Oil Investment Opportunities – Energy Funders is here to help!
Here are just a few ways to get the crude flowing into the pipes.
Investing in distressed assets.
- Assets that are distressed can come in a variety of shapes and sizes.
- Often the opportunity will be a distressed asset because oil prices were high when the asset was purchased. A low price environment presents the opportunity to purchase developed assets at a discounted price.
- Distressed asset opportunities may also arise when an operator has financial problems that are unrelated to the actual asset.
- When an asset acquisition was financed by debt and the monthly bank note attached to it is higher than the current operator can handle, an opportunity arises for the savvy investor focusing on these unique opportunities in crude oil production. Just like in a home foreclosure, the bank may allow for steep discounts to the new operator willing to take on the risks of the opportunity.
- The opportunity is thus to purchase an asset – under market value – that may include numerous drilling sites or re-working opportunities that only need a small capital infusions to juice the production of crude oil.
- As a result, distressed assets can be a tremendous investing opportunity.
- A strong oil investment opportunity can present itself when a large publicly traded oil company explores and produces an area until that area can no longer generate the return on investment necessary to feed a billion dollar plus market valuation.
- Often the field that is left behind will contain numerous drill sites that present an opportunity to exploit known geology to drill cheaply in an area that has less geological risk due to the extent of prior exploration in the region.
- As large companies move on to lucrative offshore or foreign opportunities for example, the areas left behind can be major revenue generation opportunities for smaller companies.
- These in-fill drilling opportunities can also exist in areas that are actively being explored by smaller companies without the resources to lease all the areas that are potentially affected by the discovery of oil.
- A re-work opportunity is essentially an opportunity where an existing oil well has been thoroughly produced and the current owner decides to focus on other wells.
- These opportunities in crude oil investing can be lucrative because the bulk of the cost to obtain production in an oil and gas well is often just drilling down to the total depth.
- Wells being re-worked have already been drilled to total depth, can often be purchased cheaply, and they are often opportunities to simply infuse a small amount of capital fixing up the well or re-fracturing the formation for additional oil production.
- Shale presents an opportunity to extract large volumes of crude oil by drilling horizontally through porous rock that traps hydrocarbons. The fracturing process unleashes these trapped hydrocarbons for extraction.
- Shale often reflects a prolific opportunity if lease acquisition costs can be kept low.