Compared to traditional investments, the right direct investment in oil and gas may provide solid returns with monthly cash flow, particularly in today's high oil and gas markets. In addition, direct investments in oil and gas can provide tax advantages which are not available with stocks and bonds. Furthermore, being diversified with direct investments in oil and gas can provide a hedge against the impact of high or rising energy prices on other asset classes.
Some potential advantages of direct investments in oil and gas may include:
Potential payback between 2-4 years;
Tax deductions not available to other investment classes;
Years of regular cash flow;
An investment which is less impacted by the 'up and downs' of the stock market and interest rates;
Diversification of your investments.
However with direct investments in oil and gas, there is the possibility of the loss of a portion, or all, of the investment principal if the well or wells are unsuccessful. Furthermore certain direct investments are relatively illiquid and very difficult to sell to others.
Certain direct investments in oil and gas provide a monthly payment for the oil and natural gas sold during the month.
Investments in oil and gas are less dependent on the economy or interest rates compared to traditional investments like stocks and bonds. As a result, these investments may provide a hedge against a downturn in the economy, particularly if the downturn is the result of a shortage of oil and gas.
Traditionally, investing in Oil and Gas fields has always been the territory of the qualified investors. However, a company called OilPods is determined to change this. It opens up the opportunity to retail investors to participate in the acquisition of Oil Leases of Productive Oil fields for the purpose of acquiring an income asset that through its daily production of crude oil will generate a monthly positive cashflow income for the investors. Just how secure is such method?
The company carves out 7.5% of its first lease's "Working Interest". For example, this lease is called the Zullig Project. The 7.5% of the Zullig Project is in turn divided into 240 units for individual investors to invest in, through OilPods.
OilPods offer investors a cashflow or income instrument where the monthly returns may be cashed out or re-invested to increase the constantly "income" producing units. This directly increases the cashflow return to the investors monthly.
The duration of the return depends on the mineral reserves in the land. The first monthly income payable to investors commence immediately upon the completion of title transfer, which currently takes 6 months from the date of contract. The conservatively projected return is between 7 to 15%.
OilPods collaborates with US based, Powder River Basin and Gas Corporation ( rel=nofollow [http://www.powderrivergascorp.com/]www.powderrivergascorp.com/), a publicly traded Colorado corporation trading under the symbol PRVB. PRVB acquires and explores Oil and Gas properties. Lets examine the income statement of PRVB.
For FY2006 - 2004,
Net Income : $5,725,000 $699,000 $1,008,000
Cash And Cash Equivalents : $2,733,000 $383,000 $169,000
Income Before Tax : $8,757,000 $1,511,000 $1,008,000
The Company's net revenues from oil and gas sales for the first six months of 2007 increased to $1,566,833 from $795,797 for the first six months of 2006. This represents an increase of $571,036 or approximately 71.8% over the previous year. The Company also had net revenues from working interest sales of $9,540,843, an increase of $325,843 or approximately 3.5% over the same period of 2006. Powder River Basin Gas Corp. had a net profit of $6,813,727 before income taxes for the first six months of 2007. This represents a Basic Income Per Common Share of $0.04.
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PRVB delivered a set of good financial results. Despite such, its share price has been plunging from highest $0.46 to the current $0.23 (on Nov 1, 2007). For the past few years, PRVB didn't declare any dividend payout to shareholders, cited reason such as capital for business expansion. Could it be this reason that investors start to abandon PRVB shares causes it to depreciate?
Nontheless, with the recent high oil price, early birds of OilPods investors are definitely on cloud nine! For keen investors, please visit rel=nofollow [http://www.oilpods.com/]www.oilpods.com/ for more information.
Aaron Loh
Founder and Director of Wealth Learning International http://www.aaronloh.com
Aaron Loh is an avid learner and is always in the pursuit for success in what he's passionately involved in - helping others to constantly learn and upgrade themselves. He faced many setbacks and challenges in this journey. With his strong commitment and determination, plus God's blessing, he successfully changed the lives of thousands and thousands of people.
Article Source: [http://EzineArticles.com/?Passive-Income-From-Oil-And-Gas-Investments&id=818961] Passive Income From Oil And Gas Investments
Thursday, June 3, 2010
Three Key Factors to Oil and Gas Investing
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 a higher 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:
1) Is the Oil Stock Over valued?
This is probably the first question you should ask yourself as a lot of oil stocks are more hype than actual value. A good indicator of an oil stocks value is the oil stocks price earnings ratio. If 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 is due to an aggressive growth strategy including a recent land acquisition or a large drilling program that is to take place in the future, attempt to determine the impact these events will have on the oil stocks earnings. In a lot of cases the future event's impact on the oil stock will not be what the investment community forsees.
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2) Trust Unit versus Common Share
There are a significant amount of oil and gas stocks which have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and defer tax to unitholders. However, the distributions that these oil stocks (trust units) pay out require a significant amount of cash flow and therefore reduce the growth capability of the specific oil stock. Therefore if you are looking for an oil stock which will provide you with steady cash flow than an oil stock which is a trust unit is your choice. Whereas if you would like to hold an oil stock in your portfolio which has a high growth potential you should stay away from oil stocks which are trust units. This is because normal public company shares usually do not pay out large dividends to shareholders as 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 which are more likely to generate shareholder value rather than just paying these funds out to unitholders.
3) Natural Gas versus Oil
Investors should be aware what percent of their oil and gas stocks interest is in natural gas versus oil. This is important as if you buy a natural gas focused oil and gas company and the price of natural gas is at an all time high then this is probably not the time to buy. However this is probably a good time to consider selling depending on what commodity experts feel the price of natural gas will do in the years/months to come. The same goes for oil stocks, although it is our feeling that the price of oil is much less volatile as it is doubtful the price of oil will be reduced by 50%. Whereas the price of natural gas can easily be reduced by 50% in a given year. If you are planning on holding your oil and gas investment for an extended period of time then do not fret too much about the commodity prices as they should increase with inflation over an extended period of time. If you are buying and selling oil and gas stocks for short periods of time, then commodity prices become extremely important as you can make a significant return in a short period of time.
By considering the above three factors you will be on your way to earning black gold. All oil and gas investors should also monitor insider trades of oil and gas public companies. rel=nofollow http://www.findst.com is a invaluable resource for oil and gas investors as it helps oil and gas investors monitor their rel=nofollow oil and gas stocks.
Carmen is an Insider Trading Analyst for Findst, an Oil and Gas Portal focusing on oil and gas stocks and oil and gas jobs specifically oilfield jobs and oil rig jobs. http://www.findst.com
Article Source: [http://EzineArticles.com/?Three-Key-Factors-to-Oil-and-Gas-Investing&id=190869] Three Key Factors to Oil and Gas Investing
1) Is the Oil Stock Over valued?
This is probably the first question you should ask yourself as a lot of oil stocks are more hype than actual value. A good indicator of an oil stocks value is the oil stocks price earnings ratio. If 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 is due to an aggressive growth strategy including a recent land acquisition or a large drilling program that is to take place in the future, attempt to determine the impact these events will have on the oil stocks earnings. In a lot of cases the future event's impact on the oil stock will not be what the investment community forsees.
Click Here!
2) Trust Unit versus Common Share
There are a significant amount of oil and gas stocks which have converted to become trust units. The main purpose of these oil stocks becoming trust units is to save and defer tax to unitholders. However, the distributions that these oil stocks (trust units) pay out require a significant amount of cash flow and therefore reduce the growth capability of the specific oil stock. Therefore if you are looking for an oil stock which will provide you with steady cash flow than an oil stock which is a trust unit is your choice. Whereas if you would like to hold an oil stock in your portfolio which has a high growth potential you should stay away from oil stocks which are trust units. This is because normal public company shares usually do not pay out large dividends to shareholders as 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 which are more likely to generate shareholder value rather than just paying these funds out to unitholders.
3) Natural Gas versus Oil
Investors should be aware what percent of their oil and gas stocks interest is in natural gas versus oil. This is important as if you buy a natural gas focused oil and gas company and the price of natural gas is at an all time high then this is probably not the time to buy. However this is probably a good time to consider selling depending on what commodity experts feel the price of natural gas will do in the years/months to come. The same goes for oil stocks, although it is our feeling that the price of oil is much less volatile as it is doubtful the price of oil will be reduced by 50%. Whereas the price of natural gas can easily be reduced by 50% in a given year. If you are planning on holding your oil and gas investment for an extended period of time then do not fret too much about the commodity prices as they should increase with inflation over an extended period of time. If you are buying and selling oil and gas stocks for short periods of time, then commodity prices become extremely important as you can make a significant return in a short period of time.
By considering the above three factors you will be on your way to earning black gold. All oil and gas investors should also monitor insider trades of oil and gas public companies. rel=nofollow http://www.findst.com is a invaluable resource for oil and gas investors as it helps oil and gas investors monitor their rel=nofollow oil and gas stocks.
Carmen is an Insider Trading Analyst for Findst, an Oil and Gas Portal focusing on oil and gas stocks and oil and gas jobs specifically oilfield jobs and oil rig jobs. http://www.findst.com
Article Source: [http://EzineArticles.com/?Three-Key-Factors-to-Oil-and-Gas-Investing&id=190869] Three Key Factors to Oil and Gas Investing
Saturday, May 9, 2009
Oil and Gas Jobs Vacancy
Our clients who are reputable oil and gas companies, carrying out offshore and onshore oil and gas activities are looking for staff to fill in the oil and gas openings that they have. To see if you meet the requirements for these oil and gas jobs, check any of the links below.
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