For those looking for real passive income (not the “buy my course” or “side hustle” kind), investing in oil and gas wells is one way to do it. This isn’t vending machines or some online scheme—this is hard assets generating real revenue.
There are two main categories when investing in oil and gas wells:
Producing Wells – These are already drilled and producing oil or gas. When you invest in a producing well, you’re buying into an existing cash flow stream at a multiple of its revenue (for example, paying two to five times annual revenue). This comes with lower risk, but you’re paying for that certainty.
To-Be-Drilled Wells – These come with more risk, as there’s always the chance of a dry hole (a well that doesn’t produce). However, the upside can be massive—if a well hits, it could pay off in just a few months.
Both of these investment types can be further broken down into two forms of ownership, and both are completely passive:
Working Interest (WI) – You own a share of the well and receive a portion of the revenue based on the well’s profit. Because expenses are deducted before you get paid, working interests tend to be cheaper and easier to acquire.
Royalty Interest (RI) – You get a percentage of the revenue before any expenses are deducted, meaning you get paid first. Because of this priority payout, royalty interests tend to be more expensive.
These types of investments are actual passive income.
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Lior said:
How does one get the opportunity to invest in those?
This, and what amount of investment are we talking about?
Deals range from $5k to $155k for a 1% buy-in on working interest deals. You can buy entire deals for millions or buy workover stripper (low volume producing) wells for $10k. There are .001 royalties out there you can buy for $10k easy.