DPPs VS. Buying Energy Stocks
With DPPs:
- You own a share of the actual assets of an operating company or own a percentage of the interest or units in the offering, with the resultant cash flow and tax benefits.
- You get all the benefits of being an owner without having to set up a company or become an oil and gas expert.
- You directly deduct expenses
- You can communicate directly with the operating company yourself (i.e., no brokers or middlemen) = Accountability
With Energy Stocks:
- You are a stockholder of the company but the actions, tax write-offs and net cash flow are all benefited by the company itself, not the stockholders directly (e.g., you can’t write off the drilling costs). The energy company typically reinvests profits back into exploration and development, effectively giving away control of your profits.