The first oil field was discovered in Texas more than a century ago, but it wasn’t until a couple of years ago when the United States began to fully realize its own oil potential. There had been drilling technologies in the past, but these were not enough to fully access the tight oil reserves residing below the American soil.
Types of Oil Drilling
But when two of today’s top drilling technologies were finally introduced, the United States was finally able to unclog its crust and welcome an overflow of oil. Hydraulic fracturing and horizontal drilling made it possible for oil investors to optimize their operations towards oil-producing wells and prevent digging on dry holes.
Hydraulic fracturing is the process of injecting chemicals into the hydrocarbon formation. These chemicals create great pressure that causes the formations to crack, thereby allowing oil access to get out of its tight reserves and flow to the ground.
Edmond Oil Wells
Unlike the conventional vertical drilling, horizontal drilling offers a much more effective and safer way to drill oil. During horizontal drilling, target formations are determined through the use of advanced radars, sensors and other equipment. Drilling pipes are then positioned horizontally along the formation.
It can be said that the American oil boom was largely due to the fact that hydraulic fracturing and horizontal drilling. Thanks to these two technologies, America now has more oil than ever before due to drilling in oil formations like the one near Edmond. It is now less reliant to oil-exporting countries and can now sincerely fulfill its dream to become an energy-dependent nation.
Types of Oil & Gas Investments
The oil and gas industry offers several forms of investment types, one of them is UIT. An oil and gas UIT or unit investment trust, works in the same way with real estate UITs and stocks and bonds. An investor purchases and owns an equal unit or share from the investment. Within the set maturity date, the investor enjoys his share of returns from the sales of assets, in this case the oil and gas sold per barrel.
Oil & Gas Investing in Edmond
Oil and gas UITs are attractive because an investor invests a certain amount for the drilling operation and he would only need to wait for his monthly disbursements made from the sales. The drilling company will handle all the legwork.
Oil Investment Tax Deductions
The tax deductions for UITs could also be the investment’s main driving point for investors. Investors can enjoy as much as 65% of tax deductions regardless of whether or not the well is producing. The tax deductions are written off in the following year.
However, it is also risky in that UITs do not always guarantee the expected amount, or you may not get anything at all if the well happens to a dry hole. That being said, getting into oil and gas UITs should carefully be thought over. You may have more returns than you expected, or you may end up with nothing. It is also wise to deal only with legitimate oil companies with good track record, latest drilling technologies and excellent success rates.
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