Oil and natural gas are hard assets with the potential to generate high returns and a source of passive income. Their negative correlation to mainstream investment opportunities, such as stocks and bonds, renders investments in the energy sector resistant to short-term market fluctuations. If you are looking to diversify your investment portfolio with potentially profitable and lower-risk investment opportunities, Fig Tree Capital Ventures can be your trusted partner for direct investment opportunities in oil and gas. The blog discusses four factors that are central to decision-making when planning to invest in oil and gas projects.
1. Annual Cash Flow
Oil and gas operators are constantly drilling and fracking for profitable sources of energy resources. Cash flow data from such public operators can help potential investors analyze the financial health of specific companies. Analysis of annual cash flow data from these energy companies regarding their activities can provide insights into their success and effectiveness in different well sites and geological plays. Investing in the energy sector entails receiving a profit share from each and every producing well that an investor has working interest.
2. Profit Margin/Return on Investment (ROI)
One of the most important factors to consider when investing in any commodity is the economic profit margin between the value and cost of the commodity. The return on your investment ultimately decides the overall profitability of that particular investment. Every investor needs to first analyze the risk of the investment, which can be relative to the investor, and the potential for return. Since investing in oil and gas on your own can be extremely difficult and risky, try to find a company with a great track record so you can lower the risks and increase your chance for great returns.
3. Portfolio of Opportunities
Another factor that is central to energy investment decision-making is the number of other opportunities available to individual companies and the industry at large. Due to a limited amount of available space in targeted areas with known oil and gas reserves, choosing a company that has the necessary relationships to participate in these productive plays can be difficult. Do your research when looking at direct investment opportunities and check past performance and references to make sure you are getting the best opportunities available.
4. Shifts in Supply and Demand
If you are considering investing in the oil and gas sector, it is important to factor in recent shifts in the supply and demand of oil and gas energy. A shift in supply and demand directly affects oil and gas prices all over the world. According to the International Energy Agency (IEA), “The next five years will bring a reshaping of the global gas trade”, which is a positive statement for those planning to invest or have already invested. Investing at a time when supply and demand are near an equilibrium can yield higher returns down the line.
According to a report by the American Petroleum Institute (API), the oil and gas industry is among the biggest contributors to the US economy. Fig Tree Capital Ventures leverages years of industry knowledge to provide investment partners with high-yield direct investment opportunities in the oil and gas industry. We help qualified individuals and businesses diversify their investment portfolios and ensure consistent, long-term potential cash flows. To learn more about our onshore oil & gas projects, simply call 866-304-9194.