There are a 1001 ways to play the oil and gas market. You have new drilling, rigs, leases, royalty trusts, frac packs, work overs, sidetracks, water flushing, reentries, having your own O&G investment firm and buying royalty interest directly in wells.
It is time now to introduce the next great way to make money from oil and gas- Energy Mutual Funds!
No matter how you own oil and gas if prices go up and you own it you are making money. Making money is making money I don’t care how you look at it. Mutual Funds can be held long term. Let the managers of the mutual funds manage the funds. Sit back and watch them to see what companies they are buying. Mutual Fund managers get paid on profits. If they are making you money you will stay invested and they will make money. If the returns are not good you can always invest in a different mutual fund. There are tons to choose from.
Proven Producing Reserves
Oil and gas prices are double where they were 20 years ago. Technology is double where it was 20 years ago. Put high prices technological efficiency and you have a formula for success.
PPR(Proven Producing Reserves) are the new thing in the oil business. This way of making money has always been around the oil business but the packaging was wrong. In the past brokerage firms or investment firms would have investors buy Wildcats packaged inside PPR’s. You would buy into some already producing wells with half of the money and then the other half of money would be blown drilling risky wildcats. Investors thought it was great deal. They thought it was a hedge against risk. Wrong!
Investors are smarter now. Even if the average investor isn’t smarter you are! Buy PPR’s only if you want steady returns. Make sure you are buying existing production not a bait and switch. Make the company offering the deal show you well by well what you are getting. If they offer you 20 producing wells and only 10 are running then they are telling you they think the other 10 wells that will be drilled with your money will work.
PPR’s are set up the same way other projects are. Look for the normal project set up. Anytime you get flustered refer to the chapters in the program
Remember when we used to talk about America as the only part of the world? Now the world is coming to us and we are going to them. It is easier to travel anywhere you want now then ever. Big American Companies like Coca Cola and General Electric used to do most of there business in America. Fast forward to 2010 and these corporate giants and many others do more business outside the US then inside the US.
Types of opportunities – Stimulation- the processes to enlarge old channels, or create new ones, in the producing formation of a well designed to enhance production.
After a well runs dry you plug it. New technology has provided new ways to make money on wells that have been plugged. Many new techniques are emerging we can take advantage of.
Proved Developed- reserves expected to be recover with fairly decent odds
Proved Undeveloped- a well/field proved with drilling but not produced yet
Stripper Well- The final state in the life of a producing well producing no more then ten barrels daily. Make sense when when oil prices are high. Cheap buyins
Secondary recovery- a broad term encompassing any method of extracting oil from a reservoir that has exhausted its primary production.
Re-entry- re-entering an already plugged well using new technology that will improve previous production or prices of natural gas and oil have risen significantly and it becomes worth while to re open the well for production
Side Track- a re-drill that offshoots an existing drill(usually runs alongside borehole to hit structure at high point, or go around barrier)
You may also come across sidetrack opportunities. A side track is a red rill that offshoots an existing drill. Sidetracks are great for going around barriers or trying to hit the reserves at the high point. Side tracks can be used if a company comes in to drill a well and they produce the well until it is depleted. When the well is depleted they plug it and move on. With new advances in science you might be able discover that they were not high enough on structure to get all the reserves that were in that pay zone. If this opportunity arises and you can prove that there are enough reserves to be able to re-enter the hole but drill side ways or diagonally to hit the reserves at higher point go for it.
Work over- a procedure on a producing well to either restore or increase production
Up dip- drilling/producing on a higher position on a structure then others well/wells
Upside Potential- A field that isn’t much now but has the ability to really be something of value later.
Marginal Well that’s shut in could be worked on and improved. A well which is producing oil or gas at such a low rate that it may not pay for the drilling.
Re-completion- Work on a well to produce a zone from a different formation either higher or lower with the bore hole
Rework operations- any major operation performed on a well after its completion in an attempt to restore or induce ability to produce.
Lets say an investment firm calls you up and says “Hey I have a well with proven reserves that we are going to be doing a rework on. Are you interested?” Let me tell you about reworks. A rework is a well that has already been drilled but may be it hit a fault, missed a pay zone or the operator simply ran out of money to drill the well.
Here is what we would be looking for. With reworks where the pay zone with the reserves has already been penetrated the pressure may not be as great when producing from the same zone. The less pressure the slower the oil and gas produce. Instances occur all the time where you can take advantage of another’s misfortune. As bad as that may sound it is true. Let’s say that a well has been drilled and the company hit’s a fault line. The company spent the money to have 3D seismic data done to make sure the reserves were their prior to drilling but they accidentally hit a fault. If that was all the money that a company had to drill the well and they can’t afford fix their mistake and continue to hold the leases they are out. At this point you can come in purchase the leases move over about 100 feet or whatever the distance is to get far enough away not to hit the fault and drill to be able to produce the reserves that the other company found but was not financially sound enough to produce. You hear stories like this all the time within the industry.
Dual Completion- A single well that produces from separate formations at the same time
First rights opportunities – The right to invest in a project but not the obligation
The new latest and greatest method for finding oil is under salt domes. Brand new technology keeps finding us ways to make more money.