Promoter vs. Partner: 8 Questions for Energy Investing

In energy investing, the tax benefits often take center stage. Intangible drilling costs (IDCs) and depreciation make domestic oil and gas one of the most tax-advantaged asset classes in the United States.

But most investors eventually learn a hard truth: A great tax strategy cannot rescue a bad well.

This is the core problem in the "retail" side of the oil and gas industry. Too many “promoters” lean heavily on tax advantages to mask low-quality drilling prospects. They rely on the fact that most investors don’t know the difference between a marketing pitch and an operational reality.

At Basin Ventures, we believe the tax benefits matter—but only when paired with institutional-quality partners and geology that performs on its own merit.

To help you spot the difference, we’ve created the Promoter vs. Partner Q&A Matrix.

Reading the Signs

Before you look at the matrix below, understand that Promoters and Partners often answer the same questions, but with two completely different philosophies:

On Returns: Promoters often bundle tax savings into their performance numbers to juice the appearance of returns. Partners know that tax savings are an enhancement, not a substitute for yield.
On Operations: Promoters often claim "We are the operator" to sound hands-on, when in reality, they lack the scale to drill efficiently and you end up funding their learning curve. Partners leverage the massive scale and cost-discipline of proven, top-tier operators.‍
On Transparency: Promoters use ambiguous jargon and infrequent updates to filter bad news. Partners can provide raw data, in near real time, from independent sources, as well as utilizing live portals because they have nothing to hide.

Kontix-blog-image-webflow-ecommerce-template

The Question	"The Promoters"	Basin Ventures
Where do you source your deals?	“We have a proprietary network of geologists scanning the market.” (Translation: We scrape public filings or buy recycled deals off a list.)	“We source directly through decades-long relationships with 50+ top-tier operators. We don't chase public listings; we get the call before the deal hits the market.”
Who is actually drilling the well?	“We are the operator.” / “We have a team on the ground.” (Translation: You are relying on our small, limited team to figure it out. We don't have the scale or expertise of a major.)	“Basin is proud to partner with proven, named Operators like Continental, Devon, etc. We rely on their massive scale and expertise, not a small in-house team trying to learn on your dime."
What is your return profile?	“We target 30–40% returns! (Tax-inclusive).” (Translation: The well yields very little, but we count your tax refund as 'performance' to juice the numbers.)	“While the tax offsets can be significant, money saved isn't money earned; the well must also pay you. We aim for an initial annual rate of return (ARR) north of 50%, settling into a 15-20% average over the first ten years of a fund's life."
What if oil prices crash?	“Oil is going to $100, don't worry!” (Translation: Our project needs $100 oil just to hit our projected returns. If oil stays flat, you lose.)	“We model strictly at historical 20-year averages ($70 Oil / $3 Gas). We don't gamble on a boom; we invest in projects that remain profitable in the industry's proven 'sweet spot'."
What happens if there are cost overruns?	“Our turnkey price covers everything.” (Translation: We overcharged you so much upfront that we have a buffer. You paid for the overrun on Day 1.)	“We vet Operators specifically for operating efficiency. We don't deal with 'Bob's Oil Co.' because they lack the discipline to control costs. We partner with the best to minimize the risk of overruns in the first place."
How do I track my well’s performance?	“We send out an annual PDF statement.” (Translation: You wait months for data, and you only see what we want you to see.)	“"Basin deliver's quarterly investor updates with detailed information about the Fund, production data and your returns. We also invested in a proprietary Investor Portal where you have 24/7 access to your data. We believe in providing both the white-glove report and the real-time transparency for every investor."
Who validates your geology/reserve reports?	“Our internal team of experts.” (Translation: We grade our own homework. There is no independent check on our optimism.)	“We utilize independent third-party engineers to build and validate type curves for every new basin we enter. We anchor our internal analysis to that independent data, so we aren't just guessing."
Does my cash sit idle?	“We are raising for a ‘blind pool’ to find deals later.” (Translation: You pay fees while your money sits in a bank account doing nothing for 6-12 months.)	“We value velocity. Our capital is typically deployed into active drilling projects within 60 days of the call. We raise money for projects we have, not projects we hope to find."

‍The Bottom Line

The tax benefits of oil and gas are powerful accelerants for wealth creation, but they are not the engine.

The engine is always the same: Good rock. Good operators. Good fundamentals.

If you would like a second opinion on an offering you are reviewing, or want to understand how we answer these questions at Basin Ventures, our team is always available for a conversation.

‍

Adam Butcher

President & Managing Partner

But most investors eventually learn a hard truth: A great tax strategy cannot rescue a bad well.

At Basin Ventures, we believe the tax benefits matter—but only when paired with institutional-quality partners and geology that performs on its own merit.

To help you spot the difference, we’ve created the Promoter vs. Partner Q&A Matrix.

Reading the Signs

Before you look at the matrix below, understand that Promoters and Partners often answer the same questions, but with two completely different philosophies:

On Returns: Promoters often bundle tax savings into their performance numbers to juice the appearance of returns. Partners know that tax savings are an enhancement, not a substitute for yield.
On Operations: Promoters often claim "We are the operator" to sound hands-on, when in reality, they lack the scale to drill efficiently and you end up funding their learning curve. Partners leverage the massive scale and cost-discipline of proven, top-tier operators.‍
On Transparency: Promoters use ambiguous jargon and infrequent updates to filter bad news. Partners can provide raw data, in near real time, from independent sources, as well as utilizing live portals because they have nothing to hide.

The Question	"The Promoters"	Basin Ventures
Where do you source your deals?	“We have a proprietary network of geologists scanning the market.” (Translation: We scrape public filings or buy recycled deals off a list.)	“We source directly through decades-long relationships with 50+ top-tier operators. We don't chase public listings; we get the call before the deal hits the market.”
Who is actually drilling the well?	“We are the operator.” / “We have a team on the ground.” (Translation: You are relying on our small, limited team to figure it out. We don't have the scale or expertise of a major.)	“Basin is proud to partner with proven, named Operators like Continental, Devon, etc. We rely on their massive scale and expertise, not a small in-house team trying to learn on your dime."
What is your return profile?	“We target 30–40% returns! (Tax-inclusive).” (Translation: The well yields very little, but we count your tax refund as 'performance' to juice the numbers.)	“While the tax offsets can be significant, money saved isn't money earned; the well must also pay you. We aim for an initial annual rate of return (ARR) north of 50%, settling into a 15-20% average over the first ten years of a fund's life."
What if oil prices crash?	“Oil is going to $100, don't worry!” (Translation: Our project needs $100 oil just to hit our projected returns. If oil stays flat, you lose.)	“We model strictly at historical 20-year averages ($70 Oil / $3 Gas). We don't gamble on a boom; we invest in projects that remain profitable in the industry's proven 'sweet spot'."
What happens if there are cost overruns?	“Our turnkey price covers everything.” (Translation: We overcharged you so much upfront that we have a buffer. You paid for the overrun on Day 1.)	“We vet Operators specifically for operating efficiency. We don't deal with 'Bob's Oil Co.' because they lack the discipline to control costs. We partner with the best to minimize the risk of overruns in the first place."
How do I track my well’s performance?	“We send out an annual PDF statement.” (Translation: You wait months for data, and you only see what we want you to see.)	“"Basin deliver's quarterly investor updates with detailed information about the Fund, production data and your returns. We also invested in a proprietary Investor Portal where you have 24/7 access to your data. We believe in providing both the white-glove report and the real-time transparency for every investor."
Who validates your geology/reserve reports?	“Our internal team of experts.” (Translation: We grade our own homework. There is no independent check on our optimism.)	“We utilize independent third-party engineers to build and validate type curves for every new basin we enter. We anchor our internal analysis to that independent data, so we aren't just guessing."
Does my cash sit idle?	“We are raising for a ‘blind pool’ to find deals later.” (Translation: You pay fees while your money sits in a bank account doing nothing for 6-12 months.)	“We value velocity. Our capital is typically deployed into active drilling projects within 60 days of the call. We raise money for projects we have, not projects we hope to find."

‍The Bottom Line

The tax benefits of oil and gas are powerful accelerants for wealth creation, but they are not the engine.

The engine is always the same: Good rock. Good operators. Good fundamentals.

If you would like a second opinion on an offering you are reviewing, or want to understand how we answer these questions at Basin Ventures, our team is always available for a conversation.

‍

Promoter vs. Partner: 8 Questions for Energy Investing

Reading the Signs

‍The Bottom Line

Reading the Signs

‍The Bottom Line

Read more articles