diversification.
Investing in oil and gas in the U.S. can lead to significant wealth creation.
One of the goals of most investments is to build wealth, and U.S. oil and gas investments have the potential for great profitability within a short amount of time. For example, investing in oil stocks during a downturn in the price of oil can yield large profits when prices rebound, one reason that oil was touted in many areas as a strong investment option in 2016.
In addition, investing in oil drilling, oil futures, and mineral rights can provide a strong return, sometimes within a short amount of time. This return on investment is often even more appealing because of the tax advantages that apply to many oil and gas investments: The deductions and advantages available reduce overall expenses related to the investment, thereby increasing the amount of profit an investor can make from the project.
Wealth creation in oil and gas investments can occur at a variety of risk levels. For example, relatively risky oil futures can be particularly profitable. On the other hand, sometimes, profit can be realized without the high-risk endeavors that investors often associate with oil and gas investments. For example, owning mineral rights can be a way to build wealth without the risk of dry holes or high operating expenses. And of course, there are investment options that carry moderate risk that is neither as high as oil futures nor as low as owning mineral rights.
Finding the right investment partner is essential and can help you to improve your success in U.S. oil and gas investments and help you to find the right investments to make. At Redhawk, we are aware of our investors’ desire to enjoy near-term cash returns and to have cash available to reinvest.
That is why we provide accredited investors with access to diverse direct oil and gas investment offerings that are designed to provide a strong return on investment. Currently, one opportunity is targeted for a 20-plus percent yield annually, while another will provide significant tax benefits. There are a number of good reasons to invest in U.S. oil and gas; let us help you discover all of those reasons and find the right investment project for your needs.
Always make sure you consult a financial professional for questions and appropriate advice regarding the financial impacts of the oil and gas investments in the U.S. that you wish to make.
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