Investors always want to know what the odds of their capital is lost. Investors want to know when they will start making money after sending money to participate in an investment offering. It is a development time risk. Three, investors want to know how good the profit structure is, or more specifically, how much money do they make in investment life? I will add the fourth and fifth concern, what are the tax deductions, and finally, what is the liquidity in the investment or in other words ... what is the exit strategy if any?
Risk is a fundamental concern for anyone looking to make money, and deciding who and where to invest are important questions. When a wise investor analyzes any investment and decides how much to invest, or how little to invest, fluctuations and everything in between are all factors. There are many types of risks ... I would like to list some of them based on my experience, considerable research done over the last 24 years and the failures I have encountered over the years.
People are at risk ... I think it's very important to find the right people, in fact it's very important before doing any business with anyone ... bad people ***** - the big deals we make. Finding trained, experienced and highly motivated professionals, until they do the job right and do not leave in a reasonable time. It is not easy to find the tools and equipment needed to develop people and leases that can work together, and the areas you have chosen very carefully. It can make or break you. Your best insurance is a bond that has worked together for years to ensure timely completion of necessary and properly completed development work.
Track records are important, but it's hard to count oil and gas because, like in the movies, you're just like your previous picture. Good intentions, and highly competent professional people, working with great teams and doing a lot of things together, can give up every attempt or fail to succeed, regardless of whether it is the desire to do well or experience with excellent technical skills. It is important to always remember this ... However, having people with disabilities or people who do not know how to complete tasks properly or completing what they started regularly is not an acceptable result. You need to avoid these people who are often overconfident when you first start talking to, they have some excellent clues when deciding what to avoid.
The deal is very important, but the main challenge is still how to minimize negativity, provide diversity and at the same time be structured so that you can get up and down in a reasonable time. The basis of any oil and gas deal must be good history, logic, geology, engineering and area and Time should be backed up with a good understanding of both.
For example some oil and gas drilling in the US, and developing areas are inherently very dangerous ... the Gulf Coast is such an area, and it should not be heartbreaking ... as well as the technical risk of failure. There are many of these. The statistical track record of most participants in the Gulf Coast region, despite finding recoverable reserves, was less than the 50% hit rate in completing commercial wells. The competition in the Gulf Coast is fierce, the big guys control the land ... Have you all heard the expression ‘my way, or the high-way’?
Older fields that have been drilled and developed in the past have historically produced several million barrels of oil in the past and are still doing so. These areas are being re-visited by big independents and big companies, as they have much less exposure than the newly discovered offshore fields. Wells are put into production with very little money and are much faster than large new fields found elsewhere. Most of these old fields may not have had such exciting booms, although high oil and gas prices are now favorable for a return to some of these fields, although they are depleting basic reserves of oil and gas. Secondary drilling and recovery techniques can rival and surpass the results for both the return rates and upside that you find in the Gulf Coast States or offshore drilling programs. In fact, most oil fields in the Middle East have been in secondary renewal since the late 70s and flooding was the main way to restore the last reserves left in the oil field.
Finally, there is the risk of price risk or volatility ... Oil and gas prices are high, especially as oil prices rise in the near future or over the period of time we are investing and new oil. And emerging gas projects are planned for the next ten years ... there will be alternative energy sources and conservation efforts, but based on my research the demand will exceed supply capabilities.
You must be logged in to post a comment.