Investments in gas and oil are lucrative as they yield high returns. Generally, the returns that one can earn from the original investments can range from 5 to 10 times the initial amount they invested. However, the risks in this market are high, but investors are eager to take them due to the potential high returns involved. Besides the above advantage, there are other benefits of investing in oil and gas companies too.
Paul Favret – Enjoy taxation benefits
Paul Favret is the CEO and Founder of Source Energy Partners LP and, in the past, served as the Chief Executive Officer, Aspect Energy. He completed his education at The University of North Carolina System and the University of South Carolina.
According to him, oil drilling is one of the best incentives for tax in the USA. In some cases, there is a tax deduction of 100%. Investors here can write off as much as about 65% to 80% in their first year for specific classes of investments.
With gas and oil investments, one is able to earn a profit with a ratio that can go up as ten to one in a year. This translates to an annual rate of return of more than 50%.
The risks of investments in this industry are high for some specific kind of investment. Most of the investments that one takes in this sector are defined as calculated risks. Technology has evolved and helped with the projection of several explorations of oil investment returns. In a majority of cases, projects have success rates of 90%.
Reduced costs of drilling
If you compare the current scenario of today to the past, you will find that there is an extensive diversity of drilling prospects that are small-scale in nature. Besides the above, the costs of drilling have dipped to a very low price due to its reduced rig activity.
An increase in demand
As the economy of the world develops over time and people are becoming affluent, there is an increasing demand for crude oil and energy. There is no other substitute in view now, so the demand for it will increase in the future.
Conventional sources of funding are not available
There is a challenge for conventional funding sources as it is very difficult to secure. This is why capital investments from private investors are being widely sought after for starting a fresh project. Private investors are able to get a benefit here as if they give the funds, they are being offered very high returns on their investments.
According to Paul Favret, the significance of oil has not been ignored by the Government of several nations. In order to boost the economy of their nation, several governments are providing tax incentives for encouraging investments in the sector. However, if you are interested in knowing more about oil and gas investments, you must consult a skilled professional in the field so that you can effectively make the right choice as to proceed with it or not.