Check before you invest in oil and gas

People have found a new investment option. We’re talking about oil and gas investments. Oil and gas markets have seen a steady rise in the years since the recession hit the global economy. Many astute investors have seen that oil and natural gas are the two most sought out sectors which can yield profits. They know that if they invest in oil and gas they will very likely see favorable returns in future. Well, there are a few places where one must invest wisely. Oil and gas investments are one such type. Here one can have lucrative returns and high profits, yet on the other hand one can potentially face huge losses which can be difficult to recover from.

In the course of looking for an ideal way to invest in oil, one might find certain companies which are running a scam. So before making any oil and gas investments one must know the history of the company involved. One must do thorough research on the company and calculate the future prospects of investing in it. But there are also some very legitimate companies which simply need money as they are generating oil or gas, or are providing services to the oil and gas sector. So before making any investment, be sure about the company’s past performances, and consider consult market veterans for a future scope of such a company.

There are signs, ways by which one can easily know that a company is running a scam or not. One of the most common scams occurs when the company says that it has found an oil well which will definitely give wonderful results in the near future, but does not disclose critical details about the well in question, like where is it, for how long will it generate oil, and etc. So before making the decision to invest in oil, make sure that the company involved has given full disclosure about the oil well, or the gas field, so found.

In the same way, if the company tries to assure you that there is no risk involved in the oil and gas investment in question, and tries to persuade you to invest in oil with lofty promises that sound too good to be true, then that is likely a scam. The reason is that oil and gas investments are inherently risky, one cannot predict that the particular oil well or gas field will surely give positive returns for long, and it is impossible to make a promise of zero risk in this industry. Another sign is that the company has made a discovery of an oil well, and would like to share the profit with investors. Think wisely: why would someone tell an unknown person about the discovery he or she has made and want to share the profit from that discovery with an unknown person?

The above stated signs about a potential scam may be true, or they may not, but it surely does build a doubt in our minds, and one does not like to invest in a situation where there is fifty percent chance of a scam.

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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