Useful Frequently Asked Questions:
What is the security?
A title called the Working Interest (WI) of the Oil and/or Gas Lease is transferred to your name from the respective U.S Government’s County Office. You become the rightful owner with all the rights, privileges and benefits from the ownership of the WI
What is the risk?
There has never been a better time to invest in a WI of an oil and/or gas lease. Energy prices of crude oil and natural gas, among others, are appreciating with known reasons and established trends. Our projections, based on conservative assumptions, approximates 10-15% average yields. Even at US$20 per barrel, you will still have a return close to 7.3% p.a.
What if there’s no oil in the ground?
Our principal, Powder River Basin Gas Corp is active in the acquisition of and production of crude oil and natural gas. The leases owned are mainly proven reserves and re-work projects in States of Wyoming & Louisiana.
Why invest in energy?
Every prudent well-diversified portfolio should contain energy-related investments. Energy consumption reflects the overall health of our economy and is considered an indicator of growth. Since energy is a factor in all segments of the economy, it is a perfect diversification tool in financial planning. It's also utilized by many investors for that portion of their portfolio providing an inflation hedge.
What distinguishes Natural Gas from other energy investment opportunities?
Natural Gas is increasingly recognized as the energy/fuel source of the millennium -- it is often termed America's transition fuel.
It's flexible -- it can heat your home and run your car.
It's available -- enjoying an existing delivery infrastructure to every U.S. market.
It's economical -- costing less to use on average than other fuel sources.
And better yet, it's environmentally sensitive -- Nature's ecology fuel -- a cleaner fuel than oil or coal. Plus it's domestically produced, reducing our increasing dependence on foreign energy sources.
How does the US Administration and Congress view Natural Gas?
Natural Gas has been singled out by the then Clinton Administration as the environmental and economic choice since the Little Rock Economic Summit. In addition, Congress has repeatedly enhanced tax advantages since 1986. The Bush administration and subsequent governments are expected to maintain the same view.
Does industry share the Administration's enthusiasm for Natural Gas?
Market players are increasingly aware that industry, driven by economic and environmental forces, is choosing Natural Gas over other energy sources. According to the EIA, by 2020 consumption of natural gas is expected to increase by 50 percent over 1998 levels. Natural gas has become the fuel of choice for most new and planned electric generating units as new gas fired generating technologies offer lower initial costs, higher efficiencies, and less adverse environmental effects compared to generation from other fossil fuels.
What is the industry's view of Natural Gas prices?
Most are delighted. After a period of flat prices, Natural Gas prices are escalating. For example, pricing for direct sales to utility companies is substantially higher now than it was last year.
Is the price increase temporary or an indication of a trend?
Based on increased demand, lower supplies, and the increased attention focused on Natural Gas by American industry and the administration, it is believe that higher Natural Gas prices are the trend.
How can an individual investor participate in the Natural Gas industry?
Like any other industry, individual investors should pool their resources to diversify their investment. The partnership format is a direct participation sharing in the economic and tax benefits of investing in natural gas.
In reviewing an investment portfolio, what should be asked when considering a Natural Gas investment?
It's a simple question of prudent financial planning. Is the portfolio positioned to reduce taxes and benefit from the increased demand for clean economical energy for the millennium and beyond? Are you looking to acquire assets that generate monthly income rather than capital gains?
Are alternative investments appropriate for me?
If you are a savvy investor, then alternative investments are appropriate for you. Alternative investments are asset classes such as oil and gas, real estate, low-income housing, leasing, hedge funds, private equity, venture capital, managed futures, commodities and private REITs. These classes typically have a low correlation to the stock market.
Why? Because savvy Investors are Looking for More Than a 6% to 7% Return.
The question is: Which types, if any, of alternative asset classes are best for your portfolio? Monthly production income begins after the development phase, maybe about six to twelve months after the contract is signed; your wells can continue to produce – and to generate income – for fifteen plus years. (All of this of course depends upon the results of the drilling.)
Are you in a situation where you have to pay a large amount of taxes from income gains from an investment, or a rental property?
After doing all the retirement planning, are you still looking for additional ways to reduce your taxes? Or increase your income?
Are you retiring with a large lump sum?
Are you self-employed and would like to ensure sufficient income with minimum capital outlay?
I am convinced that I should build income-generating assets but I don’t have a large portfolio?
Low Minimum Help Investors Test the Waters
We have successfully package this unique investment opportunity into units of US$5,000, allowing investors to test the shallow waters before diving in head first. Sometimes (clients) like to get used to the asset class at a lower entry level. Then investing in an oil and gas drilling partnership could be an option for you.
Power of Compounding
The absolute best strategy when investing in an oil and gas is to take your savings and distributions and to reinvest them and let the cash compound for fifteen plus years. This becomes a forced savings. You will be amazed at the return with this strategy.
Diversification is the Key
The recommended allocation in these classes is no more than 5% to 15% of a portfolio. Alternative investments may be an option to diversifying your portfolio and at the same time reducing your taxes and increasing your income stream on a monthly basis.
IS OIL AND GAS A PROFITABLE INVESTMENT?
Yes. Oil & gas can be a very profitable investment. After all, some of the largest companies in the world are oil and gas companies. One of the first factors of investing properly is trying to determine what your investment goals or objectives may be. As an example, it may be that you are looking to receive a 7 to 12 percent annual return. This type of return can be easily obtained with the purchase of stock from most of the well-known major or independent oil companies. Or, you may be looking for a rate of return in the 20 to 50 percent range. This can be accomplished by purchasing stock in aggressive small independents or by investing with service companies expanding into new markets. A good example is Powder River Basin Gas Corp. Yes, investing in the oil and gas industry can be very profitable. However, it is very important to have a good understanding of the type of programs, their structures, and your own level of risk. This leads us to the next question.
IS OIL AND GAS A SAFE INVESTMENT?
Yes, investing in the oil and gas industry can be a safe investment. When investing in oil and gas there are many aspects of the industry to consider before determining a safe investment. Three of the main features are:
HOW DO I ASSESS A POTENTIAL OIL & GAS INVESTMENT?
Understanding or assessing potential really starts with a two phase process:
The Company One of the best ways I have found to analyze the company is to look at their management and track record. Look for solid financial records as well as integrity in their management and operations. You should be able to determine how well an investor has fared in prior programs, how economical the programs have been and how sound the proposed undertaking might be.
Basically, this will summarize the programs the firm or company has drilled in the past and how they have fared. Prior activities will cover when the offer commenced, the amount of the offering, the minimum size of units, the method of offering (private or public), the number of wells in the project and the type of wells. It will also cover the net revenue; the frequency of payments and it should also state the amount of the promoted interest.
The projects should then be summarized by lease name and a yearly account of the gross revenue, operating expenses, net revenue and cumulative barrels. You should be able to determine an average return on revenue as well as a total return on investment.
The Property There are many ways to evaluate drilling proposals or acquisitions of producing assets. Quite frankly, the hardest part about determining whether an oil and gas project will be successful is trying to locate the specific benefits of the project through the terminology the geologist or engineer is using for a given area.
The best way to evaluate an oil project is to try to determine how successful the other wells that were drilled in the area were. What we are really looking for is a history of wells that have been drilled in a given area and what type of reserves has been recovered. This should serve as a benchmark in determining the probability of success in this project. In most drilling proposals or geological reports, what has been produced in the past will give a summary or probability of what might be expected in the future or throughout the drilling process.
The information contained within the document is presented with the best of intentions to inform and neither carries nor implies any guarantee. It does not predict the future and can not be considered a predictor of events yet to happen.