An investment is a venture that investors undertake and expect returns in the near future. Some prefer long term ventures while others prefer short term ventures. Long term ventures are undertaken by people who want returns in the long run, they are more interested in growth and expansion of their businesses than making quick returns on their initial money. For short term ventures, investors here are not willing to undertake projects that will last for more than a year without making any returns on their initial outlay. They concentrate on projects which will give them return on their money within the shortest time possible. Oil and gas investments can serve both the long term and short term investor.
Currently among the riches people in the world accumulated their wealth from energy related projects. These projects can be classified into long term projects or short term projects. Most businesses have long term goals and short term goals too.
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.
Another technique is payback period. Those investors who use this method consider the number of years it will take for them to recover the amount they invested. Decision criterion here is choosing a venture with short time period. This means that the project with big returns in initial years will definitely have short period.
Entrepreneurs in these sectors should first answer this primary question, why did such deal or project come their way. This is critical as it concerns capital intensive venture, it matches capital with project on hand. Appropriate capital will be generated by educated investors who know one or two things on such projects, they understand the technical issue and legal issues involved.
This resulting to project being over valued since the market prices then may not be the same prices now. Another challenge with such projects is structure of your deal. If you are getting into partnership you need to strike a deal that will not burden you or expose you to a lot of risk than the other partners. You should share risks proportionally according to capital contributed. One should not agree to bear all the direct costs alone.
This venture requires high technical analysis, economical, mechanical, geological and engineered analysis making it very expensive for common investors. There are few risk involved in this business and the first on is risk from people. These are the people who are handling the project such as the well operator, market brokers and others who may be involved. Their professional ability will greatly be required otherwise you may get advice from incompetent people and end up regretting later.
In limited partnership, gas or oil firms will offer their partnership units to the public at a fee and use the proceeds to drill wells and lease properties. In return they get to manage these projects. The sponsor firm takes fifteen to sixteen percentage of investment costs and eventually also get their share of profit in the same percentage. This is like a gamble and the risk one. They are highly speculative and very illiquid ventures.
Currently among the riches people in the world accumulated their wealth from energy related projects. These projects can be classified into long term projects or short term projects. Most businesses have long term goals and short term goals too.
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.
Another technique is payback period. Those investors who use this method consider the number of years it will take for them to recover the amount they invested. Decision criterion here is choosing a venture with short time period. This means that the project with big returns in initial years will definitely have short period.
Entrepreneurs in these sectors should first answer this primary question, why did such deal or project come their way. This is critical as it concerns capital intensive venture, it matches capital with project on hand. Appropriate capital will be generated by educated investors who know one or two things on such projects, they understand the technical issue and legal issues involved.
This resulting to project being over valued since the market prices then may not be the same prices now. Another challenge with such projects is structure of your deal. If you are getting into partnership you need to strike a deal that will not burden you or expose you to a lot of risk than the other partners. You should share risks proportionally according to capital contributed. One should not agree to bear all the direct costs alone.
This venture requires high technical analysis, economical, mechanical, geological and engineered analysis making it very expensive for common investors. There are few risk involved in this business and the first on is risk from people. These are the people who are handling the project such as the well operator, market brokers and others who may be involved. Their professional ability will greatly be required otherwise you may get advice from incompetent people and end up regretting later.
In limited partnership, gas or oil firms will offer their partnership units to the public at a fee and use the proceeds to drill wells and lease properties. In return they get to manage these projects. The sponsor firm takes fifteen to sixteen percentage of investment costs and eventually also get their share of profit in the same percentage. This is like a gamble and the risk one. They are highly speculative and very illiquid ventures.
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