Every well is drilled inside a drilling unit, and it’s rare for one company to own 100% of the leases or working interest in that unit. Typically, the company holding the majority of the leases petitions the state governing body to be declared the Operator of the unit. The other companies owning leases in the unit become Non-Operating Working Interest Partners.
The Operator handles the drilling and completion operations, gathers the oil and gas for sales, and manages the entire process from drilling to sales and beyond. Non-Op Partners cover their share of the drilling and completion expenses, they pay their share of the ongoing operational expenses, and they receive revenue from the sale of the produced oil and gas. Essentially, the Operator’s expertise in operations benefits all partners, aligning their interests almost completely.
Frequently asked questions
Basin sources projects with established operators. As a non-operated working interest partner, we draw on the operator’s expertise and operational experience while sharing in the same revenue. It offers flexibility in how capital is invested, less exposure to running the wells, and alignment with operators who know each play.
A Non-Operated Working Interest gives you direct ownership in oil and gas production, with an operator running the wells and Basin’s team selecting and overseeing the projects. Working interests also carry tax treatment that few other investments have, which is why many investors consider them as part of their yearly tax planning. Your CPA decides how it applies to you.
Every individual’s tax situation is different, so please consult your own tax professional about your specific circumstances. Generally, a large share of the investment (often 85 to 90%, the intangible drilling costs) may be deductible in the first year, and the rest is depreciated over the following years. Percentage depletion may also let you deduct 15% of the revenue each year. For more detail, review our CPA’s information provided here, and consult your own CPA.
Unlike many in the energy fund and private equity space, we are not bankers, we are not salesmen, and we didn’t spend the vast majority of our oil and gas careers inside private equity shops or on Wall Street. Our team touts decades of real, hands-on experience in the oil and gas industry, at the field level and beyond. Over those decades, we’ve formed successful ongoing relationships with top operators across the nation, which provides us opportunities that most do not see.
Our direct oil and gas expertise, coupled with our strategic partnerships with independent third-party petroleum engineers at Haas & Cobb and CPAs at Milbern Ray & Co, provide us the analytical horsepower to mitigate risk and increase value for our investors in any economic climate.
Every drilling project is different, be it in the same oil and gas play or not. In some cases, wells can be drilled and completed within 30-45 days. In other cases, it can take as long as 6 months or more, depending on a variety of factors. All of these things are considered by Basin management as we determine the best opportunities for our and our investors’ capital.
Typically, capital is deployed within 60 days of being called.
You are paid from your share of the revenue the wells produce, after operating costs. Operators typically pay for a month's production about two months later, and Basin passes it on to investors with a statement. How much depends on production, oil and gas prices and costs, all of which change over time.
For an estimate on what these numbers could look like for you, take a spin on our Investment Calculator. Generally, first revenues are delivered to Basin, by the operator, within six months of first production of a well/unit. Basin provides quarterly revenue distributions to our investors on all their investments with us.
