CSE
CS Endeavor L.L.C.
Connecting consumer capital & enterprise
CS Endeavor works with producers, operators, and promotors to make oil & gas working interest and tax savings available to individual investors.
What We Do
CS Endeavor gives individual investors the opportunity to discover oil & gas working interest projects currently being funded in the U.S.
We work with producers, operators, and promotors to bring available projects to investors. When one of our partners plans a capital raise for a working interest project, they may seek additional funds from external sources. CSE members will gain access to and be contacted about these opportunities.
What is Oil & Gas Working Interest
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Direct Investment into oil & gas producing wells
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Profit sharing proportionate to ownership %
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IDC's (Intangible Drilling Costs) 100% Tax Deductible - typically account of 100% of initial investment
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Opportunity to leverage tax dollars into real returns and cash flow
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Risk associated with drilling oil & gas wells
Fill out the form below to join our investor list and one of CS Endeavor's partners will contact you when an available project meets your specified criteria.
Companies We've Partnered With
Oil & Gas Working Interest
What is Working Interest?
At its core, working interest refers to the proportionate share of ownership in an oil or gas lease that entitles its holder to a percentage of the production from the property. In simpler terms, it represents the right to explore, develop, and produce hydrocarbons from a particular oil or gas reservoir. Those holding a working interest are directly involved in the costs, risks, and benefits associated with the exploration and production activities.
Understanding Ownership Structure
In the oil and gas industry, multiple parties often hold interests in a single lease or property. These interests are typically categorized into two main types: working interest and royalty interest.
Working Interest: The entity or individual holding the working interest is directly responsible for funding a portion of the costs associated with drilling, completing, and operating wells. In return, they are entitled to a percentage of the produced hydrocarbons, proportionate to their ownership stake.
Royalty Interest: Unlike working interest owners, royalty interest holders do not bear the financial burden of exploration and production costs. Instead, they receive a predetermined percentage of the gross production revenue generated from the lease. Royalty interest is often granted to landowners as part of leasing agreements.
Role and Responsibilities
Those with a working interest play a pivotal role in the operational aspects of oil and gas projects. Some key responsibilities include:
Financial Obligations: Working interest owners are required to contribute financially to drilling and operational expenses. These costs may include leasing fees, drilling expenses, equipment maintenance, and operational overheads.
Operational Decision-Making: Working interest owners have a say in key operational decisions such as drilling locations, well completion strategies, and production schedules. Collaboration with other stakeholders is essential to ensure efficient operations and maximize returns.
Risk Exposure: Alongside the potential for significant returns, working interest owners are exposed to inherent risks associated with oil and gas exploration and production. Fluctuations in commodity prices, regulatory changes, technical challenges, and geological uncertainties can all impact the profitability of projects.
Calculating Working Interest
Determining the exact working interest percentage involves a thorough examination of lease agreements and ownership structures. The working interest percentage is typically expressed as a fraction or decimal and is influenced by factors such as:
Ownership Contributions: The amount contributed by each working interest owner towards exploration and production costs.
Lease Terms: The terms outlined in lease agreements, including any overriding royalties or back-in interests granted to third parties.
Unitization Agreements: In cases where multiple leases are consolidated into a single unit, working interest percentages may be adjusted to reflect the consolidated ownership structure.
Tax Benefits & IDC's
What are Intangible Drilling Costs (IDCs)?
Intangible Drilling Costs (IDCs) encompass a broad spectrum of expenses associated with the exploration and development of oil and gas wells that lack a physical presence. These costs primarily include expenses related to labor, fuel, drilling rig operations, and various services essential for the drilling process. Unlike tangible costs such as equipment and infrastructure, IDCs are considered intangible because they do not result in the acquisition of tangible assets with enduring value.
Tax Treatment of IDCs
One of the most compelling aspects of IDCs is their favorable tax treatment under the United States tax code, particularly within the framework of the Internal Revenue Code (IRC) Section 263(c). The tax code allows operators and investors to deduct IDCs as ordinary business expenses in the year they are incurred, rather than capitalizing and depreciating them over time.
Eligibility Criteria
To qualify for IDC deductions, certain criteria must be met:
Directly Related to Drilling: IDCs must be directly associated with the drilling of oil and gas wells, including expenses incurred for site preparation, drilling activities, and well completion.
Non-Depreciable in Nature: IDCs should pertain to intangible activities and services that do not result in the acquisition of depreciable assets. Costs related to tangible equipment and infrastructure are typically not eligible for IDC deductions.
Incurred by the Operator: IDC deductions are generally available to the operator or working interest owner responsible for funding drilling operations. Royalty interest holders and non-working interest owners may not be eligible for IDC deductions.
Advantages of IDC Deductions
The tax benefits associated with IDC deductions offer several advantages for investors and operators:
Immediate Tax Savings: By deducting IDCs as current business expenses, investors can realize significant tax savings in the year the expenses are incurred, reducing their overall tax liability.
Enhanced Cash Flow: IDC deductions contribute to improved cash flow by lowering the upfront financial burden of drilling operations and accelerating the recovery of investment capital.
Risk Mitigation: The ability to deduct IDCs provides a degree of risk mitigation by offsetting taxable income derived from oil and gas production, thereby enhancing the overall profitability of projects.
Maximizing IDC Benefits
To maximize the tax benefits of IDCs, investors and operators should consider the following strategies:
Thorough Documentation: Maintain detailed records and documentation of all IDC-related expenses to substantiate deductions and ensure compliance with IRS regulations.
Consultation with Tax Professionals: Seek guidance from qualified tax professionals or advisors with expertise in oil and gas taxation to optimize IDC deductions and navigate complex tax regulations.
Strategic Planning: Incorporate IDC deductions into comprehensive tax planning strategies to maximize overall tax efficiency and minimize tax liabilities.