Financial planners agree that a sophisticated investment portfolio should contain a diversity of financial instruments which have varying risk and liquidity, including:
Insurance adequate to protect income and assets
Accessible cash for emergencies and unexpected investment opportunities
Investments geared toward wealth accumulation and tax minimization
Speculative investments, provided the investor has specialized knowledge beyond that of the investment community in general.
While speculative investments have the greatest potential for accumulating wealth, few individuals have sufficient resources to tolerate the risks inherent in a strategy of exclusive speculation. More commonly, prudent investors pursue opportunities in which a tolerable level of risk is balanced with a significant potential for appreciation. The tax implications of the investments should also be considered.
| An Emerging Investment Opportunity
More than five years ago it became increasingly obvious that an oil supply crisis was developing worldwide.
(See the report “The Looming Crisis in Worldwide Oil Supplies” compiled in 2000.)
While the developed world is now beginning to experience the physical inconvenience, economic uncertainty, and political disruption spawned by this crisis, the continuing oil supply-demand imbalance also reduces the threat of severe price downturns in the market for petroleum commodities.
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 | The chart below shows the price history over the past ten years of international oil prices (blue line), U.S. oil prices (black line) and U.S. natural gas prices (red line). Note that since 2002, energy prices have persistently increased as spare production capacity decreased globally. And although the increases have been tested repeatedly in the past four years, prices have consistently reached new highs after each brief downturn.
Price History of Benchmark Crude Oils and Natural Gas
This relative price security provides unparalleled opportunities for investing in petroleum assets. Ownership of interests in crude oil and natural gas production, or the direct participation in oil and gas drilling programs, may now provide — for many investors — the proper balance of risk and appreciation potential that is desirable in a diversified investment portfolio. | | Tax Implications of Oil and Gas Investing
Participation in oil and gas drilling programs, to either explore for new reserves or to further develop existing reserves, is one of the few truly tax-advantaged investments available to the individual investor. In general, investments should not be made solely for the purpose of reducing taxes. However, the tax advantages associated with exploration and development programs can make such programs particularly attractive to investors with high marginal tax rates. Our goal is to identify oil and gas assets that are compatible with our client’s investment objectives. Industry offerings for corporate or highly net worth clients can also be designed to meet individual needs of investing $20MM or more. In order to view our current oil and gas investments, you must meet our minimum accredited investor requirements of $1.5 million or more in individual or joint net worth (excluding primary residence) and/or an net income in excess of $200,000 in each of the two most recent years or had joint income with your spouse in excess of $300,000 in each of those years and you have reasonable expectations of reaching the same net income in the current year. Click here to fill out our Accredited Investor questionnaire. Once you submit the questionnaire, someone from our team will contact you within one to two business days.
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