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American Oil Investments

30.09.2010
 
Pages: 123

By Mark S. McGrew


Rule Number One: Don't expect, what you don't inspect.
Rule Number Two: Caveat emptor, which means "Buyer beware".

Huge fortunes are made in the oil business. Small investments can pay off enormous rewards. Private investors, large and small, oil companies, banks, insurance companies, Universities, Hedge Funds and governments invest in oil.

In The United States of America, any person or corporation can drill for oil. In fact, 85% of all oil wells drilled in America are drilled by entities other than the major oil companies. 65% of all oil produced is produced by entities other than major oil companies.

Major oil companies, like Exxon, Arco, Shell, and Chevron are not primarily in the business of drilling for oil. Their business is predominately to buy oil wells that have been drilled by "the little guys". In 2009, Exxon, one of the largest oil companies in the World drilled 29 oil wells on the entire Earth and half of those were dry holes.

Without the little guys, America would have never become one of the foremost producers of oil on this Earth. In the late 1960s, America was the top producer of oil in the World. That ranking has consistently and reliably decreased over the past 50 years to the point that America imports more oil than it produces. Despite the established fact that only one of the 50 American States, the State of Alaska has enough oil that is accessible and available to reach market to fuel America for 200 years. Alaska has an equal amount of accessible gas as well. And oil is produced in most of those 50 States.

America imports oil from other countries in order to drain them dry, for the inevitable future when whoever controls oil will control the World. It is not a child's game.

However, many of the oil producing Nations are controlled by irresponsible children, selling their own Nation's natural wealth to build huge fantasy fortunes for themselves which will evaporate when their oil evaporates. Dubai is a classic case study. Saudi Arabia may soon fail, as their major oil source is being over produced and their greed may collapse the formation at any time. They have done little to prepare for an oil free future, except brag and strut around as if they actually do know something.

In America, there are many ways to invest in oil. Drill a well yourself on your own land. Get a lease on someone else's land, drill a well and if it is successful, split the income with the land owner with 75% for the driller and 25% for the land owner.

Companies sell stock to raise money to explore for oil or to further develop existing oil properties. Any person, American or from another Country can make a direct purchase into an oil project by buying a Working Interest, which makes the buyer a full partner with all rights, duties, responsibilities, liabilities and profits shared on an equal distribution. This is how most oil is found and produced in America.

Anyone can buy a Royalty Interest which means, as oil comes up and is sold, the buyer gets a percentage share of that income, with no responsibilities or liabilities and absolutely no right to even speak with management, let alone tell them what to do. The Royalty buyer is a very silent partner.

Working Interest or Royalty Interest can be purchased directly from the owner, through an Oil Broker or through an online auction service such as EnergyNet or OGClearinghouse

Remember Rule Number One and Rule Number Two. Pay attention, do your homework and you can do very well with auctions and direct purchases.

Remember that purchasing stock from a major broker has its risks also. The major Wall Street Stock Broker firms have floors full of lawyers working diligently to obfuscate the true facts in their oil offerings. They are also in place to destroy investors and others who dare to complain of being fleeced.

A licensed Securities Broker or Broker-Dealer, registered with the United States Securities Exchange Commission is not a testament of integrity. Rather it is a wolf in sheep's clothing, hiding in the open.

When a person chooses to invest in oil, there are many pitfalls. Imagine yourself in a room with one table. Across from you is a Broker. On the table is $100,000 in a bundle of cash. The light turns off and the room goes pitch black. After 5 minutes, the light goes back on again.

Who has that $100,000? You, or the Broker? An investor has to be smart, knowledgeable and fast. And he has to understand that the other side does not always play by any set of rules known to honest people.

That is why we have a saying in the oil business: "If you don't know the people, you had better know the deal. If you don't know the deal, you had better know the people. If you don't know the people or the deal, you had better get out quick."

Alan Todd May of Dallas Texas was an interesting fellow. He had been arrested approximately 14 times in the past 20 years, for various small time scams and cons, like credit card and hot check type things. He spent many of his adult years in jail. While in jail in Texas, he ran a fraud selling space to vendors for a convention that did not exist. He did this on telephones in the jail.

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