[taxman22]

If you have high "ordinary income" from salary, RSUs, NSOs, etc, you can essentially convert that ordinary income to dividends and long term capital gains using these oil & gas tax subsidies.

Let's say you invest $100k into a drilling fund. You can deduct intangible drilling costs in year 1, which is usually about 95% of your investment. So you save ($maginal_tax_rate * 95k) in year 1, and get a dividend (with extra tax break) of 10-20% per year for about 7-10 years.

When the oil slows down after 7-10 years, the fund sells the asset for 20-30% of your investment, and I believe you can realize that loss.