We are independent & ad-supported. We may earn a commission for purchases made through our links.

Advertiser Disclosure

Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.

How We Make Money

We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently from our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Working Interest?

Jim B.
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A working interest in an oil or gas drilling operation gives the owner of the interest the right to work on the land where drilling will occur. The owner of the interest also must pay a percentage of the expenses incurred while working on the land that's equal to the percentage of the interest he owns. Investors seek out a working interest because it also entitles them to a share of the profits from exploration after royalties are paid. If an investor finds the right piece of land, he can make significant profits from such an investment.

Becoming involved in oil or gas exploration usually requires a significant amount of wealth from an individual investor. Such investors are lured by the potential for practically limitless profits from this lucrative business. They must pay for the opportunity to get into this industry, though. One way for an investor to buy in is through a working interest, which gives her a share of the profits commensurate with the cost of working the land.

For example, imagine that an investor pays for a 50-percent working interest in a piece of land to be used for gas or oil exploration. This means that the investor then pays for 50 percent of the expenses attached with the drilling. The rest of the expenses would be divided among the other individuals holding working interests in the land. If profits start rolling in, the investor with the 50 percent interest would reap 50 percent of the profits, minus any royalty payments that are due.

These royalty interests can significantly cut into the profits earned by those holding other interests. Using the above example, imagine that the initial owner of the land demanded a 10-percent royalty from investors for the right to work the land. Suddenly, the owner of the 50-percent working interest would see be entitled to half of the profits after the 10 percent for the royalty interest is subtracted, which means that his profits would be reduced to 45 percent. This is true even though he must still pay for 50 percent of the expenses.

Since this is the case, an investor should be especially confident that a piece of land will produce copious amounts of gas or oil before buying a working interest. While the potential for reward is great, the risk incurred is equally large. For that reason, investors wishing to play it safe in this industry might prefer to purchase a royalty interest instead.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B. , Former Writer
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.

Discussion Comments

Jim B.

Jim B.

Former Writer

Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.