How To Pick An Oil & Gas Company To Invest With:
1. Find out how long the company you’re considering working with has been in business.
you are going to invest with has been in business. If the company you want to invest with has no proven track record why would you invest your hard earned money with them? If the average life of a well is 10 years and the company you invest with has only been in business for 5 years, more than likely they wont be able to fully educate you about the life of a well because they have not experienced it themselves.
2. Call the better business bureau. If the firm has an unsatisfactory rating then you know that other investors or business partners were treated poorly/had complaints. The company must be a member of good standing or the answer is no!
3. Business Partners. Talk to the industry partners involved. It is important to work with the right partners. Working with the right partners can be the difference maker. Most o and g investment firms don’t drill or operate the wells. They are the middle man. Make sure the operator and/or driller has a good track record. This step gives you a chance to ask questions about the company you are considering investing with.
4. Visit the operations headquarters. If the business is some chop shop operating out of some ones house then at least all it cost you was airfare. While you are there talk to some of the companies employees. If the people working there are not happy then that could be an indication of how you could be treated when you become a client. When considering large or small investments due diligence pays off. Besides this is a business trip so you should be able to write it off on your taxes.
5. Do not ask to talk to clients. Why you ask? The company is only going to give you the names of their clients that have made money. If they provided you with names of clients that lost money you would not invest with them. Their is no way to check if the client references they provide you with are even clients, it could just be their Uncle George they gave $50 bucks to, to lie for them. If you have references such as bank and accounting firm, you can actually check the credibility/credentials of the representatives you talk to. If the bank and accounting firm lie for the Investment company not only the investment firm but the bank and accounting firm references will be going to jail for a long time.
6. Take advantage of the internet. Several search engines exist. Go to the search engines i.e. google, yahoo, msn, etc. etc. type in the companies name and see what pops up. Make sure the company you are dealing with has a website you can go to. If the company does not have a website in today’s day and age ask why. Most good firms will update their websites everyday with what goes on out in the field. It saves you and them time in the long run. It saves them time because you are not calling everyday asking what is going on with the well. It saves you time for not only the same reason but generally the reports on the companies website are sent by the operator of the well not the investment firm that brought you the deal. That means that the investment firm can’t lie to you because you both receive the same independent reports.
7. Find out how the company makes its money. You are more than likely not going to be dealing with a publicly trading company so their financial information is not going to be obtainable by purchasing their financial report. Read the fine print on the contract before you sign your life away.
8. When a project is offered to you ask how much money the company offering the deal has into the well/wells. If the company offering the project has no ownership in it hang up the phone and look for another company.
9. Third party geologist. Not associated with the company offering the deal. They get paid the same amount to double check the offering companies deal before they sell it to the public. If it is a good deal the third party geologist will give a positive report.
10. Companies that drill successful wells don’t charge you an arm and a leg per unit or share because they know the real money is in the back end. Let me explain. Don’t get me wrong I am sure they might charge a little premium above what they paid for it but for good reason and I will explain in detail in a minute. You want the company you invest in to not only own part of the well themselves but you want them to be in it for your profits as well. Good companies want to return your initial investment back to you as quickly as possible because they were right about the well and because they brought the deal to you will back in(back points to y’all in the movie business) for 10, 15 or even in some cases as high as 20% of your profits once your original investment is returned back to you. Companies that only make big money by owning the wells themselves and want to get you to profitability as quickly as possible so they can gain from your profits are the companies we want to do business with. I don’t mind if the firm wants a cut of my profits as long as I am making money, heck it gives them incentive to make us money.
1. Find out how long the company you’re considering working with has been in business.
you are going to invest with has been in business. If the company you want to invest with has no proven track record why would you invest your hard earned money with them? If the average life of a well is 10 years and the company you invest with has only been in business for 5 years, more than likely they wont be able to fully educate you about the life of a well because they have not experienced it themselves.
2. Call the better business bureau. If the firm has an unsatisfactory rating then you know that other investors or business partners were treated poorly/had complaints. The company must be a member of good standing or the answer is no!
3. Business Partners. Talk to the industry partners involved. It is important to work with the right partners. Working with the right partners can be the difference maker. Most o and g investment firms don’t drill or operate the wells. They are the middle man. Make sure the operator and/or driller has a good track record. This step gives you a chance to ask questions about the company you are considering investing with.
4. Visit the operations headquarters. If the business is some chop shop operating out of some ones house then at least all it cost you was airfare. While you are there talk to some of the companies employees. If the people working there are not happy then that could be an indication of how you could be treated when you become a client. When considering large or small investments due diligence pays off. Besides this is a business trip so you should be able to write it off on your taxes.
5. Do not ask to talk to clients. Why you ask? The company is only going to give you the names of their clients that have made money. If they provided you with names of clients that lost money you would not invest with them. Their is no way to check if the client references they provide you with are even clients, it could just be their Uncle George they gave $50 bucks to, to lie for them. If you have references such as bank and accounting firm, you can actually check the credibility/credentials of the representatives you talk to. If the bank and accounting firm lie for the Investment company not only the investment firm but the bank and accounting firm references will be going to jail for a long time.
6. Take advantage of the internet. Several search engines exist. Go to the search engines i.e. Google, Yahoo, Bing, etc., type in the companies name, and see what pops up. Make sure the company you are dealing with has a website you can go to. If the company does not have a website in today’s day and age ask why. Most good firms will update their websites everyday with what goes on out in the field. It saves you and them time in the long run. It saves them time because you are not calling everyday asking what is going on with the well. It saves you time for not only the same reason but generally the reports on the companies website are sent by the operator of the well not the investment firm that brought you the deal. That means that the investment firm can’t lie to you because you both receive the same independent reports.
7. Find out how the company makes its money. You are more than likely not going to be dealing with a publicly trading company so their financial information is not going to be obtainable by purchasing their financial report. Read the fine print on the contract before you sign your life away.
8. When a project is offered to you ask how much money the company offering the deal has into the well/wells. If the company offering the project has no ownership in it hang up the phone and look for another company.
9. Third party geologist. Not associated with the company offering the deal. They get paid the same amount to double check the offering companies deal before they sell it to the public. If it is a good deal the third party geologist will give a positive report.
10. Companies that drill successful wells don’t charge you an arm and a leg per unit or share because they know the real money is in the back end. Let me explain. Don’t get me wrong I am sure they might charge a little premium above what they paid for it but for good reason and I will explain in detail in a minute. You want the company you invest in to not only own part of the well themselves but you want them to be in it for your profits as well. Good companies want to return your initial investment back to you as quickly as possible because they were right about the well and because they brought the deal to you will back in(back points to y’all in the movie business) for 10, 15 or even in some cases as high as 20% of your profits once your original investment is returned back to you. Companies that only make big money by owning the wells themselves and want to get you to profitability as quickly as possible so they can gain from your profits are the companies we want to do business with. I don’t mind if the firm wants a cut of my profits as long as I am making money, heck it gives them incentive to make us money.
