One of the most frequent calls we receive on Powering America Radio is, “What is fracking?”. This confirms what Pew Research has been tracking – that only about half of American’s know what fracking is. Don’t feel bad if you don’t fully understand it. Most of us don’t….or didn’t….at least until they listened to Powering America Radio! Keeping that in mind, we often review the process for listeners.
There’s another question we also hear a lot: “How can I invest in this boom”? There are really only 3 ways. You can buy stock in oil and gas companies, or the vast number of industries that are supporting the boom. This can be anything from trucking to pipelines, or the myriad of other support industries needed to supply the oil field and its workers (the list is Vast with a capital V).
It could also be that you’d want to explore owning part of an oil well. That equates to either owning working interests or royalty interests. What’s the difference? It’s distinct. Working interest is just that: You purchase part of the well. Most oil wells are structured and funded as partnerships in one form or another. So, simplified, you can become a partner and own a percentage of the well. That’s working interest. Your percentage of ownership receives income or loss based on the profitability of the well.
Royalty interest is different. That’s the payment made to the mineral rights owner when oil or gas is being produced on his property. Those rights can be sold as assets and they trade within and outside the industry. It is possible, as a private investor, to purchase both working interests and royalty interests in either producing or upcoming oil and gas projects. Note: This is for accredited investors only. There are some other options for non-accredited folks wanting to participate, but it requires extensive research and knowing exactly who you’re dealing with. Be careful of a deal that sounds too good to be true.
One of our sponsors of Powering America Radio specializes in working interests and royalty interests. If you’d like to learn more, contact www.crude.com and simply fill out the contact form. Someone will get in touch to see if it’s something you might want to consider.