How to Invest in Oil and Gas Stocks – Tips for Choosing Between Different Companies
Oil and Gas Companies in the United States and around the world are experiencing great success and revenue due to the increased availability of readily available and affordable natural resources. With the discovery of previously unknown and economically recoverable oil and gas reserves, these companies have been able to dramatically reduce their investment and operating costs while increasing revenue. The current global economy and stock market crisis coupled with uncertainty regarding future supply of fossil fuels and potential political and environmental policies affecting these resources have made investing in the exploration and production of these types of energies more important than ever. In fact, exploration for these types of energies has become one of the main drivers of commodity prices.
In terms of price, there has been a steady increase in the prices of crude oil and natural gas over the last decade. Many analysts believe that this is the result of increased demand and lower supply due to the use of technologies that have allowed for the cheaper extraction of oil and gas from the earth’s surface. With each passing day more companies involved in the exploration for oil and gas are coming up with exciting, new and innovative ways to extract these valuable liquids from the ground. This has resulted in the companies involved in the exploration for oil and gas having greater profits per barrel of produced oil or gas. There are many different factors that impact the cost per barrel of oil. Some of these include overall quality of the reservoir, weather, the amount of drilling involved, the type of reservoir, and the infrastructure in which the oil and gas industry is based.
In addition to the cost per barrel, another important and often overlooked factor is the geographic location of where the oil and gas wells are located. Midstream and downstream operations are usually more expensive per barrel than upstream operations. Due to the higher cost per barrel of oil and gas produced by the midstream and downstream companies, they usually only have a small local presence in each area. On the other hand, upstream companies drill thousands of oil and gas wells each year in more remote and inaccessible areas. This is because the cost per barrel produced by the upstream companies is usually much higher. All in all, it will take a significant amount of research on your part before you find the perfect company for your investments.