Mineral Acquisitions

Oil and gas investing begins with the investor determining what oil and gas stocks he should invest his hard earned cash into. While some will focus on oil and gas stocks which yield a larger return on investment opportunities like oil sands stocks and Canadian oil stocks, we feel that you should start by reviewing the next key three factors:

Is the Oil Stock Over valued? This is probably the first question you should ask yourself as a great deal of oil stocks will be more hype than actual value. The best indicator of an oil stocks value is the oil stocks price earnings ratio. Should the price earnings ratio is greater than 20, we would suggest you further investigate why the oil stocks price earnings ratio is so high. If it's due to an aggressive growth strategy including a recent land acquisition or a large drilling program which is to come about down the road, try to determine the impact these events may have on the oil stocks earnings. In a whole lot of cases the future event's impact on the oil stock will not be what the investment community forsees.

You will find a vital quantity of oil and gas stocks which have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and defer tax to unitholders. In contrast, the distributions that these oil stocks (trust units) pay out require an important amount of cash flow and thus reduce the growth capability of the specific oil stock. Therefore in the event that you are trying to find an oil stock that may supply you with steady cash flow than an oil stock which is a trust unit is your choice. Whereas if you would want to hold an oil stock in your portfolio which has a high growth potential you should keep away from oil stocks which are trust units. This is only because normal public company shares usually don't pay out large dividends to shareholders as they prefer to reinvest their hard earned cash in their capital program. Oil and gas capital programs include purchasing land, mineral rights, drilling programs etc., all of that are more very likely to generate shareholder value rather than just paying these funds out to unitholders.

Investors should be aware what percent of their oil and gas stocks interest is in natural gas versus oil. This really is important as if you buy a gas focused oil and gas company as well as the cost of gas will be at an all time high then this is probably not the period to buy. However this is probably the best period to consider selling based on what commodity experts feel the cost of natural gas will do within the years/months to come. The same goes for oil stocks, though it is our feeling that the price of oil will be much less volatile since it is doubtful the cost of oil will be reduced by 50%. Whereas the price of gas will be able to be reduced by 50% in a given year. In the event that you are planning on holding your oil and gas investment for a lengthy period of time then don't fret too much about the commodity prices because they should increase with inflation over an extended period of time. In the event that you are buying or selling oil and gas stocks for short time, then commodity prices become extremely important when you can make a significant return in a short period of time.

It appears that everybody is either experiencing or knows someone whose experiencing financial difficulty. Many are took the barter-trade route of Craigslist to provide the extras for their family as well as others have decided to lease rooms or sell items of property.

An often overlooked and lesser-known source of revenue is the option to sell oil and gas leases or a mineral rights lease to generate income from deep-pocketed petroleum and mining companies with whom you may enter into "working interest" agreements. A lot of men and women decide to sell oil and gas leases on their property as being an easy way to generate extra income from land that they have already invested in. Working interests are beneficial to the property owner as the responsibility of exploration costs and mineral production or petroleum extraction are placed upon the company and not the person. Individuals may decide to sell oil and gas leases to oil and gas exploration companies in exchange for a portion of the proceeds of the land on which exploration firms have agreed to invest in.

If you've ever driven down a highway and seen a lone pump jack, common in areas such as West Texas, then you've seen a land owner who has let his land to an oil company. In areas where oil isn't common or in mountainous areas where useful materials could be located, a choice for many is to sell mineral rights to extract: copper, gold, quartz, topaz or amethyst, all of which are profitable commodities. As a result of the high degree of geological diversity through the United States there's an excellent chance that wherever you own land you may sell oil and gas leases to working interests - effectively generating revenue with little to no initial investment. Some property owners have received payouts in the millions of dollars for a 100 acre oil rights lease!

With an ever-growing requirement for energy production domestically many land owners, especially within the Southern USA, choose to sell oil and gas leases. The average royalty is approximately 1/8th of the production - meaning that roughly $125,000 per $1,000,000 per working interest is generated for oil and gas royalty. This is quite the hefty profit for little-to-no upfront investment. Typically the exploration/extraction company shoulders the logistical burden of processing the site, which could require specialized equipment and expertise that's generally not possessed by the typical landowner.

If you own land it may be in your interest to consult with a Mineral Title Analysis or oil and gas exploration service near you. You might even wish to contact and conduct your own geological survey. Many individuals aren't even aware of the composition of their land as well as for little-to-no cost you might find yourself literally sitting upon a gold mine. You never know. Your lifetime financial security could possibly be just around the corner.