Big Business: Western Capital Helps Oil and Gas Investors Cash In
For years, investors have played the stock market, hoping to cash in on their risky decisions, and cash in on the American dream. While
many still continue to play the stock market, hundreds are now turning their eye to another lucrative investment opportunity, oil and
Albeit risky, an oil and gas investment, has the potential for big payoffs. Texas wildcatters like Trevor Rees-Jones have taken risk, and are enjoying the fruits of their labor. The 56-year- old Dallas resident took a risk by starting Chief Oil and Gas in 1994, which he sold in June of 2007 for $2.5 billion.
Rees-Jones recently told the Dallas Business Journal, “When to risk and when to play it safe in the oil and gas business can't be taught -- it has to be learned…you need to tumble around in the washing machine a little bit – and get banged up -- to be able to develop that type of acumen to manage risk," he said.
"There are dozens of times that I faced adversity -- dozens of times when the oil and gas business kicked me, but you've got to make sure its kick doesn't lay you down for good," he continues.
Research has shown that revenue from a successful well can last more than a decade, with investors being able to write off nearly the entire investment.
“Based on today’s prices, and with the right project, it is not unreasonable to see anywhere from a 5 to 1 or 10 to 1 return on your investment, if not more,” Robert Jones of broker-dealer company Lone Star Securities said.
Because oil and gas investments are particularly risky investments. Oil and gas investments are suitable for accredited investors.
The term accredited investor generally refers to:
1. Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.
2. Any natural person whose individual net worth or joint net worth with that person’s spouse at the time of his purchase exceeds $1,000,000
3. Any natural person who had individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year.
4. Any trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the securities offered, whose purchase of the securities is directed by a person who has such knowledge and experience in financial and business matters, that he is capable of evaluating the merits and risks of the prospective investment.
5. Any organization that was not formed for the purpose of acquiring the securities being sold with total assets in excess of $5,000,000.
6. Any entity in which all of the equity owners are accredited investors.
The regulations surrounding accredited investors stems from the Securities Act of 1933, or Truth in Securities Act, which occurred after the stock market crash of 1929. The initiative was started to prevent uninformed citizens from investing in unregistered securities and other things that are lesser known than stocks and bonds.
Although this requirement limits the number of investors, those that are eligible as accredited investors find the benefits innumerable.
Chief among them are the on-going profits involved. Mitch Reifel, who accepted oil investments in exchange for his work in the oil industry twelve years ago, is still receiving monthly payments from his investments.
Accredited investors in oil and natural gas also see enjoy large tax breaks.
Fruitless investments like dry wells can also be written off against adjusted gross income.
“The intangible drilling costs, which go toward labor and other unrecoverable costs, usually make up about 60 to 65 percent of the investment and can be written off in the first year, one oilman proclaims.
He continues, “They want to encourage U.S. citizens to drill as much as we possibly can domestically...because every single drop of oil and every normal cubic foot of gas that comes out of a pipe is one more bit of energy that we don’t have to purchase from what now are typically countries that hate us.”
Many interested in investing in oil and natural gas are turning to Western Capital, Inc., a company that has pursued a policy of drilling low risk oil and gas prospects, usually in areas of proven production, primarily in the geographical areas of Texas and Louisiana. Western Capital, Inc. evaluates hundreds of prospects each year, but selects typically six to ten projects for development.
To find out more information about Western Capital or investing in oil and natural gas, visit www.oilandgasjointventures.com.