Acquisition Of Mineral And Leasehold Rights

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 an increased return on investment opportunities like oil sands stocks and Canadian oil stocks, we feel that you should begin by reviewing the following key three factors:

Is the Oil Stock Over valued? This really is probably the very 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 really is due to an aggressive growth strategy including a recent land acquisition or a large drilling program which is to take place in the future, attempt to determine the impact these events may have on the oil stocks earnings. In a whole lot of cases the future event's effect on the oil stock will not be precisely what the investment community forsees.

You'll find a considerable amount of oil and gas stocks that have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and defer tax to unitholders. Alternatively, the distributions that these oil stocks (trust units) pay out require a vital quantity of cash flow and as a consequence reduce the growth capability of the specific oil stock. Therefore in case you are searching for an oil stock that may present you with steady cash flow than an oil stock which is a trust unit is your decision. Whereas if you would want to hold an oil stock within your portfolio which has a high growth potential you should steer clear of Oil and Gas Leasing stocks which are trust units. It is because normal public company shares usually do not pay out large dividends to shareholders since 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 more 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 gas versus oil. This is important as if you buy a natural gas focused oil and gas company and also the price of natural gas will be at an all time high then this really is probably not the time for you to buy. However this really is probably an excellent time to consider selling according to what commodity experts feel the price of natural gas shall do in the years/months to come. The same goes for oil stocks, even though it is our feeling that the cost of oil is significantly less volatile since it is doubtful the cost of oil will be reduced by 50%. Whereas the cost of natural gas can simply be reduced by 50% in a given year. In the event you are planning on holding your oil and gas investment for an extended period of time then don't fret too much about the commodity prices as they should increase with inflation over a very long time period. If you're buying and selling oil and gas stocks for short periods of time, then commodity prices become extremely important when you may make a significant return in a short time frame.

It appears that everybody is either experiencing or knows someone whose experiencing financial difficulty. Many are have taken the barter-trade route of Craigslist to provide the extras for their family and 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 possibly a mineral rights lease to generate income from deep-pocketed petroleum and mining companies with whom you can enter into "working interest" agreements. Lots of individuals decide to sell oil and gas leases on their own 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 burden of exploration costs and mineral production or petroleum extraction are placed upon the company and not the individual. 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 have ever driven down a highway and seen a lone pump jack, common in areas for example West Texas, then you've seen a land owner who has let his land to an oil company. In areas where oil is not common or even in mountainous areas where useful materials could be located, an option for many is to sell mineral rights to extract: copper, gold, quartz, topaz or amethyst, all of that are lucrative commodities. Because of the high level of geological diversity across the United States Of America there is the best chance that irrespective of where 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 a growing need for energy production domestically many land owners, especially within the Southern United States, choose to sell oil and gas leases. The average royalty will be roughly 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 is generally not possessed through the typical landowner.

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