Working Interests

AAA

DEFINITION of 'Working Interests'

Refers to a form of investment in oil and gas drilling operations in which the investor is directly liable for a portion of the ongoing costs associated with exploration, drilling and production. In a similar fashion, working interest owners also fully participate in the profits of any successful wells. This stands in contrast to royalty interests, in which an investor's cost is usually limited to their initial investment, also resulting in a lower potential for large profits.

INVESTOPEDIA EXPLAINS 'Working Interests'

While the idea of earning unlimited profits from owning a working interest in a well might sound wonderful, the downside can wipe out unsuspecting investors. It's generally recommended that investors without deep pockets and a solid working knowledge of oil and gas exploration stick with limited liability royalty interests.

RELATED TERMS
  1. Solutionary

    Soluble matter comprised of salts, including gypsum, which is ...
  2. Spud

    In the oil and gas industry, the process of beginning to drill ...
  3. Royalty Interest

    In the oil and gas industry this refers to ownership of a portion ...
  4. Direct Participation Program - ...

    A business venture designed to let investors participate directly ...
  5. Sour Crude

    The name given to barrels of crude oil that do not meet certain ...
  6. Limited Partnership Unit

    An ownership unit in a publicly traded limited partnership, or ...
Related Articles
  1. Oil: A Big Investment With Big Tax Breaks
    Investing Basics

    Oil: A Big Investment With Big Tax Breaks

  2. Oil And Gas Industry Primer
    Active Trading

    Oil And Gas Industry Primer

  3. Commodity Prices And Currency Movements
    Forex Education

    Commodity Prices And Currency Movements

  4. Accounting For Differences In Oil And ...
    Fundamental Analysis

    Accounting For Differences In Oil And ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center