Oil and gas investing can come with a risk most new investors do not think about.
Liability.
With a non-operated working interest, there may not be entity-level liability protection between you and the well.
That means an environmental incident could create exposure.
You cannot remove that risk completely.
But diversification can help reduce it.
If you own a smaller interest across many wells, your exposure to any single well is smaller than if you owned 100% of one well.
That is one reason fund structure and diversification matter when looking at oil and gas investments.
Save this if you are learning about the risks behind oil and gas investing.