At Payson Petroleum, we not only want to give you our wisdom on investing directly into an oil and gas investment, but we want to give you some 3rd party references as well.  This is an article that askhow.com published recently has some very good thoughts and points that any oil investment analyst should consider.  We look forward to dialog on the matter.  please contact us and we will be happy and show you the overwhelming supporting data that we have on all of our projects!  Thanks again for taking time to get to know us, and we look forward to start drilling with you soon.

Investing in oil and gas in Texas can be a promising business undertaking as Texas is the most heavily explored and drilled region for oil and gas, and has produced the most oil and gas among all U.S. states. Investors may directly invest in Texas oil and gas companies that look for new capital injections. However, like any investments, investing in oil and gas can be risky, and investors must research their target companies’ general backgrounds and business operations. A proven record of healthy relations between a company and its investors also helps ensure investment returns and safety.

1. Investment Participation

   • To invest, investors have to first find target companies that are in need of investment capital. The oil and gas industry is very capital intensive, and many oil and gas companies go back to the capital market several times before their oil or gas has yet to come online. Exploration and drilling testing wells require large amount of capital, in addition to the capital needs for later productions. Even though many capital raising by independent oil and gas companies is through private placements, investors can purchase shares through investment brokers that handle direct oil and gas investments or by contacting companies themselves.

   Company Backgrounds

   • Once investors have located certain existing investment opportunities, they should then conduct extensive research on their target companies before committing any investment capital. In the state of Texas, oil and gas companies are regulated by the Railroad Commission of Texas. A commission-registered oil and gas company thus has the license and legitimacy to operate in the state. In addition to a company’s legal background, information on a company’s management team and engineering staff is also critical to an investor’s future success. The oil and gas business is not a new business venture but rather century-old, fully developed industry, and thus, management experience in the field is a key. Furthermore, information about a company’s geologists and engineers on staff is also valuable.

   Business Operations

   • To successfully invest in oil and gas in Texas, potential investors must familiarize themselves with the oil and gas fields in different parts of Texas, including learning what are the top oil and gas producing fields in the state. Regarding their target company’s business operations, investors should ask basic questions such as how many oil or gas reserves their target company has acquired, the number of well it has drilled and completed, and what is the drilling success rate and the current production capacity. Limited reserves, high rate of dry wells and low production coming online will negatively affect future investment returns.

   Investor Relations

   • Most oil and gas companies that provide investors with new investment opportunities are not publicly traded and less regulated by government securities agencies. Therefore, the conditions of investor relations between a company and its investors often are less predictable, compared with what publicly traded companies can provide. After initial investments, investors will still rely on their companies to provide timely business and financial information so that they can make informed investment decisions along the way. To ensure a satisfactory relationship with their future companies, potential investors should seek to talk to existing or past company investors to find out whether a company has a good track record of maintaining close relationships with its investors.

University Of Texas: Oil and Gas Map in Texas