How is the investor purchase price for a project determined?
The oil and gas operator proposes a purchase price in exchange for a certain working interest percentage (ownership percentage) in a well. The project cost will be clearly disclosed in investor materials, and EnergyFunders will have negotiated to keep the purchase price as closely aligned to drilling and completion costs as possible. However, it is important to remember that large expenses have likely been incurred to get a deal in place and ready to go. Geological, technical and legal expertise are necessary to get a well permitted and ready to go. It is not uncommon for oil and gas investors—including major oil companies—to pay a premium for access to more lucrative projects. Operators on the site must compete with each other for investor dollars.