How Oil Wells Generate Monthly Income and Big Tax Deductions | Courtney Moeller

Investing in oil and gas is one of the few asset classes where the tax code was written specifically to pull private money into the ground, and most real estate investors have never looked at it. Intangible drilling costs can offset W-2 income in the first year, which is something rental property depreciation cannot do without real estate professional status. In this episode, Iron Horse Energy Funds founder Courtney Moeller explains how an outside investor buys into producing oil wells, how the drilling deduction and the depletion allowance actually work, and what the real downside looks like when a well underperforms.

About Courtney Moeller

Courtney Moeller grew up in Midland, Texas in a family that drilled. Her father was a petroleum engineer who worked in Abu Dhabi, Pakistan, and Indonesia, her brother drilled, and her uncle ran well servicing companies. She inherited her father's oil and gas company in 2011, which led her into alternative investing and eventually to founding Iron Horse Energy Funds. She has drilled or invested in more than a hundred wells across Texas, Wyoming, Colorado, and North Dakota.

What We Cover in This Episode

• How an outside investor buys a working interest in producing oil wells
• Why Chevron, Exxon, and EOG do not need investor capital, and how you invest alongside them anyway
• What a landman does and how small working interests get acquired
• Why oil and gas interests are recorded at the title company like real estate
• Intangible drilling costs and how they offset W-2 and active income
• The depletion allowance and how it treats production income
• Why investors enter as general partners and convert to limited partners after drilling
• Breakeven price, and why it is the number to ask about before you invest
• Horizontal drilling versus vertical wells and what changed about dry hole risk
• Why tier one basins like the Permian and the Bakken matter
• Diversifying across wells, operators, and basins inside a single deal
• What happens when a well underperforms or drilling gets delayed
• Capital calls, contingency funds, and who covers a cost overrun
• Why oil is a depleting asset with no residual value at exit
• Using a 1031 exchange to move real estate into mineral rights and royalties
• What the TV show Landman gets right and wrong about the business
• How AI is being used to track well production and depletion rates

Key Insight

The structure is the whole trick. Courtney's investors come into the partnership as general partners, which is what makes the intangible drilling cost deduction available against active income rather than trapped as a paper loss. Once drilling is finished and paid for, they convert to limited partners. That sequencing is the reason a real estate investor can use this deduction against a W-2 when rental depreciation will not, and almost nobody selling these deals explains it out loud.

Why This Episode Matters

If you are a high income earner who has run out of depreciation, this is a real alternative and it behaves nothing like a rental property. The asset depletes, there is no appreciation and no meaningful exit value, and the return comes as monthly distributions rather than a sale. Courtney names the diligence questions that matter: what is the breakeven price, how many wells and operators are in the deal, and who pays if costs exceed monthly income. Ask all three before you wire anything, and take the tax treatment to your own CPA.

Find Out More

Website: https://ironhorseenergyfunds.com
Email: courtney@courtneymoeller.com

Sponsors

Today's episode is brought to you by Green Property Management, managing everything from single family homes to apartment complexes in the West Michigan area.
https://www.livegreenlocal.com

And RCB & Associates, helping Michigan-based real estate investors and small business owners navigate the complex world of health insurance and Medicare benefits.
https://www.rcbassociatesllc.com