Quote: (12-08-2015 05:58 PM)samsamsam Wrote:
Quote: (12-08-2015 05:54 PM)SunW Wrote:
Think actual wells.
Ignore stocks - even the basket ETFs may "close down" due to lack of interest. A physical well gives you the option to produce, set aside resources, and wait out the bust.
Gotta be careful with wells though. Depending what type of situation you get into, it could be a huge black hole for capital.
If you want to play the upside of oil recovery, I would suggest looking into buying royalties or overrides. You get a gross percent off the top and the crude buyer/marketer sends you the check for your royalty. You don't count on the operator to cut you your check.
When a land owner leases mineral rights (i.e. oil) they get an override along with some cash. These overrides/roylaties vary by % depending on where they are in the country depending on the oil play. Later, these royalties sometimes get sold off for whatever reasons.
When looking at these, you need to do a few things.
1) Understand where the oil is being drawn from, what zone. Some zones fall off quite quickly in terms of production and others are just nice and steady
2) Need to know how it has performed historically over time
3) If you can find the well info, you can go to the state websites and pull up data by that well
4) An old timer told me one time he never pays more than 24 times the monthly check, he wants to recover his investment in 2 years or less.
Be careful, there are a lot of fuckers in the oil business.
This is a disaster waiting to happen.
Stick it in USO or oil stock if you aren't in the oil industry.