When considering whether or not to invest a portion of your assets into American oil, you must come to an understanding of risk inherent in this type of endeavor. As i have said before, if you are not a high networth or accredited investor limit your exposure to sector mutual funds and the like.
If you are an accredited investor, take a closer look at direct participation oil & gas deals.
Typically, there are two types of oil drilling deals, from a broad sense……..Wildcats & Developmental Deals. Wildcats are the most aggressive types of drilling programs where oil has not been found within 1 mile of the drilling location, but the geologist might feel based on characteristics of the underlying lease that it is attractive to test for a producing well. Developmental Wells, which are the only kind I have ever invested in, are wells within 1 mile of known oil production. Many times when I have invested in these deals, I would see the adjacent leases’ pumpjacks moving up and down just a few thousand feet away. The concept of a tangible investment is very reassuring in the wake of the Dot Com bubble, thus the ability to physically see a...
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