Direct investment in oil and gas wells...sounds good!

[flowlikewater]

Hi, i have come across a company here in Singapore that offers a new alternative investment vehicle here in Asia. It allows you to invest in oil and gas wells directly in the USA. It has been going on for years in the States but it has just come to Asia. Sounds real good as you are investing in a tangible asset, in this case the oil and gas well directly and have ownership of that asset. Having direct interest means you SHARE in the cashflow , I like the sound of that. From experience I know that oil and gas wells can produce for decades. Be nice to get a monthly royalty check for 20 years!!! Typically these types of investments are registered with the SEC in the US so that makes me feel very safe...

What I do know is that the US is experiencing unprecedented growth in their domestic energy market through this shale oil/hydraulic fracturing revolution. I have read as per the IEA that the US is on track to surpass Saudi and Russia as the worlds largest oil producer. OPEC is very, very nervous. They could lose as much as 50 million dollars a day!!!

This is a clear sign to me to take advantage of this massive energy market in the USA which is growing daily.

I have also found out that the USA is the ONLY country in the world that allows for direct interest/ownership of oil and gas wells. In all the other countries, like Singapore for example, the government controls everything. That is why this type of investment doesnt work anywhere else. The long and the short of it is simply that oil is the new gold. People like myself are using oil as a hedge against my other US investments and how can you go wrong with a commodity that is depleting at the rate of finding 1 barrel for every 9 we use??

This is the start of soemthing big! Watch this space!!!

[brattzz]

Well... why would oil & gas well owners want to share their ownership and profits with you? they can get very cheap fundings easily!!

this is indeed very strange to me!

Ok, so we are watching this space!

[flowlikewater]

good question...there are thousands of land owners that have oil on their property that they want to develop but they dont have the money or they do not know how...so they sell the mineral rights on their property for someone else to come and drill and then they get whats know as an overriding royalty interest ORRI.

so basically, they get the well drilled, it costs the landowner nothing but they still get a portion of the oil...

[Kelvin]

Brattz questions not answered leh.

Sent from my S4 via Tapatalk

[kagemusha]

Hi there, let me introduce myself.. my name is Charles Ponzi.
I have this wonderful investment with high returns just for you and you alone....no one else, so you better not tell anyone.

[opmi]

If very' gian' oil royalty trusts, see below for listed ones.

http://www.bloomberg.com/markets/compani...ty-trusts/

At least info is public for people to see. Not some fly by night operators.
Take money already, dont know run where.

[specuvestor]

Well... why would oil & gas well owners want to share their ownership and profits with you? they can get very cheap fundings easily!!

this is indeed very strange to me!

Ok, so we are watching this space!

If you follow the likes of delisted Pearl Energy and subsequently Kris Energy, and also Rex International, recycling of capital and reduction of risk is quite common in the industry

That said opmi is right that counterparty risk is much lower in listed entity rather than an OTC product, unless one has expertise in that area. For me it is better to buy property stock in US than US landbanks.

Kiang-jou-hou, mai-geh-kiang

[LionFlyer]

I think it boils down to what TS mean as "investing directly" in oil and gas.

I met someone (a Singaporean) who is "directly" vested in oil and gas down in Australia as it owning the land titles to several claims. But of course, if you put down money and you just own so called "rights", you really don't own anything. (correct me if I am wrong)

[fat al]

good question...there are thousands of land owners that have oil on their property that they want to develop but they dont have the money or they do not know how...so they sell the mineral rights on their property for someone else to come and drill and then they get whats know as an overriding royalty interest ORRI.

so basically, they get the well drilled, it costs the landowner nothing but they still get a portion of the oil...

So what is the relevance to Singapore residents or individual forummers here, if it is a deal between U.S. landowners and oil drillers?

[weijian]

good question...there are thousands of land owners that have oil on their property that they want to develop but they dont have the money or they do not know how...so they sell the mineral rights on their property for someone else to come and drill and then they get whats know as an overriding royalty interest ORRI.

so basically, they get the well drilled, it costs the landowner nothing but they still get a portion of the oil...

Hi flowlikewater,
Thanks for sharing this with us. When we look at the IPO prospectus, we are able to find a wealth of information containing both potential growth, IPO proceed usage, risk etc..
As many in the forum are value investors and prefer to look at the downside of any investment first, was wondering whether you could share more information about the RISKs of this alternate investment vehicle as well?