With the price of oil so high at the moment, and likely to stay so for the forseable future, it is not surprising that many of the old oil wells are being looked at with renewed interest. Pockets of remaining oil that were not economically viable when prices were as little as $10 per barrel become much more viable when the price is $120 per barrel. As a consequence many Wildcat oil operations are beginning to reevaluate some of these ‘played out’ oil fields. The question for us is whether some of these wildcat operations are going to make us a heap of money if we invest in them.
There are a few points to keep in mind before you part with your money. The first thing to remember is that big and successful oil companies don’t need to advertise for investors. This means that if you do come across an advertisement from a company seeking investment you need to do some background research to make sure they are not some ‘fly-by-night’ operation. That is where a company like the Energy Exchange (www.enex.com) comes in handy. They know the business and can give advice on what companies are worth investing your money in and which are not, and what sort of return you can expect from that investment.
The likely minimum you will asked to invest will be somewhere between $25 – 35k for a fairly shallow well with easy drilling, more for deeper wells which might require an investment of at least $100k or more. This kind of investment is certainly not for the faint of heart, and it is important that any potential investor satisfies themselves over the quality of the seismic data the company is basing their plans on. It is important that this is of the modern, 3D type which is much more accurate, and that the company has some record of success with this kind of exploration.
If this is too rich for your blood a less risky route would be to opt for buying shares of companies actively drilling in geological areas that have a high success rate of hitting good wells. For example, the Barnett Shale and Marcellus Formations being explored by the Chesapeake Company. Smaller investors might want to consider individual stocks. But if wildcat investing excites your interest then, certainly, good advice from someone with knowledge, such as the Energy Exchange is all important.
Tags: Energy Exchange, Invest in Energy, Oil Drilling, Wildcat
