Owners

Intangible Drilling Costs (IDC's) are immediately deductible during the exploration and development phases of a project. IDC's greatly defray the high up-front costs inherent to oil & gas exploration. In addition to IDC's, Depletion Allowances minimize tax exposure on income received from oil & gas properties.

Oil sales produce revenue, which in turn can generate profits for its owners. These profits can be distributed directly in the form of a cash dividend; reinvested to grow the asset's value; or any combination thereof that maximizes value at that given time.

Once an oil and gas project is developed, it can be sold—wholly or partially—to a third party operator.  This can allow the initial investors to see a significant cash return on their investment in the short-term, while keeping a piece of future production for the long-term.

Perhaps the best part of owning a profitable oil and gas property is simply sitting back and collecting regular dividends over time. Long-term ownership can also provide an alternative source of income that hedges its owner against rising energy costs.