Resources & References

Covers deductible business expenses including intangible drilling costs, depletion, and other oil and gas-specific deductions. The primary IRS reference for IDC treatment.

Explains depreciation and cost recovery rules that apply to tangible drilling equipment and surface facilities.

The statutory authority for the IDC election, allowing qualifying working interest owners to expense intangible drilling costs in the year incurred.

Search the IRS website or consult a tax professional for the current statute text.

Governs the passive activity rules and includes the specific working interest exception that allows qualifying working interest owners to offset ordinary income.

Consult a tax attorney for analysis of how these rules apply to your specific situation.

An overview of risks specific to oil and gas investments, red flags to watch for, and questions to ask before committing capital.

Rule 501 of Regulation D defines who qualifies as an accredited investor, a common eligibility threshold for private oil and gas offerings.

Public companies engaged in oil and gas exploration file financial statements and reserve reports with the SEC. EDGAR provides free access to these filings.

The primary regulator for oil and gas in Texas. Public well data, production records, permit information, and operator histories are searchable on the RRC website.

Regulates oil and gas in Oklahoma. Provides public access to well records, completion reports, and production data.

The regulatory authority for oil and gas in New Mexico, including the prolific Delaware Basin (Permian).

The primary professional organization for petroleum engineers. SPE publishes technical papers, the Petroleum Engineering Handbook, and reserve reporting standards.

The leading geoscience organization for the oil and gas industry. Publishes basin studies, play maps, and educational materials.

Represents independent oil and gas producers. Publishes industry data, tax policy analysis, and operational statistics relevant to domestic onshore producers.

The federal agency that publishes comprehensive data on oil and gas production, prices, reserves, and market conditions. An essential resource for commodity price context.

Key areas to research: state regulatory records (violations, enforcement actions), historical AFE accuracy vs. actual costs, operator track record in the target basin, financial stability, and references from prior working interest participants.

Check the Texas RRC, OCC, or relevant state agency for the operator's compliance history.

Key documents to request and review: geological prospect package, title opinion, proposed operating agreement (JOA), AFE with line-item cost breakdown, independent reserve estimate (if available), and economic model with multiple price scenarios.

Engage a qualified petroleum engineer or landman for independent review of technical documents.

Confirm the structure of the offering and how the interest is held. Verify the operating agreement is industry-standard. Obtain written tax analysis from a CPA experienced in oil and gas before committing capital based on anticipated tax treatment.

VP Operating recommends that all participants engage independent legal and tax counsel.