Investing In Oil And Natural Gas Is All About Diversification
From January, 2006.
Investing in gas & oil investments is all about reducing your risk, and spreading-out your investment funds, or diversifying in as many new prospective oil & gas wells as possible while building a portfolio of new commercially productive wells. You need to be able to do this while taking advantage of the opportunities to invest in many fields as practical.
Your goal should be to own working interest, or have direct participation in mulitiple lease hold interests within several, or many areas of mutual interest. In our business, these lease hold interests, are located within what are called Area’s of Mutual Interest (AMI).
You must of course find and trust the right operators, company, or companies, who you can then invest with to achieve a successful outcome, plus, in almost all instances, do not invest with a company unless it is registered & licensed with the NASD, and whose brokers are licensed and registered in your state of residence as well.
You must check on this requirement, and you should not receive an offer to invest, or a memorandum until you are approved to be doing business by the licensed, and registered company, or companies you are reviewing…it’s a two way street…they need to know who you are and you need to know about them before making any investment decisions.
SIPC insurance is only available if you are investing with both registered, and licensed broker/dealers, and registered representatives, don’t make the mistake of short cutting this important step to success in our industry.
Investing in many ‘area’s of mutual interests’, or ‘leasehold interests’ with multiple operators allows you to benefit from the investment strategies of many operators, and prospect generators, not only to realize the benefits of diversifying with many very successful operators, and prospect generators…but to be able to directly profit from their major discoveries which can, and do occur throughout the most lucrative areas; where large commercial, and recoverable quantities of oil & gas are being found by these companies, or pro’s in our industry…you just never know when or where a big discovery will be made…capitalizing on the discovery is a key to success in our business…being postioned to take advantage of the opportunities when they occur takes both luck, and skill…plus a plan…
You must have the proper investment structure, and legal entity to be able to invest relatively small amounts of your hard earned money in many wells which allows you to fully diversify your portfolio, and get all of the tax benefits possible from your investment at the same time. The direct participation, working interest ownership method of investing in new oil & gas drilling prospects is how the industry, or people in the business acquire fractional oil & gas ownership in both developmental, and exploratory wells in the US.
Let us know if you would like to receive more information about how to do your due dilligence to find the right companies to do business with, and what to look for when you do.