Starting in January 2006.
Investing in gas and oil is all about lowering your risk and spreading your money out over as many new oil and gas wells as possible so that you can build a portfolio of new wells that can make money for you. You need to be able to do this while taking advantage of the chances to invest in as many fields as possible.
Your goal should be to own a working interest or take part directly in multiple leasehold interests in several or many areas of mutual interest. In our business, these leasehold interests are in places called "Areas of Mutual Interest" (AMI).
You must of course find and trust the right operators, company, or companies before you can invest with them. Also, in almost all cases, don't invest with a company unless it is registered and licenced with the NASD and its brokers are licenced and registered in your state.
You need to find out if this is a requirement, and you shouldn't get an offer to invest or a memorandum until the licenced and registered company or companies you are looking at have given you permission to do business with them. It's a two-way street—they need to know who you are, and you need to know about them before you decide to invest.
SIPC insurance is only available if you invest with both registered, licenced broker/dealers and registered representatives. Don't skip this important step if you want to be successful in our industry.
Investing in many "areas of mutual interests" or "leasehold interests" with multiple operators allows you to benefit from the investment strategies of many operators and prospect generators, not only to realise the benefits of diversifying with many very successful operators and prospect generators, but also to be able to directly profit from their major discoveries, which can and do happen in the most profitable areas, where large commercial and recoverable quantities are found.
You need the right investment structure and legal entity to be able to invest small amounts of your hard-earned money in many wells. This lets you diversify your portfolio and get all of the tax benefits you can from your investment at the same time. Direct participation, working interest ownership is how the industry or people in the business invest in new oil and gas drilling prospects. This is also how they get fractional oil and gas ownership in both exploratory and development wells in the US.
Let us know if you'd like more information about how to do your due diligence to find the right companies to do business with and what to look for when you do.
