Please Ask Us Questions!
That’s the best advice we can give you about investing wisely. We see too many investors who could have avoided trouble (and losses) if they had asked basic questions from the start. We encourage you to thoroughly evaluate the background of any brokerage firm or individual broker with whom you intend to do business before you ever make an investment.
Investor Tip: The brokerage firm or individual broker you select is a very important decision for several reasons. You’ll want to do a thorough investigation before doing business with a broker or firm that has a history of complaints or problems with regulators. Also, you should know that if your firm or broker goes out of business or declares bankruptcy, you might not be able to recover your money — even if an arbitrator or a court rules in your favor.
It doesn’t matter if you are a beginner or have been investing for many years, it’s never too early or too late to start asking questions. It’s almost impossible to ask a dumb question about how you are investing your money. Don’t feel intimidated, remember, it’s your money at stake. You are paying for the advice of your investment professional, you should get what you pay for.
A good broker or investment advisor will welcome your questions, no matter how basic. Financial professionals know that an educated client is an asset, not a liability. They would prefer to answer all your questions before you invest any amount of money.
Q & A: Investing with Douglas Scott Securities, Inc
Q: Is your investment product registered with the SEC and my state securities agency?
A: While your individual registered representative IS registered with the Financial Industry Regulatory Authority (FINRA), and your State Securities Agency, Douglas Scott Securities uses an exemption from registration referred to as "Regulation D."
Q: Does this investment match my investment goals? Why is this investment suitable for me?
A: Our programs are geared to investors that have the income and net worth that can support HIGH RISK investments. Successful energy projects have the capability of delivering long-term cash flow with exceptional tax benefits.
Q: How will this investment make money? (Dividends? Interest? Capital gains?) Specifically, what must happen for this investment to increase in value? (For example, increase in interest rates, real estate values, or market share?)
A: The partnership will make money if the well drilled produces oil, natural gas or other hydrocarbons in commercial quantities. Under current law, oil and natural gas drilling ventures have “active” tax benefits.
Q: What are the total fees to purchase, maintain and sell this investment? After all the fees are paid, how much does this investment have to increase in value before I break even?
A: Every project is different, but there is always 10% of funds raised as a broker’s commission, and 4.9% of the project is recouped as a due diligence fee. Other ancillary fees can add on another 3% to 5%. A good rule of thumb would be 15% to 20% of the project goes to places other than the investment.
Q: How liquid is this investment? How easy would it be to sell if I needed my money right away?
A: These types of investments must be considered VERY ILLIQUID. They can be sold but must be offered to existing partners first.
Q: What are the specific risks associated with this investment? What is the maximum I could lose? (For example, what will be the effect of changing interest rates, economic recession, high competition, or stock market ups and downs?)
A: Risks range from mechanical issues, production issues, lack of producible hydrocarbons. The offering documents will list numerous potential risks. The entire investment can be lost with an unsuccessful well.
Q: How long has the company been in business? Is its management experienced? Has management been successful in the past? Have they ever made money for investors before?
A: Douglas Scott Securities has been in business since 1995. We are a family-owned business with very experienced professionals. Our issuer's staff geologist has 50 years of experience (formally with Humble Oil, Exxon), and both the president and vice president of our issuer have over 25 years in the industry. They have numerous successful projects and have made money for their investors.
Q: Is the company making money? How are they doing compared to their competitors?
A: The company does make money – and has done so every year for the last 15 years. As for competitors, we believe we have strengths that match up well with any other organization.
Q: How long as your firm been in business?
A: Douglas Scott Securities has been a registered broker/dealer since 1997.
Q: What training and experience do you have? How long have you been in the business? What other firms have you been registered with? What is the status of those firms today?
A: The training of our brokers is extensive, ranging from understanding of current energy markets to regulation “D” offerings and client suitability. Please inquire with your Registered Representative as to his/her tenure with us.
Q: What is your investment philosophy?
A: Building wealth through income, and effectively managing risk sector portfolios while acting with integrity daily.
Investor Tip: You can verify your broker’s disciplinary history by checking the Central Registration Depository (CRD). Either your state securities regulator or FINRA can provide you with CRD information. Your state securities regulator may give you more information from the CRD than FINRA, especially when it comes to investor complaints, so you may want to check with them first.
You can find out how to get in touch with your state securities regulator through the North American Securities Administrators Association, Inc.’s website at www.nasaa.org. To contact FINRA, visit their Web site at www.finra.org, or call them toll-free at (800) 289-9999.
Tax Advantages of Domestic Oil and Gas Investing
Q: Is there an active tax deduction available for this type of investment?
A: The Internal Revenue Service code states there is an active tax deduction for the IDC (Intangible Drilling Costs) of a direct domestic oil and gas investment. Congress has approved this tax benefit for the growth of domestic exploration and production. The goal this derives from is the more energy production there is in the U.S., the less dependent our country will be on foreign oil production.
Q: Why can this type of investment be deducted?
A: Oil and Gas working interest from direct participation programs is an “Active” business activity. In this case, “Active” means actual participation – including management – resulting in joint and several liabilities. This type of investment is considered “Active” – and therefore, under current code deductions, can be offset against other sources of income, even capital gains.
Q: Are there any tax advantages on the revenues I receive from my investment?
A: Under current law, the IRS can allow up to 15% of every dollar an investor makes from a direct oil and gas investment to be tax-free. This rule is known as the “percentage depletion allowance.” Congress enacted this law because the life of an oil and gas investment varies in longevity and is an asset that can be depleted.
That’s the best advice we can give you about investing wisely. We see too many investors who could have avoided trouble (and losses) if they had asked basic questions from the start. We encourage you to thoroughly evaluate the background of any brokerage firm or individual broker with whom you intend to do business before you ever make an investment.
Investor Tip: The brokerage firm or individual broker you select is a very important decision for several reasons. You’ll want to do a thorough investigation before doing business with a broker or firm that has a history of complaints or problems with regulators. Also, you should know that if your firm or broker goes out of business or declares bankruptcy, you might not be able to recover your money — even if an arbitrator or a court rules in your favor.
It doesn’t matter if you are a beginner or have been investing for many years, it’s never too early or too late to start asking questions. It’s almost impossible to ask a dumb question about how you are investing your money. Don’t feel intimidated, remember, it’s your money at stake. You are paying for the advice of your investment professional, you should get what you pay for.
A good broker or investment advisor will welcome your questions, no matter how basic. Financial professionals know that an educated client is an asset, not a liability. They would prefer to answer all your questions before you invest any amount of money.
Q & A: Investing with Douglas Scott Securities, Inc
Q: Is your investment product registered with the SEC and my state securities agency?
A: While your individual registered representative IS registered with the Financial Industry Regulatory Authority (FINRA), and your State Securities Agency, Douglas Scott Securities uses an exemption from registration referred to as "Regulation D."
Q: Does this investment match my investment goals? Why is this investment suitable for me?
A: Our programs are geared to investors that have the income and net worth that can support HIGH RISK investments. Successful energy projects have the capability of delivering long-term cash flow with exceptional tax benefits.
Q: How will this investment make money? (Dividends? Interest? Capital gains?) Specifically, what must happen for this investment to increase in value? (For example, increase in interest rates, real estate values, or market share?)
A: The partnership will make money if the well drilled produces oil, natural gas or other hydrocarbons in commercial quantities. Under current law, oil and natural gas drilling ventures have “active” tax benefits.
Q: What are the total fees to purchase, maintain and sell this investment? After all the fees are paid, how much does this investment have to increase in value before I break even?
A: Every project is different, but there is always 10% of funds raised as a broker’s commission, and 4.9% of the project is recouped as a due diligence fee. Other ancillary fees can add on another 3% to 5%. A good rule of thumb would be 15% to 20% of the project goes to places other than the investment.
Q: How liquid is this investment? How easy would it be to sell if I needed my money right away?
A: These types of investments must be considered VERY ILLIQUID. They can be sold but must be offered to existing partners first.
Q: What are the specific risks associated with this investment? What is the maximum I could lose? (For example, what will be the effect of changing interest rates, economic recession, high competition, or stock market ups and downs?)
A: Risks range from mechanical issues, production issues, lack of producible hydrocarbons. The offering documents will list numerous potential risks. The entire investment can be lost with an unsuccessful well.
Q: How long has the company been in business? Is its management experienced? Has management been successful in the past? Have they ever made money for investors before?
A: Douglas Scott Securities has been in business since 1995. We are a family-owned business with very experienced professionals. Our issuer's staff geologist has 50 years of experience (formally with Humble Oil, Exxon), and both the president and vice president of our issuer have over 25 years in the industry. They have numerous successful projects and have made money for their investors.
Q: Is the company making money? How are they doing compared to their competitors?
A: The company does make money – and has done so every year for the last 15 years. As for competitors, we believe we have strengths that match up well with any other organization.
Q: How long as your firm been in business?
A: Douglas Scott Securities has been a registered broker/dealer since 1997.
Q: What training and experience do you have? How long have you been in the business? What other firms have you been registered with? What is the status of those firms today?
A: The training of our brokers is extensive, ranging from understanding of current energy markets to regulation “D” offerings and client suitability. Please inquire with your Registered Representative as to his/her tenure with us.
Q: What is your investment philosophy?
A: Building wealth through income, and effectively managing risk sector portfolios while acting with integrity daily.
Investor Tip: You can verify your broker’s disciplinary history by checking the Central Registration Depository (CRD). Either your state securities regulator or FINRA can provide you with CRD information. Your state securities regulator may give you more information from the CRD than FINRA, especially when it comes to investor complaints, so you may want to check with them first.
You can find out how to get in touch with your state securities regulator through the North American Securities Administrators Association, Inc.’s website at www.nasaa.org. To contact FINRA, visit their Web site at www.finra.org, or call them toll-free at (800) 289-9999.
Tax Advantages of Domestic Oil and Gas Investing
Q: Is there an active tax deduction available for this type of investment?
A: The Internal Revenue Service code states there is an active tax deduction for the IDC (Intangible Drilling Costs) of a direct domestic oil and gas investment. Congress has approved this tax benefit for the growth of domestic exploration and production. The goal this derives from is the more energy production there is in the U.S., the less dependent our country will be on foreign oil production.
Q: Why can this type of investment be deducted?
A: Oil and Gas working interest from direct participation programs is an “Active” business activity. In this case, “Active” means actual participation – including management – resulting in joint and several liabilities. This type of investment is considered “Active” – and therefore, under current code deductions, can be offset against other sources of income, even capital gains.
Q: Are there any tax advantages on the revenues I receive from my investment?
A: Under current law, the IRS can allow up to 15% of every dollar an investor makes from a direct oil and gas investment to be tax-free. This rule is known as the “percentage depletion allowance.” Congress enacted this law because the life of an oil and gas investment varies in longevity and is an asset that can be depleted.
