Oil and Gas Investing: What You Should Know

Oil and gas investing covers a wide range of structures, from publicly traded energy stocks to direct working interests in producing wells to corporate bonds issued by energy companies. Each structure carries a different mix of income potential, tax treatment, liquidity, and risk. Phoenix Energy, an oil and gas company operating primarily in the Williston Basin of North Dakota and Montana, is one example of a company that gives investors exposure to the sector through corporate bonds and notes rather than direct well ownership.¹

This guide walks through why investors have historically looked to oil and gas, the main ways to gain exposure to the oil and gas sector, and what to consider before committing capital to an investment. It also covers how Phoenix Energy’s bond and note programs work, how they compare with other income-oriented investments, and where oil and gas fits within a diversified portfolio.

What’s Shaping the Oil and Gas Investment Landscape in 2026?

U.S. oil and natural gas production, domestic demand, and export activity continue to keep the energy sector in focus. The U.S. Energy Information Administration’s September 2026 Short-Term Energy Outlook projects U.S. crude oil production will average 13.8 million barrels per day in 2026, rising to 14.3 million barrels per day in 2027, while U.S. LNG exports are expected to increase from 15.0 billion cubic feet per day in 2025 to 17.0 bcf/d in 2026.²

The EIA also expects U.S. natural gas consumption in the electric power sector to hit a record next year, driven by rising overall electricity demand, including from data centers, and the continued build-out of gas-fired generation.² Together, these trends could be inferred to explain why investors continue to pay attention to companies operating across the U.S. energy sector.

Commodities, including oil and natural gas, have historically behaved differently from traditional stocks and bonds. Broad commodity returns have historically shown low correlation with U.S. equities and near-zero correlation with global bonds, in part because commodity prices can respond to distinct factors such as supply conditions and geopolitical events. This is one reason some investors consider commodity exposure as a potential source of portfolio diversification, although diversification does not eliminate the risk of loss.³

Importantly, investments in energy-company stocks, bonds, or other securities should not be assumed to have the same diversification characteristics as direct or broad commodity exposure.

Commodity markets can also be highly cyclical and volatile. In its September 2026 Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) projected Brent crude oil prices to average $91 per barrel in 2026 before declining to $74 per barrel in 2027. The agency expects Middle East oil production to increase as flows through the Strait of Hormuz gradually increase and alternative export routes are used, with most Middle East crude oil production returning to near pre-conflict averages by the second quarter of 2027. As oil production recovers and global inventories rebuild, the EIA expects downward pressure on crude oil prices.²

Against this broader industry backdrop, Phoenix Energy has expanded its production in the Bakken/Williston Basin. The company reported crossing approximately 50,700 barrels of oil per day on July 19, 2026, up from roughly 100 barrels per day at the start of 2024. From June 2025 to June 2026, the company reported production growth of approximately 60% year over year.¹ Production growth of this kind is a company-specific result, not an industry average, and past growth does not predict future output.

What Are Some Characteristics Investors Consider Across Energy-Related Investments?

Investors may consider different types of investments connected to the energy sector, depending on their objectives and circumstances. Publicly traded energy securities, direct working interests, and corporate debt issued by oil and gas companies are distinct investment structures with different potential benefits, risks, tax treatment, and liquidity. In no particular order, some of the characteristics investors may consider include:

Interest income from corporate debt securities. Bonds and notes issued by oil and gas companies, as well as corporate debt securities across industries, can provide a stated annual interest rate over a defined term. Bonds and notes, including those offered by Phoenix Energy, are corporate debt securities, meaning investors lend capital to the issuer rather than purchasing an ownership interest in the company or a direct interest in oil and gas wells or production. Current offerings provide stated annual interest rates ranging from 6% to 13%, depending on the applicable offering and term, with payment terms described in the applicable offering documents.⁴ For a broader comparison of corporate bonds with CDs, municipal bonds, and other fixed-rate investments, see Phoenix Energy’s Fixed-Rate Investing in 2026 guide.

Potential tax benefits for direct working-interest investors. Investors who directly own an operating or working interest in an oil or gas property may be eligible to deduct certain qualifying intangible drilling and development costs (“IDCs”), subject to applicable tax law and individual circumstances. Owners of qualifying economic interests in oil and gas properties may also be eligible for depletion deductions.⁵ These potential tax benefits relate to direct ownership and do not pass through to holders of equity interests in Phoenix Energy or holders of bonds, notes, or other debt securities issued by Phoenix Energy. Phoenix Energy’s bonds and notes are debt securities, and investors should consult their own tax advisor regarding the tax treatment of interest received from them.⁴

How Do Oil and Gas Company Bonds and Notes Compare With Other Income-Oriented Investments?

No single asset class is right for every investor. The table below compares select market benchmarks with the stated rates on Phoenix Energy’s currently offered bonds and notes to illustrate differences among common income-oriented investments. This comparison is for informational purposes only and is not a recommendation to invest. Higher stated yields or rates may be associated with greater risk, lower liquidity, or both.