Petro Partners WHITEPAPER .pdf
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WHY INVEST IN OIL AND GAS
OPPORTUNITY KNOCKS IN OIL AND GAS
IT’S AN ENERGY-CHALLENGED WORLD
Foresighted investors, take heed! The top players in oil and gas have enjoyed up to
a 10:1 return on their investments in recent years.
It’s clear, growth in oil and natural gas is
being fueled by the world’s changing
energy needs. Worldwide demand
is increasing and will continue to
increase over the coming decades.
Sophisticated investors recognize that.
Individual and institutional investors
from all over the globe entrust billions
of investment dollars in the drilling
for oil and gas in the United States.
Look to the oil and gas industries
to deliver long-term economic
value, cash flow, dramatic upside
potential and permanent tax benefits.
By 2035, world energy consumption is projected to
grow by 49% — with over half of that energy supplied
by oil and gas.
The global population’s
energy needs are expanding
exponentially on a daily basis.
Investors couldn’t be happier with the long-term economics of oil and gas as supply-and-demand of global energy tips to
the “demand” side of the scales. Smart and sophisticated individuals, prestigious U.S. and foreign investment houses both
here and abroad, pension and government funds, major industrial companies and banks and looking increasingly to oil and
gas to deliver consistent profits and guaranteed growth.
5.5 billion people,
12 billion by the
end of the next
century. By the
year 2020, 26
years from today,
it will most likely
have increased by
about 2.5 billion
to a total of 8
billion people, an
increase of nearly
100 million a
Over 93 percent
of this growth
will take place in
As former Communist countries enter a world of free market enterprise, emerging
markets, powered by a low-cost workforce and ever-increasing consumer
demand, look to oil to fuel GDP growth. In the light of predicted life expectancy
increase and global population rise, consider the unstoppable demand to fire
the factories, fuel the cars, light the new houses spark the home entertainment
systems and launder the clothes in Southeast Asia and Eastern Europe – which in
turn will feed countless new business opportunities in the oil industry.
But it’s not just growing demand for the product that makes investment in oil
and gas a no-brainer. Oil and gas fields boast a high intrinsic value, one that, as
tried and true as an exceptional red wine, increases with age. Field production
is expanded regularly as new wells are completed, as production techniques
are refined, as secondary recovery options are improved. Productive zones
previously bypassed are often redeveloped. The advent of new technologies
is paving the way to guarantee supplemental yield to gradually replace that
from primary reserves which, having been actively producing for decades, are
now slowly depleting. Tech giants like IBM exploring “smart”-field approaches
through improved data integration and business analytics are well on their way
to creating systems linking a field’s business functions into one smooth system.
The outcome: upstream oil and gas producers can look in the coming years to
raise production levels, recovery rates and cost efficiencies.
As the field value increases, so does the product value. The steadily climbing value
of the gas and oil industry will come as no surprise to anyone who experiences
first-hand – at the gas pump or when paying their home heating bill – the rising
cost of petroleum and gas products.
And the value remains safe for the life – often decades — of an optimally-yielding
field. Reservoirs embedded in rock thousands of feet underground remain
untouched by the elements. Impenetrable by all except the owners, these
reserves are secure and will remain so for decades. No high-security bank vaults
needed. And, as political and social turmoil elsewhere in the world boil and
bubble, the physical security of U.S. oil and gas fields is ever more underlined by
a political security: onshore properties and reserves in the United States harbor
one of the world’s most valuable assets in one of the world’s safest places.
OWNING JUST A SMALL
FRACTION OF A OIL
AND GAS WELL, CAN BE
Oil and natural gas, as easily-valued commodities, have proven time and time again to be one of the most essential
basic commodities of the worlds’ growing industrial societies. So great is the economic power of oil that it has propelled
relatively small countries to commercial and financial preeminence. Oil and gas are the largest business in the world. Of
the top five Fortune 500 companies, three of them are oil companies. Exxon’s net income alone was greater than the
sales of more than half of the Fortune 500. As worldwide energy prices continue to rise, “black-gold” and gas owners are
seeing a surge in profits. Today, the person who owns a relatively small natural gas well or two with recoverable reserves
(500,000 Mcf ) of natural gas is a multi-millionaire.
Oil and gas investing is a particularly attractive medium to guarantee an ongoing cash stream. Revenue checks are issued
on a regular basis once production starts. Let those profits grow organically with auto-reinvest, and enjoy the income
tax benefits today. With appropriate professional advice and foresighted, pre-investment research into properties, their
geology, production history, drilling company and deal structure, investors can assure themselves of the quality and look
at projected return on their specific investment choice. All types of investments, of course, carry a certain risk factor – look
to lower your own risk in oil and gas by doing your homework.
“These [oil shale] companies
basically start printing
money once oil is above $90
Fadel Gheit, an oil industry analyst with
Oppenheimer & Co.
Unlike other industries, oil and
gas drilling can boast a huge
The exciting opportunity of producing high-yield oil and gas fields sets oil and gas investments apart from all other
investment types. Look at a theoretical potential return in this example: A oil and gas well with 100,000 barrels of
recoverable crude oil at $90 per barrel has a gross undiscounted value of $9 Million for a single well. A single well in
a field may have reserves of 100,000 - 500,000 barrels of oil per well and in many cases the wells will have multiple
reservoirs that also contain hundreds of thousands of barrels of oil. Do the math, and marvel at the gross undiscounted
value of $9 million – $45 million for one single well! All subsequent drilling in this field is no longer high-risk exploration,
but rather a low-risk developmental activity. This is when the real profits start to roll in – when drilling low-risk offset
development wells in a known, high $$-valued reservoir.
Partner Directly with the Operator
for a greater chance of success and
A Direct Participation Program is a business venture designed to allow investors to participate directly in the cash flow
and tax benefits of the underlying investment.America needs domestic oil and gas production for its own security and
economy. Informed financial advisors are recommending oil and gas DPP’s as part of a balanced portfolio.The two
most common ways for investors to profit from the oil and gas markets are: investors can buy publicly traded stocks or
participate directly in ownership in oil and gas production companies through DPP’s.
Generally, when investing in publicly traded stocks, these companies re-invest the majority of their profits back into the
Company, focusing on their business objectives.This deprives an investor of a higher yielding return on investment.A
DPP offers the strongest possible opportunity for high returns and considerable tax benefits.
Oil and gas DPP’s are more investor-friendly today than ever before. Individual investors can now invest directly in
independent oil and gas companies and in many times in specific wells. DPP’s were once considered the exclusive
domain of institutions and wealthy individuals, however not anymore.The U.S. government provides many tax benefits
for domestic drill- ing and production. In fact,American citizens who invest in oil and gas DPP’s earn tax benefits for the
production expenses and income from the revenue and profits generated by the oil and gas produced from the DPP’s
wells. Investors with well-balanced portfolios who invest in DPP’s can see excellent monthly dividends and sustained cash
flow while adding to their diversification.A disciplined plan such as this allows the DPP investor the greatest opportunity
to prosper from private oil & gas investments.
IRA/401K APPROVED - NO TRANSFER PENALTY
These projects are IRA/401K/SEP qualified. You have the ability to direct your self-directed retirement plan via transfer or
rollover without any penalty or taxation. Please note; since Retirement Plans consist of tax deferred capital contributions
and growth, the Congress and IRS approved tax incentives which are passed through to investors contributing cash will
not apply. Although if an investor takes a cash distribution from a retirement plan (which becomes a taxable event) and
invests those funds in this partnership, he or she could qualify for the approved tax write offs.
“DRILLING FOR OIL
AND GAS IS THE VERY
BEST TAX ADVANTAGED
Let’s get back to the tax breaks. While
share ownership in oil and natural gas is
not a tax shelter, there are some taxation
benefits associated with owning oil and
natural gas properties. For example,
intangible drilling costs, including e.g.
labor and other unrecoverable expenses,
can comprise up to 85% of the investment,
and typically can be written off. Over
time, remaining costs may be written off,
at most over the time period of life of the
well. (In some cases, write-offs can even
reduce an investor’s tax bracket.) And,
if a well turns out to be dry, the entire
investment is a write-off.
Not to forget, fifteen percent (15%) of the
tangible oil and gas income generated
from successful wells is deductible
from federal taxable income. As with
all investments, each investor is urged
to consult their own advisors as to the
benefits an investment in oil and natural
gas may have regarding the federal
income tax consequences and how it may
apply to their individual tax situation.
However, the tax benefits of oil and gas
investment are undeniable.
accelerates. An increasing use of electronic
devices – along with our need for cozy
warm houses in winter and refreshing air
conditioning in summer – pressures utility
companies to increase output. Electricity
suppliers throughout the country, for
example, are building new gas-fired
combined cycle turbine generator power
plants to meet consumer expectations.
Supply of natural gas is forced to increase
to meet suppliers’ demand just as those
same suppliers adapt to increase their
output to satiate an ever-growing and
ever-hungrier U.S. consumer population.
We can expect our politicians to
support tax benefits and incentives
well into the future. Eager to achieve
energy–independence in a world
seeing constant shifts in economic and
political power and influence, the U.S.
is now looking to tackle its own its own
The demand for power, both consumerand industry-driven, is escalating as the
rate of our technological advancements
The United States consumes around 20
million barrels of oil daily. Of the crude oil
is consumes, 70% is imported. As demand
continues to rise and the push toward
energy independence intensifies, it is a
no-brainer that domestic oil production
must increase, particularly in the area
of land-based fields. Currently, onshore
production accounts for just 5% of our
national oil – and the door of opportunity
is wide open, inviting investment in an
exciting and durable industry supporting
America’s soaring energy demand.
Remember, the sooner you invest, the sooner you see the potential profits. The longer you hold your
investment in oil and gas, the more you compound your profit.
A representative will be calling you shortly to discuss the qualification process, and to show you how
you can be part of one of the world’s largest and most profitable growth industries: oil and natural
Learn more today by calling toll free: (888)696-5597
It’s time for success, diversify
your protfolio with oil and gas
To learn more call: (888) 282-1933
©2014 Petro Partners | www.petropartners.info | All rights reserved. | 888-282-1933
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