What to Look for in an Oil Well Investment
Project location plays an important part in the investment decision-making process — It can make or break a project. These are a few of the criteria that we evaluate when vetting a potential oil well investment.
Developing the Lease
First, we look at the location of the lease. Is this a one-well project or is there opportunity to develop the lease or buy more leases to expand your field?
Development wells can be up to 30% cheaper to drill, and since you already put in the infrastructure for the test well, those costs are minimal.
Regional Market Activity
Next, we examine regional market activity, which influences costs for the project.
Regional activity can mean better access to vendors and perhaps cheaper access to tap into pipelines, which lowers the cost to take your product to market. On the flip side, it can lead to an increase in vendor cost due to a high demand in the region and more competition and a higher drilling cost.
High activity in the region can also lead to an increase in lease acquisition costs and lease terms that are better for mineral owners.
Is the project location near or surrounded by offset production?
Greenfield exploration involves an undeveloped lease with little to no offset well data around the target lease.
Brownfield exploration (most of our exploration projects fall under this category) involves an undeveloped lease with offset well data to reduce drilling risk and provide well control data.
Understanding this difference is important when considering an oil well investment and the risks associated with it. Diving into the geoscience is part of how oil and gas investing is like treasure hunting.
What Does This Mean for Investors?
Lease, project location and regional market data are all criteria to evaluate when selecting an oil well investment. We also evaluate the legal side of potential investments and an operator’s track record.
If you don’t want to dig up all the research yourself, you can sign up to view our vetted oil well investments. We give you all the data so you can make an informed decision and feel confident in your investment choices.