Mineral And Leasehold Acquisitions

Oil and gas investing begins with the investor determining what oil and gas stocks he should invest his hard earned cash into. While some will focus on oil and gas stocks which yield a larger return on investment opportunities like oil sands stocks and Canadian oil stocks, we feel that you should start by reviewing the following key three factors:

Is the Oil Stock Over valued? This is probably the very first question you should ask yourself as a lot of oil stocks will be more hype than actual value. A good indicator of an oil stocks value is the oil stocks price earnings ratio. In the event the price earnings ratio is greater than 20, we would suggest you further investigate why the oil stocks price earnings ratio is so high. If it is due to an aggressive growth strategy including a recent land acquisition or perhaps a large drilling program which is to come about later on, attempt to determine the impact these events shall have on the oil stocks earnings. In a lot of cases the future event's impact on the oil stock will not be precisely what the investment community forsees.

There are actually an important amount of oil and gas stocks that have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and my review here defer tax to unitholders. However, the distributions that these oil stocks (trust units) pay out require a vital amount of cash flow and therefore reduce the growth capability of the specific oil stock. Therefore if you're searching for an oil stock which can present you with steady cash flow than an oil stock which is a trust unit is your decision. Whereas if you would like to hold an oil stock in your portfolio which has a high growth potential you should steer clear from oil stocks that are trust units. It is because normal public company shares usually don't pay out large dividends to shareholders because they prefer to reinvest their hard earned cash in their capital program. Oil and gas capital programs include purchasing land, mineral rights, drilling programs etc., all of which are more likely to generate shareholder value rather than just paying these funds out to unitholders.

Investors should be aware what percent of their oil and gas stocks interest is in natural gas versus oil. This really is important as if you buy a natural gas focused oil and gas company and the cost of gas is at an all time high then this really is most likely not the time for you to buy. However this really is probably an excellent time for you to consider selling according to what commodity experts feel the cost of natural gas will do in the years/months to come. The exact same goes for oil stocks, although it is our feeling that the price of oil is significantly less volatile as it is doubtful the price of oil will be reduced by 50%. Whereas the cost of gas will likely be reduced by 50% in a given year. In the event that you are planning on holding your oil and gas investment for a lengthy period of time then don't fret too much about the commodity prices since they should increase with inflation over a lengthy time period. If you're selling and buying oil and gas stocks for short time frames, then commodity prices become extremely important as you could make a substantial return in a short time frame.

It seems that everybody is either experiencing or knows someone whose experiencing financial difficulty. Many are have taken the barter-trade route of Craigslist to provide the extras for their family and others have decided to lease rooms or sell items of property.

An often overlooked and lesser-known source of revenue is the option to sell oil and gas leases or a mineral rights lease to generate income from deep-pocketed petroleum and mining companies with whom you may enter into "working interest" agreements. Many people choose to sell oil and gas leases on their property being an easy way to generate extra income from land that they've already invested in. Working interests are beneficial to the property owner as the responsibility of exploration costs and mineral production or petroleum extraction are placed upon the company and not the person. Individuals may opt to sell oil and gas leases to oil and gas exploration companies in exchange for a portion of the proceeds of the land on which exploration firms have agreed to invest in.

If you have ever driven down a highway and seen a lone pump jack, common in areas for example West Texas, then you have seen a land owner who has let his land to an oil company. In areas where oil isn't common or even in mountainous areas where useful materials could possibly be located, an alternative for many is to sell mineral rights to extract: copper, gold, quartz, topaz or amethyst, all of which are profitable commodities. Due to the high amount of geological diversity across the United States Of America there's a great chance that wherever you own land you may sell oil and gas leases to working interests - effectively generating revenue with little to no initial investment. Some property owners have received payouts in the millions of dollars for a 100 acre oil rights lease!

With a growing requirement for energy production domestically many land owners, especially in the Southern United States Of America, decide to sell oil and gas leases. The normal royalty will be roughly 1/8th of the production - meaning that roughly $125,000 per $1,000,000 per working interest is generated for oil and gas royalty. This really is quite the hefty profit for little-to-no upfront investment. Typically the exploration/extraction company shoulders the logistical burden of processing the site, which could require specialized equipment and expertise which is generally not possessed through the typical landowner.

If you own land it may be in your interest to consult with a mineral or oil and gas exploration service near you. You could even wish to contact and conduct your own geological survey. Lots of people are not even aware of the composition of their land and then for little-to-no cost you may find yourself literally sitting upon a gold mine. You never know. Your lifetime financial security could be just nearby.