How to determine whether to invest in an oil and gas company

There's no doubt that oil and gas companies are some of the most lucrative in the world. But before you invest in a drilling project or buy stock for a company, be sure you know what you're getting into.

Instructions

Difficulty: Moderately Challenging

1. Look at the management and track record of the company you want to invest in. Request a Due Dilligence document from the company, which summarizes its management, staff, reserves, inventory, equipment and track record.
2. Ask the company how many projects the company has drilled and revenue acquired from each project.
3. Check a company’s credibility by contacting corporate references, which might include supply stores or service companies.
4. Call the crude oil or gas purchaser who buys the company’s products for an objective opinion. Ask specifically if the company find and produces oil and gas on a consistent daily basis.