Accredited Investor Requirements modernized for Oil & Gas Investment Participation (Updated in 2020)

Only Accredited Investors can participate in oil & gas direct participation programs.

Find out if you qualify below:

Disclaimer:

The publicly-available information provided in and on this website is for informational purposes only and provides factual business information about OklahomaOilBoom.com. This publicly-available information provided in and on this website is not intended to and does not constitute an offer to sell or the solicitation of an offer to purchase to any person in any jurisdiction. The contents of this website shall not be construed as legal, business or tax advice.

THIS WEBSITE DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY STATE OR OTHER JURISDICTION WHERE, OR TO OR FROM ANY PERSON TO OR FROM WHOM, SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED.

Only approved investors qualify to invest with Oklahoma Oil Boom. If you would like to be considered for approval, please contact us to fill out our questionnaire. U.S. securities laws limit the types of investors who can invest with us. The questionnaire will help us determine whether you meet suitability requirements for future potential investments.

Only those individuals who satisfy the requirements for an exemption from registration of securities and applicable suitability factors will be considered for approval. Whether a potential investor is found to be qualified and approved is left to Oklahoma Oil Boom’s sole discretion, regardless of whether such potential investor satisfies the minimum suitability and qualification requirements.

The satisfaction of these requirements by a prospective investor does not necessarily mean that an investment in a partnership is a suitable investment for that investor.

We reserve the right to reject in its sole discretion a potential investor’s subscription. The contents of this website shall not be construed as legal, business or tax advice. Each person should consult his or her own attorney, business advisor, or tax adviser as to legal, business, tax, and related matters concerning the information on this website.

investor requirements

What is accreditation of investors?

Oil and gas direct participation programs have the potential for huge payoffs. Investors can write off nearly their full investment, not to mention that the cash flow derived from a successful well can last for many years to come. Aside from the lucrative returns, the oil and gas industry enjoys some of the most rewarding advantages available in the United States tax code.

It would be important to note, however, that not everyone is qualified to invest in oil and gas direct participation programs. The Security and Exchange Commission has outlined specific requirements for qualified and accredited investors who are eligible to invest. Additionally, the investment must be suitable for the investor’s overall financial situation.

Who qualifies as an accredited investor?

To be an accredited investor, there is no application form or registration to fill out. Instead, organizations or companies offering investments must make sure that the investors are accredited.

The companies accomplish this by having potential investors fill out a questionnaire or provide financial statements like W-2 forms, tax returns, or letters from attorneys, accountants, or investment advisers. They may also choose to evaluate a potential investor’s credit report.

A person who meets the criteria below is an accredited investor:

  • Individually, has earnings greater than $200,000 per year for the past two years.
  • Has earnings greater than $300,000 per year with a spouse for the past two years.
  • Solo or combined with their spouse, has a net worth that exceeds $1,000,000, excluding their home.

Do you meet the accredited investor definition? If so, let’s start our conversation about your investment opportunities.

Why are there accredited and qualified investor requirements in place?

Just as with any investment, there are risks associated with oil and gas investments. The requirements intend to ensure that the investors have the financial knowledge to understand the investment as well as its associated risks. Sophisticated investors who choose to invest should have ample financial cushion if in case their investment doesn’t succeed. Hence, the Texas State Securities Board and the Securities Exchange Commission have defined these minimum requirements for those who are interested in direct participation programs in oil and gas:

  • You are an accredited investor.
  • You are able to sustain the loss of a portion or all of the investment
  • The investment is suitable for your overall portfolio

How to start investing

To invest in our oil and gas direct participation programs promoted here on Oklahoma Oil Boom, simply get in touch with us. We participate as a minority non-operating working interest partner with some of the most successful production and exploration companies in the oil and gas industry. We are experts at finding, developing, and managing the most lucrative oil and gas investment opportunities for qualified and approved investors.

Please note: Oklahoma Oil Boom is not a financial advisor and the content of this blog and website should not be construed as legal, tax, or financial advice. Please advise with a qualified financial consultant for all of your financial transactions and investments. This publicly-available information provided in and on this website is not intended to and does not constitute an offer to sell or the solicitation of an offer to purchase to any person in any jurisdiction.

Qualified Purchaser vs Accredited Investor

Qualified Purchasers

  • Qualified purchasers have access to more investment opportunities than accredited investors.
  • The qualification is based on the value of a person’s investments rather than their net worth, income, or credentials.
  • Individuals generally need to invest either $5 million for themselves or $25 million for themselves and other qualified purchasers to be considered qualified.
  • Trusts can qualify as qualified purchasers if they meet certain criteria, such as having at least $5 million in investments and ownership by two or more close family members.
  • Benefits of being a qualified purchaser include access to 3(c)(1) funds and 3(c)(7) funds.
  • 3(c)(7) funds can accept up to 2,000 qualified purchasers.

Accredited Investor

  • Accredited investors are individuals or entities that meet specific income, net worth, or licensure criteria.
  • To be an accredited investor, individuals generally need a net worth of at least $1 million and an annual income of $200,000 (or $300,000 jointly with a spouse).
  • Trusts can also qualify as accredited investors if they meet certain requirements, such as having total assets greater than $5 million and being directed by a sophisticated person.
  • Benefits of being an accredited investor include access to unique and restricted investments, high returns, and increased diversification.
  • Accredited investors can invest in 3(c)(1) funds, which are limited to 100 accredited investors (or 250 if the fund size is less than $10 million).
  • 3(c)(1) funds must primarily invest in private operating companies, usually startups.

Main points about Qualified Purchasers:

  • Qualified purchasers have access to more investment opportunities than accredited investors.
  • The qualification is based on the value of a person’s investments rather than their net worth, income, or credentials.
  • Individuals generally need to invest either $5 million for themselves or $25 million for themselves and other qualified purchasers to be considered qualified.
  • Trusts can qualify as qualified purchasers if they meet certain criteria, such as having at least $5 million in investments and ownership by two or more close family members.
  • Benefits of being a qualified purchaser include access to 3(c)(1) funds and 3(c)(7) funds.
  • 3(c)(7) funds can accept up to 2,000 qualified purchasers.

Importance of Investor Qualification:

  • Investor qualification is essential for participating in the private market ecosystem and managing investment funds.
  • It determines whether an investor qualifies to invest, whether the fund needs to register with the SEC, and the fee that can be charged.
  • Securities laws aim to protect individuals from financial losses and ensure informed investing.
  • Investment funds may be exempt from disclosure requirements if all investors are accredited.
  • Alternative options for non-accredited investors include crowdfunding and pooling funds with friends.

Difference between Accredited Investors and Qualified Purchasers:

  • The financial threshold for accredited investors is lower compared to qualified purchasers.
  • Becoming an accredited investor is easier than reaching the status of a qualified purchaser.

Is there any additional information on becoming an Accredited Investor?

Yes, please find additional articles and websites at:

SEC.gov ecfr.gov

Why Qualified Investors Choose Experienced Operators

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