FAQ
Frequently Asked Questions
Common questions about oil and gas participation, working with VP Operating, financial considerations, and legal topics.
Getting Started
What does it mean to participate in an oil and gas project?
Participating in an oil and gas project means acquiring a working interest — an ownership share in the rights to drill, complete, and produce hydrocarbons from a specific well or group of wells. As a working interest owner, you bear a proportionate share of drilling and operating costs and receive a proportionate share of the revenues produced. VP Operating acts as the operator: we manage all day-to-day field operations, vendor relationships, regulatory compliance, and financial reporting on behalf of all working interest owners.
Who is eligible to participate in VP Operating's projects?
VP Operating presents project opportunities only to qualified parties — typically accredited investors as defined under SEC Rule 501 of Regulation D, and in some cases sophisticated investors with relevant industry experience. Project-specific details, including offering documents and participation terms, are provided only after a preliminary conversation to confirm eligibility. Nothing on this website constitutes an offer or solicitation to sell securities.
How do I get started?
The first step is to reach out through our contact page or by calling our Denton, Texas office. We'll schedule a brief introductory conversation to understand your background, goals, and whether our current or upcoming projects may be a fit. If there is alignment, we will share project-specific information and introduce you to the relevant documents under a non-disclosure agreement.
What is the typical minimum participation level?
Minimum participation levels vary by project and are specified in each project's offering documents. Because oil and gas projects involve significant upfront capital for drilling and completion, minimum participation levels are set to ensure that each participant's economic interest is meaningful and that administrative overhead per participant is manageable. Contact us for specifics on any current project.
Our Process
How does VP Operating select projects?
We focus on domestic onshore projects — primarily in established Texas basins — where we have direct operational experience or strong regional knowledge. Project selection begins with geological evaluation of the prospect, followed by land and title work to secure the necessary mineral leases. We then develop a detailed AFE (Authorization for Expenditure) and economic model before presenting the project to potential participants. We pursue a limited number of projects at any given time, which allows us to give each one the operational attention it requires.
What role does VP Operating play once a well is drilled?
As operator, VP Operating is responsible for all ongoing field operations for the life of the well. This includes daily production monitoring, scheduled maintenance, vendor management, regulatory reporting to state agencies, and handling any remedial work or workovers needed to maintain or restore production. We provide monthly revenue statements and joint interest billings (JIBs) to all working interest owners so you can track both revenues and costs.
How are working interest owners kept informed?
Working interest owners receive monthly revenue checks and joint interest billings. We also provide updates at key project milestones: spud, reaching total depth, completion, and first production. Significant operational decisions that require participant approval under the joint operating agreement — such as major workovers or additional wells — are communicated directly and in advance. We maintain an open-door policy for questions from any project participant.
What happens if a well doesn't produce commercially?
If a well encounters no commercially viable hydrocarbons, it will be plugged and abandoned in accordance with state regulatory requirements. The drilling and completion costs borne by working interest owners in a dry hole are lost; there is no recovery of those funds. This is one of the fundamental risks of oil and gas participation, which is why geological evaluation, operator due diligence, and appropriate capital allocation across multiple projects are important considerations.
Financial
When do participants begin receiving revenue checks?
Revenue checks typically begin flowing one to two months after first production, depending on how quickly purchasers set up division orders and the timing of the first run ticket. The operator establishes division orders with the oil and gas purchasers, which confirm each working interest owner's revenue decimal. Most operators pay revenue monthly, in arrears.
Are there tax benefits to participating in an oil and gas working interest?
Yes. Working interest participation can carry significant tax advantages, including the deductibility of intangible drilling costs (IDCs) in the year incurred and ongoing depletion allowances. However, tax treatment depends on your individual circumstances, how you hold the interest, and current tax law. This website provides general educational information only and is not tax advice. Always consult a qualified CPA or tax attorney before making any investment decision based on expected tax treatment.
What ongoing costs should participants expect after a well is producing?
Producing wells generate ongoing operating costs: field labor, chemical treatments, electricity, compression, produced water disposal, and routine maintenance. These costs are itemized on the monthly JIB and charged to working interest owners proportionate to their working interest. Operating costs vary widely depending on the well's production volume, fluid characteristics, and artificial lift method. VP Operating works to maintain operating costs at or below AFE estimates and provides full transparency on all charges.
Legal
What legal documents govern a working interest participation?
The primary governing document is the Joint Operating Agreement (JOA), which establishes the rights and obligations of all working interest owners, designates the operator, and sets out procedures for decisions requiring participant consent. Participants also sign a purchase and sale agreement or participation agreement specifying the working interest percentage, consideration, and representations. For private placements that constitute securities offerings, appropriate offering documents (e.g., a Private Placement Memorandum) will also be provided.
Is a working interest in an oil and gas well a security?
Whether an oil and gas interest constitutes a security depends on the structure of the arrangement and applicable law. Working interests where the owner exercises some degree of operational control are often treated differently than passive interests. VP Operating's counsel evaluates the structure of each project, and offerings that constitute securities are conducted in compliance with applicable exemptions, typically Regulation D under the Securities Act of 1933. Nothing on this website is an offer or solicitation. Consult your own legal counsel regarding the regulatory characterization of any investment.
Have a question not answered here? Reach out directly.
Contact VP OperatingVP Operating does not provide tax, legal, investment, or financial advice through this website. Visitors should consult qualified professional advisors before making any decision.