What Is Wildcatting?
Wildcatters are consortiums that drill oil wells searching for that black gold. The term originated from an area known as “Wildcat Hollow” near Titusville, Pennsylvania, where oil was first discovered in America.
With current higher prices for crude oil, “wildcatting” will likely increase. (Though oil investing can occur, and be profitable, in any oil price climate.)
What Does Wildcatting Mean for Oil Well Investors?
Instead, many oil and gas professionals are turning to direct oil well investments. Their reasons for the move include having transparent access to data about the oil well project, taking advantage of tax benefits and taking control of their investments.
Plus, investing directly in oil well exploration has the potential for a high ROI and a long-term investment life.
When Oil Prices Rise, How Should You Invest?
This trend of wildcatters drilling exploratory oil wells in the search for crude oil offers opportunities for investors.
- It can be easy to be dazzled with rosy projected returns, so we advise you look at high, low and mid-case scenarios for projected returns.
- We also suggest that you diversify your portfolio with investments in multiple oil well projects so you can spread your risk. After all, no one can guarantee success. (For reference, EnergyFunders has a roughly 60% success rate, which is good for the industry.)
- You should conduct due diligence on all potential investments to make sure you like the oil well project, the operator and the investment structure.
Finally, consider investing directly in oil wells at the exploration phase (possible with EnergyFunders) and continuing to invest through the life of the well to the payoff — operation and production.
Investors interested in oil exploration with any company should work to make sure their portfolio is diverse to withstand market fluctuations and always conduct due diligence prior to investing.