You’re probably asking yourself of why invest in oil, knowing that it is a category of your portfolio that requires tremendous work.
But, If you’ve read this far, you likely believe that adding access to a commodity from the point of extraction would be a solid addition to your portfolio. And, you’d be right! Crude oil being owned at the point of extraction can be a very lucrative addition to your investing portfolio. So, why invest in oil?
You’re using science.
- When you invest in the most recent photo sharing application or the most recent social network, you’re not investing using science.
- Oil investments are the result of the application of the scientific method.
- A geo-scientists hypothesis about the existence of oil deposits trapped thousands of feet underneath the surface of the earth.
- Tests are run, existing well results are researched, and the hypothesis is tested using available datasets.
- It is only until the scientific method has been exhausted that new oil wells are sought to be drilled and investors are given the final investment opportunity.
- The ability to use science to gain a bigger picture and reduce risk in your investment is a key reason to invest in oil and gas and crude extraction.
Deals can be structured to reduce risk.
- After the scientists vet the project, the transactional lawyers can further mitigate your risk.
- An oil deal is a thinking man’s game (or, a thinking woman’s).
- There are a myriad amount of ways you can be taken advantage of based on the structure of the deal. However, there are also a number of ways that you can shift the playing field to your advantage and reduce risk in the oil investment.
- Proper contracts can reduce risk by making payments contingent on meeting project benchmarks. Oil investments can be made in distressed assets in deals that require the operator to obtain a loan on the property, allowing for a multiplier effect on your capital if the oil investment is structured smartly.
The culture of the industry requires greater returns.
- A banker has basically knocked the ball out of the park if he can guarantee ten percent returns.
- An oil and gas operator would be out of business making ten percent his standard return amount.
- The image of Spindletop gushing oil and making instant millionaires out of oil investors has been deeply ingrained into the psyche of the industry.
- Oil investments target larger returns.
- But, by turbo-charging the ability of the investor to diversify, EnergyFunders allows investors to place smart investments in the oil industry.
- It is true that oil investments have traditionally been riskier.
- But, real estate can crash. The stock market can crash. Most start-ups fail. Companies go bankrupt all the time.
- No one is advocating abandoning traditional investments. Because all investments carry with them the possibility of risk, that’s why you diversify.
- Oil investments are no different.
- But, now, you can obtain proper diversification in oil and gas. It’s a great amount of upside, tempered by the new unprecedented level of deal flow and diversification enabled by the EnergyFunders platform.
Follow these rules to win:
- Pick projects that can be successful without high prices.
- Diversify, diversify, diversify across many oil wells, assets and operators.
- Invest directly into the oil well.
- When oil prices decrease, invest smarter to reap rewards.
- Don’t let a pamphlet satisfy your due diligence.
- Cut out the middleman.
- Demand the transparency you deserve.
- Don’t go it alone. Get aligned with quality oil and gas professionals.
With EnergyFunders, you’re aligned with a strong multi-disciplinary team of professionals who only win if you win.
Our profit is from a carried interest in a successful project. If you’re ready to start winning in oil and gas, together, get started now.