- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Anyone ever buy an oil field or buy interest in an oil field?
Posted on 8/14/14 at 6:55 pm
Posted on 8/14/14 at 6:55 pm
Seeing if anyone here has experience with this or knows anyone who has before. This is something I'd like to consider down the line.
When searching fields for sale on the internet, naturally there are tons of "too good to be true" opportunities. I did find one site, mergernetwork.com, that has ads for fields for sale, most of which are seemingly legit. It's worth checking out..most of the lower priced fields are small 1-3 well leases in Texas that produce <5 BPD. LINK
Here's an example of one:
This one is just an example, and doesn't sound particularly profitable as-is and will require additional capital to recomplete zones/get a waterflood started. But there are many more on the site.
When searching fields for sale on the internet, naturally there are tons of "too good to be true" opportunities. I did find one site, mergernetwork.com, that has ads for fields for sale, most of which are seemingly legit. It's worth checking out..most of the lower priced fields are small 1-3 well leases in Texas that produce <5 BPD. LINK
Here's an example of one:
quote:
Brown County TX Stripper Lease for Sale
business Summary
118 acres (2 adjacent leases).
Leases HBP - 1.5 BOPD total.
Rights to all depths, including gas-rich Marble Falls (2,200').
Reserves estimated at 400MBO (Fry Sand) and 1.9 BCF (Marble Falls).
Multiple re-entry candidates in the Fry. Potential for waterflood.
SW injection in service. Equipment in good shape.
Pumper available for hire
$265k for 100%WI at 80%NRI
Contact us if you want additional information.
This is not an offer to buy or sell securities. We are not a United States Securities Dealer or Broker or United States Investment Adviser. Do your own due diligence and consult with a licensed professional before making any investment decisions.
This one is just an example, and doesn't sound particularly profitable as-is and will require additional capital to recomplete zones/get a waterflood started. But there are many more on the site.
This post was edited on 8/14/14 at 6:59 pm
9
Posted on 8/14/14 at 7:38 pm to TheIndulger
Drainaaaage!
Posted on 8/14/14 at 8:17 pm to TheIndulger
It is a quick way to lose money unless you know what you are doing.
After looking at enough of these over the years either the reserves or the operating costs or the capital costs (often all three) are fantasy, and the marketed financials often don't even tie to their lease operating statements.
If you have enough expertise to cut costs or recognize upside that the seller didn't, then you can make some money. Otherwise plan on losing your arse.
After looking at enough of these over the years either the reserves or the operating costs or the capital costs (often all three) are fantasy, and the marketed financials often don't even tie to their lease operating statements.
If you have enough expertise to cut costs or recognize upside that the seller didn't, then you can make some money. Otherwise plan on losing your arse.
Posted on 8/14/14 at 8:19 pm to TheIndulger
I know a few people who have leased old fields and re-worked the wells. One guy bought a new 40 ft boat a few months after they worked over the field so I am guessing it worked out ok.
I also have some family who drilled their own well on a lease in west Texas back in the day. It was the lease next to a pretty high output well, but he had a dry hole and lost it all and cried all the way back to Dallas. He started over that next day and has ended up doing very well for himself.
Edit: all the individuals I know who have done this are geologist/drillers/petroleum engineers in their day jobs.
I also have some family who drilled their own well on a lease in west Texas back in the day. It was the lease next to a pretty high output well, but he had a dry hole and lost it all and cried all the way back to Dallas. He started over that next day and has ended up doing very well for himself.
Edit: all the individuals I know who have done this are geologist/drillers/petroleum engineers in their day jobs.
This post was edited on 8/14/14 at 8:21 pm
Posted on 8/14/14 at 9:06 pm to Bayou Tiger
That's pretty much what I figured.. I am of course skeptical of how many reserves the seller says they have, as they will more than likely inflate the number.
Posted on 8/14/14 at 9:07 pm to eng08
That's practically wildcatting which I would definitely not do 
Posted on 8/14/14 at 11:41 pm to TheIndulger
Out of curiosity, how do you monetize the oil? Do you contract with a company to buy it from you and they pick it up every so often?
Posted on 8/15/14 at 12:00 am to TJG210
That's what I had in mind. Figured that would be the easiest way to do it.
This post was edited on 8/15/14 at 12:01 am
Posted on 8/15/14 at 12:31 am to TJG210
quote:
Out of curiosity, how do you monetize the oil? Do you contract with a company to buy it from you and they pick it up every so often?
Plenty of lease buyers out there, it just won't net the best price bc of the volume.
Posted on 8/15/14 at 5:37 am to TheIndulger
Also consider that, like buying a cheap foreclosure property, you could end up with a property that is actually a huge liability.
Abandoning wells, removing equipment, and remediating the soil can be either relatively cheap or quite expensive, depending on the setup and condition of the wells underground and the specific terms of the lease.
There are also numerous regulations where being out of compliance can lead to fines or the need to spend money with a rig just to fix an issue.
Many of the above issues are not always visible, even to the trained eye, so you have to know what you are looking at, value accordingly, and understand that there is still risk.
Abandoning wells, removing equipment, and remediating the soil can be either relatively cheap or quite expensive, depending on the setup and condition of the wells underground and the specific terms of the lease.
There are also numerous regulations where being out of compliance can lead to fines or the need to spend money with a rig just to fix an issue.
Many of the above issues are not always visible, even to the trained eye, so you have to know what you are looking at, value accordingly, and understand that there is still risk.
Posted on 8/15/14 at 8:30 am to TheIndulger
I talked to a guy the other day that was in a group that was looking into buying a small refinery. I thought all of these were owned by large corporations. 
This guy then went on to talk about buying crude tankers from Africa and bringing them to the US and selling them on an auction market to US refineries. Anybody ever heard of this kind of bs?
This guy then went on to talk about buying crude tankers from Africa and bringing them to the US and selling them on an auction market to US refineries. Anybody ever heard of this kind of bs?
Posted on 8/15/14 at 9:05 am to TheIndulger
Have looked into it and know some who have done it. Be very cautious.
Posted on 8/15/14 at 10:08 am to eng08
quote:
Edit: all the individuals I know who have done this are geologist/drillers/petroleum engineers in their day jobs.
VERY important edit. Oil companies drill dry holes and lose their asses all the time and they have teams of experts working on them. The percentage of wells that make you rich is very, very small.
This post was edited on 8/15/14 at 10:11 am
Posted on 8/15/14 at 10:09 am to TheIndulger
If they are offering interest to the public it's not a good deal
Posted on 8/15/14 at 9:07 pm to Bayou Tiger
quote:
Abandoning wells, removing equipment, and remediating the soil can be either relatively cheap or quite expensive, depending on the setup and condition of the wells underground and the specific terms of the lease.
There are also numerous regulations where being out of compliance can lead to fines or the need to spend money with a rig just to fix an issue.
Many of the above issues are not always visible, even to the trained eye, so you have to know what you are looking at, value accordingly, and understand that there is still risk.
This. Actually a lot of people sell it because complying with the regulations for a "green" abandonment is expensive.
Posted on 8/16/14 at 12:17 am to TheIndulger
You won't make money on a stripper well unless you know what you're doing. For example, if your well sanded up would you know that's what occurred? Do you know what to do? Do you know how much a wireline or work over rig costs? Also are you able to qualify as an operator? Secure and provide a $150-200k operator bond? Your initial $265k isn't your last cost by any means. If you're not an experienced O&G professional you have no business buying any working interest, especially operated. You shouldn't even buy an override unless you can properly evaluate it. Stay away unless you are actually rich enough to stomach losing your total 300-500k investment.
Posted on 8/16/14 at 12:21 am to TJG210
quote:
Out of curiosity, how do you monetize the oil? Do you contract with a company to buy it from you and they pick it up every so often?
There are purchaser/gatherers that pick up the oil for a fee. Sunoco and shell are common gulf coast onshore purchasers. It's not a big deal to sell your production.
Another thing I failed to mention above is the accounting side. You have to be able to account for your rev then distribute to your lessors, other royalty and overriding royalty owners every month for the trailing 90 days at minimum.
Posted on 8/17/14 at 7:10 pm to cwill
quote:
Another thing I failed to mention above is the accounting side. You have to be able to account for your rev then distribute to your lessors, other royalty and overriding royalty owners every month for the trailing 90 days at minimum.
E&P Accounting....
Listen to cwill. If you want to invest in O&G, go by some E&P stock.
For every story you here of someone getting lucky there are hundreds of people losing everything.
Posted on 8/17/14 at 7:21 pm to yellowfin
quote:
If they are offering interest to the public it's not a good deal
this is the key point...if you've got quality people working a quality lease they are going to get all the money they need from private investors or institutions...if they're taking to small investors, they have a bad deal they can't sell to 'real' money or they want to fleece them with bad pricing...stay away
Posted on 8/18/14 at 10:33 am to TheIndulger
Invest your money into a Master Limited Partnership for Oil and Gas. Do your reasearch on MLP's that have a good track record and you can make good money. MLP's are required to pass 90% of profits to shareholders and do not pay taxes, so the money is only taxed once, and then only a percentage (a portion of your divi payment is treated as return of capital).
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News