This report was prepared to help advisorscommunicate with clients about the diverse methods available to invest in oiland gas (O&G) in 2025. With decades of experience advising oil and gas executives,our team offers insights into the evolving landscape of energy investments.Below, we explore four primary strategies, from ETFs to Direct Investing, eachwith distinct benefits depending on client objectives and risk tolerance.
ETF’s: A Simple Gateway to Oil Exposure
Exchange-traded funds (ETFs) provide astraightforward way to gain exposure to the oil market. They come in four maincategories:
MLP’s: Yield and Stability
Master Limited Partnerships (MLP’s) focuson transporting oil and gas, offering high yields and moderate risk. While notdirectly tied to commodity prices, MLPs can face indirect risks through tenantbankruptcies or contract restructuring.
Royalties: Tax-Advantaged Income
Royalties provide passive income tied tocommodity production, with exceptional tax advantages—15% of income is oftentax-free. Investors can gain exposure through:
Direct Investing: Maximizing TaxBenefits and Upside
Direct investment in O&G wells offersunparalleled tax benefits, including the ability to offset Adjusted GrossIncome (AGI) through accelerated depreciation. For example, a $200,000investment can yield $65,000–$80,000 in tax savings in year one.
Key Considerations:
Conclusion
The oil and gas sector continues to evolve,presenting both challenges and opportunities for investors. From ETFs to DirectInvesting, each method offers unique advantages tailored to specific goals andrisk profiles. Understanding these structures and conducting due diligence canhelp advisors provide optimal recommendations for their clients.
For more information or to access ourcomprehensive Tax Guide on Direct Investing, visit www.invitoep.com.