Working interest

A working interest is an ownership stake in a well or prospect that comes with a share of the drilling and operating costs, in exchange for a proportional share of the oil and gas produced. It's different from a royalty interest, which shares in production without bearing any of the cost. Working interests are often split among many participants on a single prospect, each taking whatever percentage they can afford, which spreads out both the risk and the potential upside of a well that may or may not pay off.

Guests on the show describe deals where twenty or forty different parties hold working interest in a single prospect, each contributing a small slice of capital, which is one of the main ways exploration risk gets diversified across an industry where any individual well can be a dry hole.