Get The Best Returns Out Of Oil And Gas Investments
This is a project which is very risky but with satisfactory returns, these two products are currently the most demanded commodity in the world. This is because of their industrial use. Prices of these products are too high creating a lot of interest to investors to undertake such ventures. Irrespective of it being a lucrative business, security regulators have warned potential investors of possible oil and gas investments dangers and scam that exist.
Business who wish to grow and expand with go for long term projects while those business who want to make quick return on their capital invested they will go for the short term investments. There are several techniques that can be used to evaluate the viability of a project even before undertaking it.
The other technique is internal rate of return, it evaluates how much return an investor will get from a certain project, and the choosing criteria is an investor chooses a project with high internal rate of return. If someone wants to take up the gas and oil venture they should first study the market wisely and identify markets trends so that they can make wise decisions on when to invest.
Some of risk facing this industry are reserve risk, this risk involve not striking a big enough reservoir to meet your demands. Before starting drilling process first carry out a series of tests on the soil to determine or predict with reasonable accuracy the size of reservoir to expect. Another challenge is price risk, the prices of gas and oil are state controlled or sometimes left to market demand and supply forces to set prices.
The other technique to evaluate project viability is by use of internal rate of return. This method is easier to use and calculate and is also accurate given accurate information. Before undertaking such big venture, an investor should first carry out a study on the market trend, determine whether buying shares in an oil and gas company is the most profitable decision or participating directly in the drilling and refining process.
Those who want to take up this venture should be in a position to evaluate risk involved properly and come up with mitigation measures to protect them from such risks. This business is not for those with faint heart or those investors who are risk averse, it is for risk takers. This is because the venture is extremely risky.
This venture may take any of following forms, partnership with limited liability, buying some shares in lease contracts and hence becoming a shareholder who is entitled to interest and lastly general partnership. Each category has different tax consequences and share liabilities differently too. General partnership lack limited liability and therefore the partners are personally liable, this means their properties can be used to recover any debt by the partner.
If cementing is not done properly is can leak gas or oil behind casing instead of it flowing smoothly inside the casing. Reservoirs sometimes will call for sand screening and use of specialized chemicals which can corrode pipes used especially if temperatures are too high. Another risk is reserve risk, the size of reservoir will ultimately determine the economic sense of such projects.
Business who wish to grow and expand with go for long term projects while those business who want to make quick return on their capital invested they will go for the short term investments. There are several techniques that can be used to evaluate the viability of a project even before undertaking it.
The other technique is internal rate of return, it evaluates how much return an investor will get from a certain project, and the choosing criteria is an investor chooses a project with high internal rate of return. If someone wants to take up the gas and oil venture they should first study the market wisely and identify markets trends so that they can make wise decisions on when to invest.
Some of risk facing this industry are reserve risk, this risk involve not striking a big enough reservoir to meet your demands. Before starting drilling process first carry out a series of tests on the soil to determine or predict with reasonable accuracy the size of reservoir to expect. Another challenge is price risk, the prices of gas and oil are state controlled or sometimes left to market demand and supply forces to set prices.
The other technique to evaluate project viability is by use of internal rate of return. This method is easier to use and calculate and is also accurate given accurate information. Before undertaking such big venture, an investor should first carry out a study on the market trend, determine whether buying shares in an oil and gas company is the most profitable decision or participating directly in the drilling and refining process.
Those who want to take up this venture should be in a position to evaluate risk involved properly and come up with mitigation measures to protect them from such risks. This business is not for those with faint heart or those investors who are risk averse, it is for risk takers. This is because the venture is extremely risky.
This venture may take any of following forms, partnership with limited liability, buying some shares in lease contracts and hence becoming a shareholder who is entitled to interest and lastly general partnership. Each category has different tax consequences and share liabilities differently too. General partnership lack limited liability and therefore the partners are personally liable, this means their properties can be used to recover any debt by the partner.
If cementing is not done properly is can leak gas or oil behind casing instead of it flowing smoothly inside the casing. Reservoirs sometimes will call for sand screening and use of specialized chemicals which can corrode pipes used especially if temperatures are too high. Another risk is reserve risk, the size of reservoir will ultimately determine the economic sense of such projects.
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