Investment in oil and gas can be a highly profitable venture for the accredited investor, but there are risks. Because of the profitability investment in oil and gas can create, the number of unscrupulous investment scams are on the rise.
Investment in oil and gas with a reputable company can bring the investor a number of benefits that allow the investor to offset other income, reduce tax liability, and write off expenses related to the development of the well. Investment in oil and gas also provides investors with the satisfaction of being directly responsible for helping to reduce the reliance of this country on foreign oil and gas supplies.
There are several ways to determine if the investment in oil and gas is a legitimate offer. First, before considering any investment in oil and gas, you need to be willing to ask tough questions and trust your instincts – before you sign any contracts or hand over any money. One of the first signs of a scam when considering an investment in oil and gas is high pressure sales tactics. If you are being pressured to make a quick decision about an investment in oil and gas, without being given the opportunity to review the details, you should simply walk away and find different investment in oil and gas.
Any investment in oil and gas you consider should be registered with the state’s securities commission. While there are some exemptions, if the investment in oil and gas you are considering claims it is exempt from registration, perform due diligence to determine what exemptions were filed. You can confirm with your state securities agency whether or not the exemption is legitimate before seriously considering the investment in oil and gas.
There are specific licensing requirements for those selling partnerships and other investment in oil and gas options. Don’t be afraid to ask for information about the sales person, the company he or she represents, and the commission structure in place.
Before seriously considering any investment in oil and gas, do your homework on the company. You should be able to easily obtain information about who the principals or general partners are, what experience they contribute to your investment in oil and gas, and what kind of funds the company has available to cover the costs involved.