Invest in U.S. Oil Drilling: Direct Participation in American Wells
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- /You fund specific wells and hold working interest with your name on the operating agreement
- /60-85% of well costs go to IDCs, which may be 100% deductible in the year incurred
- /Producing wells typically generate revenue for 15 to 30+ years with monthly distributions
- /BassEXP invests alongside you and provides full transparency on every project
What "Drilling Investment" Means
A direct oil drilling investment means you fund the drilling and completion of specific oil and gas wells. You are 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. As the wells produce, you receive a proportional share of 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 majority (60-85%) goes to intangible drilling costs, including labor, chemicals, fuel, and site preparation, which are typically deductible in year one. The remainder covers tangible equipment such as casing, wellhead assemblies, and surface tanks, which are depreciated over time. After drilling and completion, ongoing costs include pumping, maintenance, and gathering fees. These are deducted against production revenue as operating expenses.
How Returns Typically Happen
Successful wells begin producing oil and gas after drilling and completion, typically within 60 to 120 days. Revenue starts with higher initial production rates and gradually declines over the life of the well, a natural pattern called a decline curve. Most wells produce for 15 to 30+ years. You may generate passive income today through monthly cash distributions tied to actual production. Increased global demand trends, including industrial and technology applications, can support commodity prices over time, though prices are never guaranteed.
Tax Considerations
Oil well drilling offers some of the most favorable tax deductions in the U.S. tax code. Working interest holders can deduct intangible drilling costs in year one, depreciate tangible equipment over 7 years, and claim the 15% depletion allowance on production revenue. These large deductions and write-offs can reduce your effective cost basis significantly. 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 comprehensive tax benefits guide.
Why Some Investors Choose Direct Drilling
- Real-asset ownership: You hold a tangible interest in producing wells. A real asset outside stocks and bonds.
- Cash flow potential: Monthly distributions from production revenue, not dividends subject to corporate 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 can encounter unexpected geological conditions, mechanical issues, or weather delays that increase costs or reduce production.
- Commodity prices: Revenue depends on oil and gas prices. Low prices can reduce returns even from productive wells.
- Liquidity: Working interests are not publicly traded. Capital is committed for the long term. Oil and gas wells for sale through direct participation are illiquid investments.
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 purposes only. 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. Actual results will vary materially. IDC deductibility depends on working interest structure and IRS material participation rules. Consult a qualified CPA or financial advisor. Past performance is not indicative of future results. Securities offered only to accredited investors via Disclosure Memorandum.
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.”
— Charlie H.
“I spent months researching operators before I found BassEXP. The due diligence materials they provided were more detailed than anything else I'd seen — geological reports, full cost breakdowns, and monthly production updates. They run a tight operation.”
— Tom C.
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