Invest in U.S. Oil Drilling: Direct Participation in American Wells
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Well ROI Estimator
Model potential returns based on production rates, prices, and your working interest.
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- /Your name goes on the operating agreement -- you fund and hold working interest in specific wells
- /60-85% of well costs are IDCs, and those may be 100% deductible the year you spend them
- /A producing well typically pays out for 15 to 30+ years through monthly distributions
- /We invest alongside you and give you full transparency on every project
What "Drilling Investment" Means
When you invest in oil well drilling directly, you're funding the drilling and completion of specific wells. You're not buying shares of a company or units of a fund. You hold a working interest in actual wells, with your name on the operating agreement. When those wells produce, you get a proportional share of the revenue. For a full walkthrough of the process, see our complete guide to investing in oil and gas.
Where Investor Dollars Go
Your capital covers drilling, completion, and equipment. The bulk of it (60-85%) goes to intangible drilling costs -- labor, chemicals, fuel, site prep -- which are typically deductible in year one. The rest pays for tangible equipment like casing, wellhead assemblies, and surface tanks, depreciated over time. Once the well's online, ongoing costs (pumping, maintenance, gathering fees) get deducted against production revenue as operating expenses.
How Returns Typically Happen
Once a well's drilled and completed -- typically 60 to 120 days -- production starts. Revenue is highest early on and gradually tapers off over the well's life. That's called a decline curve, and it's normal. Most wells keep producing for 15 to 30+ years, paying out monthly cash distributions tied to actual barrels. Growing global demand from industrial and technology applications can support prices over time, but commodity prices are never guaranteed.
Tax Considerations
Oil well drilling carries some of the most favorable tax treatment in the U.S. tax code. Working interest holders write off intangible drilling costs in year one, depreciate tangible equipment over 7 years, and claim the 15% depletion allowance on production revenue. Those deductions can take a real bite out of your effective cost basis. Use our investor tax calculator to estimate your potential savings. Tax treatment depends on your individual situation, so always consult your CPA or tax advisor. Learn more about tax benefits, or read our full tax benefits guide.
Why Some Investors Choose Direct Drilling
- Real-asset ownership: You own a tangible interest in producing wells -- a real asset that sits outside stocks and bonds.
- Cash flow potential: Monthly distributions from actual production -- not dividends subject to boardroom decisions.
- Tax efficiency: First-year deductions from IDCs can offset 30-40% of your investment, depending on your bracket.
Key Risks
- Execution and cost overruns: Drilling sometimes hits unexpected geology, mechanical problems, or weather delays. Any of those can push costs up or pull production down.
- Commodity prices: Your revenue tracks oil and gas prices. A price drop can cut returns even from a productive well.
- Liquidity: Working interests aren't publicly traded. Your capital is locked in for the long term -- these are illiquid investments by design.
Ready to see what is available? View our current drilling projects to review opportunities with full cost breakdowns and projected returns.
Estimate Well Returns
Model potential after-tax returns from a drilling investment with our interactive estimator.
Your Parameters
Well Performance
Tax Assumptions
Net Investment
$72,250
After IDC tax savings
Cumulative Cash Flow
$64,252
3-year cumulative, after-tax
Payback Period
>3yr
Months to recoup net investment
Total ROI
-11.1%
3-year on net investment
| Year | Avg. Prod. | Gross Revenue | Your NRI Share | LOE | Depletion Shield | After-Tax Cash |
|---|---|---|---|---|---|---|
| Year 1 | 129 | $3.20M | $51,212 | ($13,556) | $2,842 | $26,566 |
| Year 2 | 100 | $2.49M | $39,813 | ($10,539) | $2,210 | $20,652 |
| Year 3 | 83 | $2.05M | $32,838 | ($8,692) | $1,823 | $17,034 |
| Total | – | $7.74M | $123,863 | ($32,787) | $6,874 | $64,252 |
Illustrative, not a projection: This tool uses generalized industry assumptions to show how the asset class and federal tax code work in general terms. Outputs are not projections for any specific BassEXP offering. Individual results vary significantly with well performance, commodity prices, and program structure, and are not guaranteed. Past performance is not indicative of future results. Consult a qualified CPA or financial advisor for advice specific to your situation.
Model notes: Uses a simplified hyperbolic decline model (b=1.2) and does not account for gas production, NGL revenue, TDC depreciation, state taxes, workover costs, or actual well performance.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered legal or tax advice. We are not licensed CPAs, and readers should consult a qualified CPA or tax professional to address their specific tax situations and ensure compliance with applicable laws.
“What stood out from the start was how direct Preston and his team were about the risks and the process. No sugarcoating, just real data and honest answers. That kind of transparency is rare in this space, and it's why I keep coming back.”
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