How can you protect yourself from common frauds involved in oil and gas investments?

Fraud DefinitionNowadays, the number of frauds and scams concerning oil and gas investments has reached a new height. In case you believe you have found the perfect oil and gas investment and have started believing that you can “strike it rich” with the deal, you must pay a second thought to it. It is possible that it might be a scam.

Where on the one hand opportunities related to oil and gas investments can be legitimate, on the other, many investment ventures can turn out to be fraud. If you are planning to invest money in oil wells or other similar projects, make sure that you protect yourself from the scams and frauds associated with it.


Some Elementary Steps to Avoid Being Deceived In Oil and Gas Investments

•        Question yourself and look for the answers

Fraudsters rely and attain success in their scam on the basis of just one sad truth: that irresponsible investors do not research or investigate before making oil and gas investments. There are certainly no setbacks to asking more and more information from the promoter. Investors who conduct proper research and take time to analyze things are more likely to generate higher returns.

•        Contact the oil regulatory agencies and other business organizations

It is quite possible that you may come to know about a fraud or scam by contacting the oil regulatory agencies where the wells are supposedly being drilled. Such agencies normally possess information regarding a company’s drilling history. You can even confirm whether or not the supposed firm has a track-record of success or not.

•        Before making oil and gas investments, investigate the company(ies) involved

You may contact the relevant state secretary to find out whether the company has a good standing or not. In addition, take the time to understand the company’s products and services before making oil and gas investments. Understand one thing very clearly and that is to not consider unsolicited materials as the only reason for taking an investment decision. Ascertain that the company is legitimate and the investment that you are making is going to be fruitful in the future. If a company involved is unwilling to provide you with reliable information then it is probable that you are being scammed.

•        Be acquainted with the salesperson

Spend a few hours scrutinizing the salesperson touting the oil and gas investments.  Even if you know the salesman personally, it is still a good idea to conduct an investigation to be 100% sure. Find out that whether the person selling securities has a license to do so. You may even find proof of disciplinary history by their advisors or regulators.

If you follow the above listed steps properly you have a better chance to avoid being the victim of all kinds of frauds or scams.

NASAA resource for more information about oil and gas investment fraud.

- Chris Termeer

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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