5 Ways to Invest in Oil and Gas

There are various ways to invest in the petroleum industry. Without a doubt, each one of them

has their list of pros and cons. Let us have a look at five ways to invest in the petroleum

industry.

1. Stock in oil companies: one of the easiest way to invest in oil and gas is to buy shares.

However, you must know that there is a great risk in investing your money here. The pro

here is you just need to buy a stock, that’s it. You don’t need to be active here

2. Work as an interest partner in the drilling program: this investment has its own set of

risks. For example, you can even lose your entire investment. You can place this

investment in the “gamble” category because it is highly volatile in its rewards. You

must only invest here once you have enough money to invest in various drilling

programs.

3. Stock in royalty interests: buying stocks in oil and gas royalty investment is quite

different from purchasing shares in the oil industry. There is an advantage here for

people who can’t afford to lose the value of their investments. Here, there is no

business operation. You will receive cash from the royalties.

4. Existing working interest in a lease: purchasing an interest in a working oil or gas lease

is far less risky than investing in a drilling program. The pro here is the production of the

well remains constant and it is easier to evaluate the cash flow. However, the biggest

advantage here is a superior return. The negatives are that you are still at the risk of

lawsuits from on site accidents. Obviously, we can’t predict them. But, the biggest

drawback here is you need to have some basic knowledge about the oil and gas well.

Further, you also need to dig a little deeper to know who wants to sell their working

interests.

5. Oil and gas royalties from mineral owners: buying royalties from the owners have

several pros. To begin with, the return can be huge and secondly, buying royalties

means you are purchasing the minerals. This means if another oil zone is discovered you

will be entitled to the royalty cash flow. However, for this you need to know how to buy

mineral rights and to find the owner who wants to sell their mineral rights.

As you can see, there are many methods to invest in the oil and gas industry. Pick up the

method that suits your needs.