U.S. Energy Development Corporation recently announced taking on the Shetland and WarWink oil development projects.
The acquisitions stem from U.S. energy distributing $100 million in new projects within the past year.
The Shetland project takes place in Eddy County, New Mexico, and is comprised of 14 producing wells and six proposed oil wells that will begin production in mid-2021. Located in Winkler County, Texas, the WarWink project has an ownership interest in two wells and with an expected production date of mid-2021.
"The Shetland and WarWink projects are instrumental in U.S. Energy's continued growth and expansion in the Permian Basin," Jordan Jayson, chairman, and CEO, U.S. Energy told PR Newswire. "These projects offer favorable valuations, desirable locations and strong projected returns. They rank amongst the most attractive projects we have seen in our 40-year history."
Opportunity-zone energy projects like Shetland furnish more tax benefits for investors, allowing them to defer short or long-term capital gains, receiving 10% of their deferral tax for free, and receive tax-free gains on investments that have been held onto for over 10 years.
"Some of the best areas for oil and gas production are located in opportunity zone census tracts," Matthew Iak, executive vice president of U.S. Energy told PR Newswire.
The deadlines that investors had to take action on an opportunity fund were extended through Notice 2021-10 and passed by the IRS. This Notice allows investors the ability to go back to October 2019 to invest in opportunity zones and defer capital gains tax.
"Oil and gas direct investments have long been recognized for substantial tax benefits, but the opportunity zone tax provisions have raised the bar in terms of what investors can expect from their energy investments," Matthew Iak, executive vice president of U.S. Energy told PR Newswire. "The combination of opportunity zones and oil and gas investments couldn't have happened at a better time. The only thing better for investors than cash flow is cash flow that is potentially tax-free."
U.S. Energy Development Corporation is an exploration and production operating company. Founded in 1980, the corporation designs and manages direct investment opportunities that present themselves. Currently, the corporation has invested in or operated on 2,400 wells, deploying over $1.5 billion for its partners.