Energy Programs
We live in a world where the demand for natural resources is rising. Large populations in China and India are joining the middle class and as they do, their appetite for energy increases. Until alternative sources of energy are more accessible, we believe this trend will continue to exert upward pressure on oil and gas prices, over the long-run. Investing opportunities within this realm include direct investment in exploration, development, or royalty rights programs. Please know that investing in oil and gas is considered to be a high risk investment. While this is true, there are ways to reduce some of these risks and add valuable diversification to an existing portfolio. Oil and gas drilling is the process of extracting crude oil or natural gas from the earth. Often, drilling is exploratory, meaning that drilling takes place in areas where oil and gas reserves are unproven. This type of drilling is very risky, but when successful, can lead to very high returns. Developmental drilling, on the other hand, is less risky. Development drilling takes place in areas where reserves are proven. In these investments, returns are more predictable. As a firm, Dynamic prefers to work with investments in the developmental stage and we can help you identify investments that suit your needs. Additionally, certain oil and gas drilling investments may provide a valuable tax incentive. While tax incentives should not be a primary reason to invest, it does help to make such investments more attractive. Specifically, the tax law allows intangible drilling costs to be deducted against ordinary income. These costs can represent a substantial percentage (often as high as 90%) of your initial investment. In addition, each year of production, depletion expenses can be deducted against the income generated from the sale of oil and gas. For these reasons, investors who may be facing a large tax bill, often find oil and gas programs to be a way to help reduce those costs and, at the same time, increase diversification.