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Oil & Gas Project

GTII-Oil&Gas

Oil makes the world go round, and there’s no sign of that changing any time soon. Petroleum remains in high demand, as it is an efficient way to generate capital value. Petroleum also has a multitude of uses in industry, as it can be used as a lubricant and is a key component in the creation of plastics.

Natural gas, for its part, is a popular source of heating and cooking energy. It can also be converted into diesel fuel and electricity, and is essential in the creation of chemical fertilizers.

You can approach oil and gas investing in a number of different ways. For example, you can consider the industry a collection of companies providing products or services to consumers, as well as to other players in the oil and gas industry itself.

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You can approach oil and gas investing in a number of different ways. For example, you can consider the industry a collection of companies providing products or services to consumers, as well as to other players in the oil and gas industry itself.

You can also approach the industry as a commodity, and seek to profit from changes in the prices of crude oil, gasoline, diesel, and other products.

These companies or projects buy or lease land and invest money in drilling. If they strike oil, the investment can pay off 10 times over – sometimes much more if the company uses borrowed money (leverage) to finance operations. If not, they may lose nearly everything they invested in that particular project. Pure exploration companies are best suited for those with very high tolerance for investment risk. These plays are highly speculative.
These projects drill near proven reserves, hoping to unlock further value. These are somewhat less speculative, but there are never any guarantees that their efforts on any one plot of land will bear fruit.
These projects involve the acquisition of plots of land, either through lease or purchase, over proven oil and gas reserves, and seek to create a steady stream of income over and above expenses. This is generally the safest way to get involved specifically in the drilling and extraction operations, and is more of an income play than a speculative play. The risk is that the oil or natural gas will run out faster than expected.

These companies provide a nearly unlimited menu of supporting services to the oil and gas industry. Examples include transportation, shipping and logistics companies, pipeline companies, construction and rigging companies, drilling and refining hardware and equipment manufacturers, refiners, and many others.

Investing in these companies is similar to investing in any other company involved in B2B services, logistics, technology, and the like. Some of these investments don’t rely on increasing fuel prices to be profitable. For example, pipelines make money by charging a fee per barrel transported. They’ll make roughly the same amount regardless of whether fuel prices rise or fall, as long as demand remains consistent.