Singapore Profit

With oil prices shooting up, why not own part of some oil wells in the United States and make money from a business investment? I went to the Asia Trader and Investor Convention 2008 at Suntec today, and a sales rep from Oilpods approached me to explain oil and gas investment to me.

First of all, they offer a cash flow (business model) investment. After investing a sum of money (minimum US$10000) to buy assets, you wait for six months before you recover your capital over a span of 3-4 years. You will be paid monthly, and every three months, they will pay you another sum of money.

After the breakeven point in a few years, you get to generate a cash flow which may fluctuate depending on how the business is doing or how the oil prices are. This is being compared to a capital gain investment, where you get a one-time profit when you sell and not get any more money.

Once you get your money back, you can choose to invest in subsequent projects, and repeat the process. Then you will have multiple streams of passive income. According to the sales rep, the oil fields in US are estimated to last another 12 years after you have recovered your capital. Based on a conservative estimate by them, you will get 10-14 percent Internal Rate of Return p.a. The oil and gas fields that are chosen are known to be producing. That means these fields are not at the exploratory stage or at the final stage.

You get to own part of the lease. It will be registered at the U.S. State’s County Office.  This is known as Working Interest. This is supposed to work as a hedge against inflation. What Oilpods does is to market the shares of projects to people. Currently, they are at the 8th project, and they started since 2002. The company collaborates with Powder River Petroleum International Inc, which is involved in the production, acquisition and marketing of crude oil development of crude oil and natural gas properties in US.

With oil and gas prices remaining high, the demand should be there. Unlike stocks which require constant monitoring, you will get a sum of money monthly. The cash flow is derived from daily production.

It sounds rather exciting to have such a high return scheme. Of course, any investment carries risk. I’ll discuss some of the risks in my next posting. In addition, some forum goers have expressed concern regarding the company’s operations, so you can find out more before jumping onto this bandwagon. Since I’m doing research on this company, please let me know if you have heard of the company or invested with it.

Sarah Tan

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