Small Companies and Private Investors Take Over
A window of opportunity has opened for the private investor in developing America’s remaining energy reserves. Twenty years ago, there was plenty of funding available for domestic energy projects and high quality projects were hard to find. Independent oil companies and the major oil companies were competing for leases. Today, however, the tables have turned. The major energy companies are currently spending most of their money offshore and overseas. They are selling their domestic production to the smaller independent oil companies and, with the exception of very large acreage blocks, they are allowing most of their domestic leases to expire. Usually, independent energy companies pick up mineral acreage when the major oil companies move out of an area, but often the small energy companies do not have sufficient cash to purchase oil and gas leases and still fund the drilling of wells on the properties. Since banks are no longer excited about providing independent oil and gas operators with drilling funds, individuals can finding investment opportunities in the petroleum industry that were only dreamed of a decade ago.
With the major oil companies focusing on projects overseas, independent energy companies are able to acquire prime leases in the heart of America’s energy producing areas. Some of these projects involve developing proven reserves in existing oil and gas fields, where the probability of success is greater than 90%.
Since most of the companies that list projects at the Energy Exchange in Houston are these independent oil and gas operators, this presents a tremendous window of opportunity for accredited investors with the willingness to accept a slightly increased risk in return for a substantial increase of return on investment.