{"id":59789,"date":"2025-01-31T10:55:19","date_gmt":"2025-01-31T10:55:19","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/buy-an-oil-well\/"},"modified":"2025-01-31T10:55:19","modified_gmt":"2025-01-31T10:55:19","slug":"buy-an-oil-well","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=59789","title":{"rendered":"Buy An Oil Well?"},"content":{"rendered":"


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I was reading Loral Langemeier a few years back. She’s a big advocate of direct investing in business opportunities like self storage, rental real estate and oil wells.<\/p>\n

The idea of buying an oil well<\/strong> got me intrigued. So I started looking around on-line. Some small wells can be had for around $200,000 to $1,000,000. This type of business works based on how much oil\/natural gas, etc. you can get out of the ground. The sizzle is that wells can be extremely profitable, especially when gas prices are high.<\/p>\n

Since I don’t have $200,000 to $1,000,000 in cash lying around, this is probably going to be a project for 5 to 10 years down the road, but I’m definitely interested. It looks like a great money making opportunity that could allow one to significantly build their wealth.\u00a0 In case you’re also interested, here is where to buy a well, and some alternatives if you can’t afford to buy one directly.<\/p>\n

Where To Buy A Well And What To Consider<\/strong><\/h3>\n

Most wells appear to be sold by brokers, so if you want to cruise some of the listings check them out here<\/a>.<\/p>\n

The only book I’ve been able to find on buying oil wells is Investing In Oil Wells by Nick Slavin<\/a>. It retails for $12.99, but if you are going to drop $5,000 to $20,000 on fractional ownership in a well, $12.99 and some education is probably worth it.\u00a0 You can get the book here<\/a>.<\/p>\n

There are some factors to consider.\u00a0 Oil and gas wells are capital intensive – they costs a lot to operate and maintain.\u00a0 Oil is also heavily regulated so when a well stops producing, you need to cap it to prevent damaging the environment.\u00a0 \u00a0Capping is extremely expensive – costing between $20,000 and $80,0000.\u00a0 So, they cost a lot to drill, maintain and close.<\/p>\n

Also, wells are risky. So, what a lot of investors do to avoid risk is to buy several wells.\u00a0 This of course, requires a lot more capital and management time.\u00a0 For example, buying several wells at $200,000 each could cost millions of dollars.<\/p>\n

Alternatives To Direct Ownership<\/strong><\/h3>\n

Since the costs of owning wells directly is prohibitive for most investors, here are some alternatives if you want direct exposure to oil and gas:<\/p>\n

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  1. Buy Royalties<\/strong><\/em>: Royalties are basically payments made to individuals for the right to use their natural resources. What often happens is an oil company will agree to pay a landowner a given payment per barrel of oil or gas extracted.\u00a0 For example, if a landowners property produces 100 barrels of oil a month and the royalty agreement between the extraction company and the landowner says the owner gets $2 per month, the landowner would get 100 x $2, or $200 per month.\u00a0 Royalties can be bought and sold.\u00a0 If you want to get some,\u00a0 Energynet is a good place to find royalties to buy (here<\/a>).<\/li>\n
  2. Buy Oil and Gas Stocks<\/strong><\/em>: A simple and straightforward option is to buy the common stock of oil and gas companies.\u00a0 Owning shares of major companies like Exxon (XOM), ConocoPhillips (COP) or Phillips 66 (PSX) is a good way to get exposure to oil wells. Similarly, exchange traded funds (ETFs) that focus on on the oil industry are good ways to get exposure.<\/li>\n<\/ol>\n

    Here Are More Great Reads On Oil Wells From Dinks Finance:<\/strong><\/h3>\n