Oil and Gas Stocks - Boom or Bust? by Sebastien Wright

  For an investor that is interested in investing in the oil and gas sector, there are several options available. You could go the more traditional route of investing in mutual funds that invest in oil and gas or buying shares of an existing oil and gas company. You could also do something more unconventional such as buying your own oil and gas well or investing in oil and gas futures. Each one of these options are definitely within the oil and gas sector however they are all considerably different and would require expertise in an the area that interests a potential investor. In terms of the energy sources available to us today, fossil fuel still remains the most widely used form of energy. There are the obvious uses of petroleum products such as the gas that we burn in a vehicle or the natural gas/propane used to fuel some cooking appliances however there are also the more subtle uses of fossil fuel such as the synthetic fibres in your carpet or the nylon material of your jacket. Petroleum products are used in virtually every material we have today whether that is in the direct manufaturing process or peripheral activities such as the transportation of goods. Because fossil fuels are so widely used, many people feel that investing in this sector is a prudent idea. Purchasing oil and gas stocks is one of the easiest ways of accessing investments in the energy sector. Most investors do not have the capital available to invest in their own oil and gas well for example and many investors also have not had the best experience overall with investing in mutual funds. Once again, because of the factors listed above, investing in oil and gas stocks is accessible to most investors. Investing in oil and gas stocks takes some education and research as it would with any other investment. If there is an energy company that you are potentially interested in as an investment, there are some key factors to consider regarding the company before investing. An eample of this would be considering where the company has the majority of it's oil and gas holdings. A company in North America or another relatively stable region politically may be considered less risky that a region that is used to experiencing turmoil. Focusing on a key area within the broader oil and gas sector may be another thing to consider when investing in oil and gas. Some of the more specific areas to consider within the energy industry may be oil and gas service companies, exploration companies, transport companies and companies that are engaged in refining petroleum products. Choosing one of these areas will likely allow you to narrow your scope and focus your research. No matter which area of the oil and gas sector you choose to invest in, research is another item to consider. There are many ways to research the industry in general and specific areas or companies. There are likely books in your local librabry, online research firms, industry newsletters, radio and TV programs, etc. Even reading the business section of your local newspaper is often a very effective means of gaining insight into the petroleum industry. If investing in oil and gas stocks is of interest to you, another thing to consider is specifically how you will invest in these stocks. You can join investment groups that invest in stocks, use a traditional brokerage firm or review many of the online trading options that would allow you to purchase stocks online. Many options are available so once again, choosing the means of investing that works best for you is suggested. In summary, the world's appetite for fossil fuels is likely not going to diminish in the near future. Because of the likely longevity of this industry, many investors are looking to capitalize on the potential returns through oil and gas stocks. As with any investment, there is considerable risk associated with oil and gas stocks so getting educated and perhaps professional advice can never be a bad place to start.

Invest in oil and gas by Elle Wood

   Investing in Oil and Gas Ventures can provide any investor with a large window of opportunity. Today's investor can choose among numerous projects that offer very high financial rewards, and an investment in oil and gas is definitely one of them. You can expect Return of Capital in 6 to 12 months with greater than average Annual Rate of Return. Risk inherent in an average well is less risky than what it was10 years ago with the probability of success to be better than 90%, however, available projects would be economically attractive if oil prices would fall 50%. There are various advantages associated with drilling. In the United States, Congress has instituted tax incentives to promote domestic natural gas and oil production financed by private resources making involvement in oil and gas ventures to be a considerable tax advantage. The availability of Small drilling prospects is better than ever. Since Oil companies are not as anxious to renew expired leases making lease costs low. Long-range projections of price forecasts are up and since Rig activity is lowest in 50 years, drilling costs are low. In addition, recent advances in oil finding technology has improved recovery and reduced risk with some companies reporting 85% success on wildcat wells. Natural gas is now one of the most deregulated commodities. Since traditional sources of drilling money are no longer available, it is considered a bonanza for independent investors. One of the simplest way to bet on the price of oil is by investing in shares of USO (the U.S. Oil Fund) which is an asset created to track the price of oil. Investors can buy it like a stock. A handful of exchange-traded funds (ETFs) relating to oil are available as well such as OIH, IXC, IYE, XLE, and VDE. Some people prefer to invest in ETFs rather than mutual fund because the cost of ownership is lower, and you can buy and sell them any time through the day. If you are wary of the market, discuss your options with a true Oil and Gas Operator. Discover your possibilities, and weigh the advantages of becoming a true Oil and Gas investor.

Selling Oil And Gas Royalties by Elle Wood

Selling oil and gas royalties can be a very lucrative venture. You must take it upon yourself to become educated on the nuances involved in this process. The people you will be conducting business with will more than likely be a professional company that has vast experience with these types of acquisitions. Arming yourself with the knowledge to confidently negotiate will give you the advantage.
First, know whom you are dealing with. Today there are thousands of public and private interests vying to buy up the royalties to these resources. Many of them are independent brokers who conduct acquisitions of mineral leases. Understand that if you are dealing with brokers they have no authority to negotiate with you. They must obtain approval from their client before accepting any offers.
This leaves you with the edge. Do not accept the primary offer this is the baiting bid and is usually on the low end of what the client is willing to offer. Negotiate the terms that you want, do not accept anything less. The deck lies stacked in your favor, but there are some things to consider such as how much of the mineral is in your possession, the location of production, and competition for leases. Negotiations should be handled with care.
Discuss the bonus amount of the lease, the percentage of royalties shared and the initial terms of the lease. Any bonuses and royalties will be vastly different from location to location and are initially based on the three factors previously stated. On average, lease terms hover around the three-year mark. Be careful not to agree to an extension that will give the brokerage leverage in renegotiations at the end of the lease.
Royalties will vary considerably based on certain criteria. As a general rule of thumb 12% is considered the low end while 25% is the top of the spectrum for royalties. A checklist of favorable terms will give your the added security of knowing that you are not being taken advantage of. A Vertical Pugh Clause releases all depths under the deepest production zone. The Horizontal Pugh Clause in contrast, releases all land not included in the unit being negotiated.
It is advisable to forgo the "Mother Hubbard Clause" altogether while limiting the lease to oil and gas only. It is also preferable for you to have the warranty of title deleted. These items are standard requests that are usually accommodated without incident. Once acquired, the brokerage will begin the process of negotiating. There will be counter offers based upon your outlined lease terms. Be diligent during the negotiating process and you will succeed.
The information provided in this article will aid you in the process of selling oil and gas royalties. The topics covered were typical buyers, what to expect in the negotiating process, and favorable lease terms to include in your negotiations. After reading this article you will be ready to sell your oil and gas royalties with ease.

http://www.uniroyalties.com