Why Evaluating Oil and Gas Investments Takes Time

Mineral rights can be extremely complex and there are many different risk factors associated with acquiring them.

When you have a full appreciation for these risks and why such a high level of technical, geological, economic, and mechanical analysis is required, you’ll understand why a lot of time is often required before a deal is made. Even with all the risks, a well thought out and executed deal could make your decision to buy oil and gas minerals a good one for years to come.

Minerals Under Production Have Higher Values
Some of the main risk factors you can’t overlook regarding mineral rights include:

• Exploration Risks: When you’re drilling deep into the earth, precision and accuracy are critical. One minor misstep can lead to tough consequences, and even the most experienced experts can make mistakes. Nevertheless, the mineral owner is not burdened with any exploration or production expenses. This risk only relates to mineral owners from the standpoint of reduced and/or delayed revenue streams.

• Sponsor Risks: People always introduce an element of risk. You must do your due diligence on the people or entities offering mineral rights. It is crucial to work with people of high character when looking into making these types of deals.

• Geological Risks: Evaluating the size of the reservoir is critical for maximizing your investment, since the size can vary drastically. Knowing what’s beneath the surface will allow you to better negotiate your mineral rights with an oil company interested in exploring and producing your oil and gas minerals.

• Market Risks: The price of oil and gas is something you can’t control, so this is always a risky component to consider. There are numerous factors that influence commodity prices. 

Thorough Due Diligence Is A Requirement
When making the decision to buy oil and gas minerals, one must consider their own risk tolerance. It is highly constructive to perform a thorough evaluation of the company or entity you’re working with. Plenty of mineral rights deals have gone sour, and most of the time it’s because the investor did not spend the appropriate amount of time evaluating and analyzing every aspect of the deal.

Here at Eckard Enterprises, we use our considerable expertise and experience to scrutinize every aspect of the mineral rights we acquire.

Confer With Experts
In most cases, successful mineral rights deals occur when the buyer confers with third-party experts. These experts know everything there is to know about oil and gas mineral interests, including current trends, short-term and long-term impacts, potential cash flow, and much more. When you’re thinking about becoming involved in a mineral rights deal, you can never have too many expert opinions.

Eckard Enterprises is always available to help you with your mineral rights questions. We are a premier mineral rights aggregator that partners with industry experts like geologists, engineers, and landmen to validate our decisions. To learn more about mineral rights, working interest, or other oil and gas assets, contact us today.