A percentage ownership in an oil or gas well that carries a share of all costs and risks of development, as well as a proportionate share of production revenues.
A working interest is a form of direct ownership in a well or drilling project. The holder agrees to pay a proportional share of all costs to explore, drill, complete, and operate the well. In return for taking on these costs and risks, the working interest owner receives a corresponding share of the oil or gas produced, after royalties are paid. Importantly, working interest owners have unlimited liability for their portion of the project’s expenses, meaning if costs escalate or environmental issues arise, they must cover their share. This active ownership stake is commonly held by direct investors in oil and gas projects and qualifies the investor for certain tax benefits (like deductions for drilling costs) due to their participation in operations.
Working interest is the typical stake acquired in direct oil and gas investments, offering investors hands-on exposure and tax deductions. However, it also means accepting operational responsibilities and financial liabilities.
