Working Interests

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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.

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