How to Invest in Oil
There are many great reasons to invest in oil, and if you know how to invest in oil drilling and oil exploration, you can open yourself or your investment group up to some tremendously profitable opportunities. But if you’ve never invested in oil before, you may be wondering about the basics. Here’s what you should know about investing in oil.
Why Invest in Oil?
The first question to answer is why should you invest in oil in the first place? If you look around you, the answer should be obvious. People use oil in vast quantities every single day — it’s one of the energy resources the world is most reliant upon. Oil extraction companies pull almost 100 million barrels of oil from the earth every day to meet the demand, and that demand is only growing.
Some people are under the misconception that the consumer desire for oil is dropping, but this is not the case. Over the next few decades, as the demand for products that use oil and more technology that requires fuel develops, experts expect oil consumption to rise significantly — not fall. If you invest in oil, the only question will be how much can you get, not whether you can sell it at a great price.
How Do You Invest in Oil?
One option to invest in oil is to buy one or more oil wells directly. While there can be benefits to this — such as being able to keep all of the profits for yourself or your company — there can be headaches, as well. You’ll have to be savvy to make sure you acquire oil-producing land at a reasonable price. Then, there will be the matter of obtaining the necessary equipment and maintaining it, as well as finding refiners and distributors to sell your oil to.
Many speculators interested in the oil sector instead prefer to invest in an existing oil and gas extraction company. This way, your money is already with experts who know where the oil is, how to get it and how to sell it.
An oil and gas extraction company can make money from oil production in many ways, and if you invest in that company, you stand to benefit from all of it. Depending on the company, they can make money in many ways:
- By directly drilling, extracting and selling the oil
- Refining oil from other producers if they own a refinery
- Offering oilfield services
- Helping entities that own oilfield set up their own oil rigs
- Selling or renting equipment to those entities that own oilfields
- Providing management and advice
If you’d like to learn how Viper Capital Partners is helping accredited investors benefit from oil exploration, please contact us for more information.