- 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
Investing in an oil well
Posted on 12/21/10 at 5:33 pm
Posted on 12/21/10 at 5:33 pm
Anyone done this? I was talking to a guy who owns an oil and gas exploration company about this. It sounds like a bit of a high risk high reward investment, but he says he is very selective and hasn't had many dry wells. The minimum investment is around $50k to $100k depending on the specific project.
4
Posted on 12/21/10 at 6:14 pm to RC
Big oil hit rate is 20% (ie, commercial wells). That's 2 out of 10. Stated differently, 8 out of 10 are not commercial.
...pretty damn close to 1 bullet in 6-chamber pistol...Russian Roulette.
...pretty damn close to 1 bullet in 6-chamber pistol...Russian Roulette.
Posted on 12/21/10 at 6:31 pm to RC
Unless you know the guy very well and understand the prospect, turn and run. With oil prices this high, there is plenty of capital floating around looking for good opportunities.
I looked at a couple of these public offerring prospects (to qualified investors, that is), and they were a little sketchy. Apparently one of the big ways to make money is to sell interest in prospects that have no chance of success. That way the finance guys can sell 200% of the prospect and pocket the difference between that and the actual drill cost (with no one the wiser). If the well hits, they are in big trouble!
Seriously, turn and run.
Edited to add: It just came back to me. I was asking about how they planned to complete the well upon success, where they would sell the oil, etc, so I could do an actual commercial evaluation. Their technical guy said they were just going to sell the reserves (i.e. the well) upon success. What the hell? You have to know this to understand what kind of money the well would even fetch if successful.
I looked at a couple of these public offerring prospects (to qualified investors, that is), and they were a little sketchy. Apparently one of the big ways to make money is to sell interest in prospects that have no chance of success. That way the finance guys can sell 200% of the prospect and pocket the difference between that and the actual drill cost (with no one the wiser). If the well hits, they are in big trouble!
Seriously, turn and run.
Edited to add: It just came back to me. I was asking about how they planned to complete the well upon success, where they would sell the oil, etc, so I could do an actual commercial evaluation. Their technical guy said they were just going to sell the reserves (i.e. the well) upon success. What the hell? You have to know this to understand what kind of money the well would even fetch if successful.
This post was edited on 12/21/10 at 6:39 pm
Posted on 12/21/10 at 7:27 pm to Bayou Tiger
I actually know the guy fairly well, which is part of the problem. I trust him not to scam me, but it would be a bit awkward if I ended up losing a $60k investment. However he was very careful not to promise any specific return. He just said most of his wells are successful. His background is in geology, and he goes after wells that the big boys didn't feel were big enough to justify their time.
He apparently gets a lot of investment from the old money uptown New Orleans people. FWIW, he didn't approach me about this. I heard about what he does and asked him about potentially investing. I have some money that I don't mind being aggressive with, I would just like to know if anyone has had success with this type of thing.
He apparently gets a lot of investment from the old money uptown New Orleans people. FWIW, he didn't approach me about this. I heard about what he does and asked him about potentially investing. I have some money that I don't mind being aggressive with, I would just like to know if anyone has had success with this type of thing.
Posted on 12/21/10 at 7:40 pm to RC
He may not be scamming you, but there's always this bit of old advice to consider. Don't invest in something you don't really understand.
Posted on 12/21/10 at 11:28 pm to RC
quote:
I have some money that I don't mind being aggressive with, I would just like to know if anyone has had success with this type of thing.
Invest only what you can afford to lose. I had the same offer one time.
Posted on 12/22/10 at 7:04 am to RC
How many successful oil companies have you heard of that need 60 grand to help them drill a well?
Are you a doctor? Thats who usually gets involved in these deals. Easy money
I'd bet 60 grand that well produces nothing but saltwater, at least that's what they'll tell you.
Are you a doctor? Thats who usually gets involved in these deals. Easy money
I'd bet 60 grand that well produces nothing but saltwater, at least that's what they'll tell you.
This post was edited on 12/22/10 at 7:05 am
Posted on 12/22/10 at 7:05 am to Sternocleidomastoid
quote:I resent that!!
Russian Roulette.
Posted on 12/22/10 at 8:14 am to RC
quote:
Anyone done this? I was talking to a guy who owns an oil and gas exploration company about this. It sounds like a bit of a high risk high reward investment, but he says he is very selective and hasn't had many dry wells. The minimum investment is around $50k to $100k depending on the specific project.
The only way you invest in O&G is if you can afford to have your 50-100k go up in smoke. Also - there are a lot of schiesters out there taking people's money. My advice to you is that if you don't know anything about the business, stay out. You can lose your arse in a minute. Another thing, if you take a working interest, your initial investment of 50-100k is only the beginning of your costs. You will have to pay your share of all operating expenses and any time the well is worked on you will be billed for your share of the costs.
Posted on 12/22/10 at 8:17 am to RC
quote:
He just said most of his wells are successful.
Be wary of geologists that claim "success". Success can mean the well was simply completed and produced. However, they won't mention the fact that the well failed to produce enough hydrocarbons to payout on the investment. Completion of the well is often referred to as a "success" when in reality it is a failure.
Posted on 12/22/10 at 8:24 am to RC
quote:He would say that, wouldn't he?
He just said most of his wells are successful.
And by "most" he could mean 50.1% are successful.
Posted on 12/22/10 at 8:36 am to LSURussian
My mother in law's boyfriend owns an oil company in Houston and I ran one of these by him. This was his advice to me. If they get to you for raising capital then run. Most of the big money insiders would have funded the well if it was worth a chit. Just my thoughts.
Posted on 12/22/10 at 8:47 am to RC
quote:
Anyone done this?
Done it twice, and both times for a lot less than the numbers you are quoting. Neither time has paid for itself, and one was a complete and total loss of money.
The sad thing is, I worked in the oil field for 7 years before doing this. I saw well logs for wells in the same field. I verified the production in the field... and I still lost. The one that was a total loss ran into so many drilling problems because of an incompetent toolpusher that it bankrupted the project.
Do yourself a favor... find a good industry analyst that's selling stock picks for small oil companies. You'll spend a lot less money, and have a lot more success.
This post was edited on 12/22/10 at 8:48 am
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News