Do you want to know how to invest directly in oil wells? Have you always wanted to get in on the ground level with a drilling company to receive the absolute most profit out of your investment? It can be done, but there are several things to consider before taking on the risks involved.
We’re here to help you understand those risks and provide you with the necessary tools to evaluate the companies you are considering investing with. Whether you are experienced or someone just getting into it, you’ll find valuable information and evaluative techniques as you read through our website and oil investment guide.
Direct Oil Investment Risk
The risks of direct oil investment are very real. We find that many people we work with have been burned in the past because they did not fully understand the risks involved and properly gauge the amount of risk they were willing to take before signing a deal with a company.
What’s at stake?
When investing directly, you have to understand that even if the drilling company does everything right, the hole could be dry. You also have to consider that the oil company you partner with might end up being untruthful and unfair with their projections, costs, payouts, etc. Either way, you have to weigh the risk you are willing to take to receive the higher return on investment that a good oil well may yield. Would you be better off putting your money into more conservative investment vehicles? Maybe, or maybe not.
Learn more about the risks involved in direct oil investment by visiting our risks page.
How Much Should I Invest?
Everyone knows that the more you risk, the more you stand to gain if everything goes well. Determining how much to put towards an individual opportunity depends on a few things.
- Are you an accredited investor that makes more than $200,000 annually or has a net worth over $1 Million?
- How much are you willing to risk (lose)?
- Is this type of investment right for you?
I can answer those!
If you answered yes to question number one, at least $15,000 to question number two, and yes to question number three, you are on the right track.
Typically, drilling companies look for those that are liquid for at least $15,000 to $30,000. If you have more that you are willing to risk, you should be able to put in for larger percentages of ownership and invest with larger companies.
Evaluating Oil Investment Opportunities
Here’s where things get tricky. You know your risk levels and how much you are willing to invest, but how do you actually evaluate potential opportunities? Your success will come down to the due diligence performed in this stage of the process, so getting this right is crucial.
Due Diligence Questions
- Who is this company?
- Can you verify their portfolio/profile?
- Do the executives have a good track record in the industry?
- Do they operate their own wells, or contract them out?
Those are just a few of the questions you should be able to answer before pulling the trigger on an investment deal.
For more info, continue reading about evaluating oil investments.