This is the final part of our oil investment, “How to Make Money in Today’s Oil Industry”. This is the article to pay attention to.
This article will tell you how you can get involved with investments in the oil industry. It is easier said than done. While there is some ease of entry investments, such as, with over the counter stocks, options, etc.
True wealth in the oil industry has been obtained through direct investment on the project level.
This article will dive into the over the counter market, the direct oil investment, and the unique opportunity that World Trade Center San Francisco can provide you if you are looking into investing in oil.
The easiest way, by far, is to invest in over the counter trades, or OTC trades for short.
This is something that might be already familiar to you either as a stock trade, or buying commodities. Because oil is a commodity, it can be bought and sold on various trading platforms, in a variety of ways.
These can include options, PUTS, futures, etc. Other OTC trades can be stock in oil companies.
These can be seen in large corporations such as Shell, ExxonMobil, BP, and others. While this may be the easiest way of investing in oil, this can be risky, and this type of investment might not provide a very high rate of return, compare to directly investing in oil development and exploration directly.
How does someone go about finding this type of investment?
And how can someone make money off investing directly in an oil development project rather than the company itself?
The first thing investors need to find is what kind of oil development investment they are looking for.
Oil development investment can be broken down into three different categories:
- Exploratory development
- Infill drilling
- Business loans
Each category has a varied risk and rate of return on the investment.
As an investor, it is important to have a good understanding of each category when evaluating your risk tolerance.
Starting off with exploratory investments, these are investments in oil development that follow the name’s meaning pretty closely.
They are focused on exploring and finding new oil. They are unproven projects and the riskiest of the three choices; however, because of the increased risk, they should offer the investor the greatest rate of return.
There are ways to minimize risk in the exploratory oil development field. One way is to find a new exploration project that is going in a well-known and proven area.
While there is no proof of new oil, there may be stronger evidence of oil in well-known areas that are close to other proven projects.
The second area of oil and gas development is infill drilling.
The concept of infill drilling is when a company will go and develop new oil wells in between existing wells that are already producing oil.
While there are some risks because the company is exploring drilling for new wells, they are logically drilling in between two oil wells where there is proof of oil.
Take a look at the basic logical concept below for a visual representation.
Looking at the drilling location of the orange box, while a developer may not know with 100% certainty that there is going to be oil in that area, we can see that eight successful oil wells are surrounding the proposed area. Each area around the well has been successful, so it is highly likely that this well will be successful. This is the basic concept of infill drilling for investors to understand.
The final type of oil development investment to be discussed in this article is going to be a direct loan for oil development.
A direct loan is the most secure type of oil development investment because it has nothing to do with the production of the new oil wells. This is a simple type of loan where the company pays a percentage of interest on the principal amount over a period of time.
While there are many different ways to structure these type of deals, for this article, we are going to assume that the loan is paid back on a schedule with a set amount of interest. It is because the loan is not tied to the success of the well or the fluctuation of the stock market.
The investor is guaranteed their rate of return on the loan.
Now that we know the different kinds of development investments that investors can be a part of, we need to explore the ways in which to find these investment opportunities.
Finding these opportunities is easier said than done. Many American citizens look to invest in oil, but they never become part of a development project. They only settle for the OTC market.
Here are some inside tips on how you can get involved in oil development:
1.Attend a NAPE Conference
One popular way that developers connect with one another is through a popular convention for developers called NAPE.
This is a series of conventions that was started in 1993 by American Association of Professional Landmen for the direct purpose of bringing interested developers, landowners, and investors together for the purpose of doing business.
While the first few conferences were hosted by the American Association of Professional Landmen, other major organizations in the industry have become involved in putting together NAPE and bringing together many resources to make NAPE the largest series of conferences in the Oil Industry.
Other organizations heavily involved include the Independent Petroleum Association of America (IPAA), The Society of Exploration Geophysicists (SEG), and The American Association of Exploration Geologists (AAPG).
Anyone can attend these conferences throughout the year to meet experts and dealmakers within the oil industry.
There are three NAPE conventions each year, with the largest being the NAPE Summit. There are even beginner seminars at these conventions if you are attending and want to learn more about the industry as a whole.
All-in-all these conventions are a great way to get connected and find deals within the oil and gas industry.
PLSX.com is a website that is a great research tool as well as a place to find deals for investments.
This is a website that offers a plethora of services such as advisory services, market report and research, marketing and networking opportunities and schedules, project opportunity and sales (similar to how you can find houses on an app like Zillow) and reporting documents on specific projects and areas.
This website is for subscribers, but you can look through their interactive map of available deals and projects for sale, https://www.plsx.com
How WTC-SF can help you get involved
If you are looking to invest in the oil and gas industry but do not want to attend a conference, have to learn a new industry, or just want a stable investment with a guaranteed rate of return, World Trade Center San Francisco can help.
We have partners that specialize in private oil investment as well as investment for the purpose of EB-5 investment immigration.
Follow the link below to sign-up and receive a free PDF of how our oil investments are structured and how you can diversify your investment portfolio with World Trade Center San Francisco.
The information in this article is meant for general information purposes only and should not be taken as legal advice. Please consult an immigration attorney for your specific immigration needs.