Oil and Gas Drilling Programs Explained: Inside 546 Energy Funds

Some 546 energy funds filed a Form D with the SEC between Nov 4, 2024 and Nov 4, 2026, according to AltMountain's energy fund directory, and many of them use a structure many investors have heard of but few have looked inside: the oil and gas drilling program.

Why it matters: Drilling programs raise money from individual investors every year, sometimes from thousands of people at once, and they are among the few private offerings that advertise openly. Knowing how they are put together makes their SEC filings much easier to read.

What a drilling program is

A drilling program is usually a limited partnership formed by an operator, the company that actually drills and runs the wells. Investors buy units in the partnership; the partnership uses the money to drill a set of wells, and investors share in whatever the wells produce after costs. Many sponsors start a new partnership each year, so a single company can have a long chain of numbered programs, one per drilling season. AltMountain groups those yearly programs on a single fund sponsor page for each company it can match, linked from each program's fund page.

Other energy vehicles in the same filings work differently. Royalty and mineral funds buy a share of production from wells someone else drills and pays for. Income funds buy wells that are already producing. Midstream and infrastructure partnerships own pipelines and processing plants rather than wells.

How they raise money

Like other private funds, drilling programs sell under Regulation D and report each raise on Form D, which shows the amount sold, the number of investors, the minimum investment and the exemption used. The figures are cumulative sales, not the value of the wells.

Many programs use Rule 506(c), which lets an issuer advertise as long as every buyer is a verified accredited investor. AltMountain's Rule 506(c) energy list currently shows 241 U.S. energy funds using that exemption. Programs that use Rule 506(b) cannot advertise and may take a limited number of non-accredited investors. Our guide to Rule 506(b) vs 506(c) covers the difference, and who counts as an accredited investor is explained separately.

The tax rules investors ask about

Two parts of the federal tax code come up in almost every program's materials. First, the code gives taxpayers an option to deduct intangible drilling and development costs, such as labor, fuel and site work, as current expenses instead of capitalizing them (26 U.S.C. 263(c)). Second, a working interest in an oil or gas property held directly, or through an entity that does not limit the investor's liability, is not treated as a passive activity (26 U.S.C. 469(c)(3)).

How these rules apply depends on the program's structure and each investor's own situation, and the rules carry limits and exceptions. This article describes the statutes only; it is not tax advice, and anyone considering a program should talk to a tax adviser.

Key figures

What the filings show over time

Because programs are often built to drill and then wind down, many older ones simply stop filing. AltMountain keeps them in an archive of earlier energy funds, which lists 4,130 funds whose latest Form D is more than two years old. A fund in the archive has not filed a Form D since that date; that alone does not mean it has closed.

For readers tracking new activity, the new energy funds list shows the latest filings each day. As with any private offering, a Form D is a notice of sale, not an SEC approval, and the numbers in it are reported by the issuer.

Related on AltMountain

• Energy funds directory
• Rule 506(c) energy funds
• Form D explained
• Archive of earlier energy funds

Sources

• 26 U.S.C. 263, capital expenditures (govinfo.gov)
• 26 U.S.C. 469, passive activity losses (govinfo.gov)
• Fund counts and amounts: AltMountain energy fund pages, from SEC Form D filings, as of Nov 5, 2026

Information only. AltMountain reports public SEC filings. Nothing here is an offer, solicitation or recommendation of any security or fund, and AltMountain has not reviewed any fund mentioned. Form D data is self-reported and not verified by the SEC. Disclosures