Oil investing can be a lucrative business, but, like everything else, there are risks, and nobody can tell you what the future will hold.
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All investments have risks. But when you dive into a new kind of investment, you want to be sure you have all your ducks in a row. You may not know what normal looks like, and therefore you want to do all of the research you can so you understand what is correct (and legal) and what isn’t.
If you’re new to oil investing, I have good news for you. I’ve already done all the research for you. I know what’s shady and what isn’t because I’ve seen it firsthand and heard it out in the field.
With that in mind, let’s talk about some of the potential red flags that come up when you’re looking to invest in oil.
Trying to Skirt Securities Laws
If there’s one thing I want to avoid, it’s drawing the attention of the SEC for doing some sketchy stuff. That’s why everything I do is legal and above board, but not everyone shares my stance. If you’re going to invest in oil, you need to follow the proper procedures, which means establishing a limited partnership. If a company you’re trying to do business with wants you to form a joint venture, that’s a red flag, and you should just walk away.
Offering Limited Opportunities
This is a classic sales technique: Get in now while there are still open slots! But that’s never the case in a properly run oil setup. They’re creating false scarcity in a product with limitless investment opportunities. In fact, you could just find another company and do just that.
Requiring Significant Investment to Get Started
If you want to invest with my company, Allied Resource Partners, your number doesn’t need to be seven figures big. We have many different options if you want to dip your toes into the industry. Some companies want those bigger numbers, though, and they demand them, so you have to buy in big. Don’t be fooled by this scam.
Saying They Have “100s of Years” of Combined Experience
This is always a fun one to approach because there are so many variables that it becomes hard to refute. But if you’ve got a new company or your staff is relatively green, one way to give the appearance of experience is to add up how much everyone has. Now, if there are 100 employees and each one has two years of experience, does that make you feel comfortable? I wouldn’t, so maybe you should consider this as another one to walk away from.
Investing in Middlemen Companies Who Mark Up the Deal
Oil investing can be a very straightforward business. We have a rig where we’re trying to strike oil. You want to invest in our operation. Why does anyone else need to be involved? If you’re looking to put your money somewhere and bumping into middlemen, you should go to another spot.
They Say How Much They Will Get Out of the Well
I’m many things, but one thing I’m not is psychic. I cannot tell you whether or not the oil well I own will produce a million barrels or five. While we do a ton of research and use advanced technology to determine the best spots to dig, there is no concrete way I can know what will happen. And unless something has changed, nobody else can do that either. If they try, then you know it’s just a sales pitch.
There’s So Much More
This is just the start. I’ve heard about and dealt with so many suspicious businesses over the years that it can very easily become deflating. Who wants to get into that kind of investment?
Fortunately, we’re not all that way. In fact, oil investing can be a lucrative business, but, like everything else, there are risks, and nobody can tell you what the future will hold. Take the time to do your own research before you give anyone a dime because, at the end of the day, it’s your money. Invest it in the right people and companies, and it will go far.
