Risks of Oil and Gas Investment
Oil and gas investment sounds extremely lucrative, with you getting your money back within 4 years, and then continuing to receive monthly payments for 12 or more years, based on the company’s proposed investment scheme. It could even replace the Annuities scheme from CPF Life if you invest substantially! So are there any risks involved? After all, US$10000 is not a small sum.
First of all, on one hand, there is a currency risk. You invest US$10000. Currently, with the weakening of the US currency, you don’t need to fork out that much money compared to 4 years ago. Having said that, if the US currency continues to fall further, which until recently, it was unthinkable that it would breach the US$1=S$1.4 barrier, the returns you get will be lower when it is converted to SGD. If there is a huge drop, then your investment gains will be negated by the losses through foreign exchange.
On the other hand, if the US dollar continues to weaken, then the price of oil will continue to climb, since the value of oil is somewhat stable. Hence, the losses in currency exchange may be covered by the increases in oil prices. The higher the oil prices, the faster you get back your original investment.
Second, there is an environmental risk. If a hurricane strikes your oil field you have a share in, production will be halted. If an earthquake happens, I’m not sure how they can resolve the problem easily. According to the sales rep, payments may stop for a few months, before production continues. This is because the oil company has a 75% share in this, so they cannot afford not to resume production quickly. In addition, since oil is underground, the structures that may be destroyed in a natural disaster will be quickly rebuilt. For other physical risks, such as fires, insurance will cover that.
Third, even though this company has been marketing such oil and gas investments since 2002, little else is known about them. I always have this fear that companies will fail and my money will be gone. That is why whenever I purchase packages for all sorts of beauty-related sessions, I wonder whether my money is safe. Perhaps this risk is always there, and we have to weigh the risks carefully. One good thing is the main company, Powder River, is traded on OTCBB in the US under the symbol PWDR. The only thing I know about OTCBB is that it is for microcaps.
Forth, oil and gas production has its own risks. It might not be that easy to continue production for a long period of time as it may be commercially unviable. If the oil well dries up, then income will fall. Hopefully with 25 fields spread out at different locations, the chances of all of them failing in the short term will be negligible.
Fifth, I can’t find much information from people who have invested with them. The sales rep at the fair showed me his earnings because he also invested with them. However, he has vested interest, so it is hard to say. At least two people with some authority, Mr Tan Kin Lian, and Mr Dennis Wee, had come out to say they will not invest in such schemes. Other people at forums think it might be the making of a Ponzi scheme. When I was listening to the sales rep, he mentioned right from the start that it was not a Ponzi scheme. That means this must have been a concern raised by many would-be investors for him to say that. Basically, it means that money from later subscribers is used to pay the earlier subscribers, instead of real money that is made. This point cannot be substantiated though. There are other threads that discuss Oilpods.
By googling Oilpods, I only come across some consultants that mention similar things that I had mentioned in my earlier posts, but they do not mention the risks. When some consultants who post in forums were questioned by other forum members, they were unable to fully explain. Some people mentioned that there was insider selling, but when I checked, somebody from the company bought the shares twice.
For more news, you can check the press releases over at Yahoo Finance.
Hence, I am still thinking hard whether I should invest in this. Whatever it is, caveat emptor – buyers beware.
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You are right that there are many risks to consider when investing in a oil or gas drilling venture. However, those risks can be managed by conducting careful due diligence before making an investment. Please read through the articles on my Accredited Investor Talk blog at http://accreditedinvestortalk.blogspot.com/. My corporation researches oil and gas drilling ventures and lets accredited investors know what we are currently invested in. After you have had a chance to review the articles in the blog, please feel free to email me with any further questions you might have at MarcobeInvestmentsInc@gmail.com.
Ole Cram, President of Marcobe Investments, Inc.
Hi,
Dont invest, I think they will take your money and run I found a landbank on http://www.propertyscam.org.uk – Land International Far East moving into the same market they have the same office addresses as http://www.oilestates.com – birds of a feather flock together.
Tim
About Oilpods:
http://www.todayonline.com/articles/273587.asp
It is an oil nightmare
Investors may lose $65 millionfrom alleged pyramid scheme
?Excellent blog with lots of useful information on financial
?Excellent blog with lots of useful information on financial
You sure got have a lot of knowledge about finance..I got a lot of info from this post.
Gold Confiscation: Could it Happen Again? watch this http://www.youtube.com/edjuh10
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