Investing in Oil Wells: 4 Myths and Realities

When you finally save up money and start looking into various investment opportunities, you want to know what types of investments are going to make you the most profit. The truth is, investing in oil could be one of the best decisions you ever make.  

Oil is one of the strongest industries in the world, and the demand for oil only keeps increasing with the development of nations around the world. After all, the demand for oil has gone up every year by 1.3 million barrels per day for the past five decades. Even if the oil prices are low, investors can give you a potential return of 5 times (or even more, if you’ve chosen the right investment).  

Before considering the various types of crude oil investments, one way you can get into the world of oil is through oil well investment. By investing in oil wells, you are getting in on the ground floor of exciting projects and reaping the tax benefits it has to offer.  

Before learning how to go about investing in oil wellslet’s first dive into some of the myths and realities of these kinds of investments.   

1. Myth: Investing in Oil Wells is Risky. Reality: You Choose Your Risk Tolerance.

There is a myth that investing in oil wells is risky business. The truth is that when it comes to any type of investing, you can choose your risk tolerance. The oil industry is not risky at all if you choose the right type of investing, especially compared to other businesses. 

Only experienced investors with a lot of money to spend will invest in smaller startups because the risk for failure is a lot higher. It’s an unproven investment. Also, investing in futures contracts is risky if you don’t have a lot of experience in it. However, investing through large-cap stocks and mutual funds is not very risky, especially since the stock market has an annual average 10% return overall, and oil companies tend to offer the greatest returns.  

Once you make your money on large-cap stocks and oil wells, you can then go onto futures contracts and small-cap investing. But until you get to that point, play it safe and go with companies and funds that have proven themselves to be highly successful in the past. 

2. Myth: There Is No Oil Left to Invest In. Reality: Oil Is Constantly Being Discovered.

The second myth is that the world is running out of oil since globally, there is a higher demand for it than ever before. The truth is that oil exploration companies are discovering more ways to unearth oil through the use of fracking and offshore drilling. At the same time, the world is also relying on natural gas and more on alternative energies such as electric cars, solar energy, and windmill power, which is offsetting some of the need for oil. In the U.S., oil is having a boom; in 2018, America became the world’s largest oil producer. If you’re thinking about investing in oil wells anywhere in the world, the U.S.specifically in oil-producing states like Texas is the best place to look 

3. Myth: Oil Wells Have a Short Lifespan. Reality: Oil Wells Have a Healthy Lifespan. 

You may be hesitant to start because you think your investment isn’t going to last very long, and you’ll have to find another one within a few years or so. This is simply not true. If you are investing in oil wells, you can get about two or three decades out of your average well. Before you invest in a certain company, do research to see how long their typical wells produced for in order to make the best investment decision possible. 

4. Myth: You Have to Be an Oil Wells Expert to Invest. Reality: Anyone Can Start Investing in Oil Wells. 

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When you think about investing in oil, the image of a rich and powerful oil tycoon may come into your mind. But that’s not what every oil investor looks like or has to be. Even if you’ve never invested in oil, you can start as soon as today. To do this, it’s important to have some money saved up to invest and a dedication to receiving financial education. As long as you’re following the market’s news and insights and you’re working with a Securities Administrator to help avoid being involved in any oil investment scams, you too can benefit greatly. Don’t let this type of investing intimidate you because, in reality, anyone can do it. 

Now that we’ve explored some common myths and realities, let’s dive into how you can go about investing in oil wells 

How to Start Investing in Oil Wells

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If you want to start investing in oil wells, here are some ways in which you can break into this market: 

  • Buy small/micro-cap stock and limited partnerships. If you want to get more involved in your investments, buy into a smaller oil well project through small/micro-cap stocks and limited partnerships. This is typically for an investor with more money and more tolerance for risk. There are tax benefits to this.  
  • Purchase large-cap stocks. This involves buying into publicly traded companies on the stock market. The largest businesses, such as ExxonMobil (NYSE:XOM), have high market capitalization. This is for investors with less risk tolerance. There are tax benefits to this.  
  • Invest in oil well mutual funds. Some of the top ones include Vanguard Energy Fund and BlackRock Natural Resources Trust Fund. This is also for investors with less risk tolerance, but there are no tax benefits. 
  • Buy futures contracts. Just be aware that futures contracts can frequently expire and may not be worth anything when they do. This is only for investors who are up for taking a risk. According to some sources, an oil futures contract may be profitable when the price of oil goes before the contract expires, in which case you profit. 

Learning About Investing in Oil Wells From Energy Advantage Investor

Now that you’ve learned the ins and outs and the truths and myths about investing in oil wells, are you ready to begin earning big profits on your investments? It all starts with getting access to the right information on investing in oil wells and the oil industry in general. That’s why you should subscribe to oil investing newsletter Energy Advantage Investor. 

Once you subscribe to Energy Advantage Investor, you will gain access to all the latest and groundbreaking news on oil investing from one of the industry’s leading experts, Dr. Kent Moors. Dr. Moors is trusted by leaders throughout the globe for his fascinating and revolutionary insights into the energy business. He will share what oil wells and other types of energy investments he believes will give you the largest returns and help you build your wealth.  

If you want to step into this exciting market and ensure that you are successful with your investments, make sure you subscribe to Energy Advantage Investor today.  

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