Understanding Different Types Of Oil And Gas Investment

If you are looking to be an oil and gas investor, you should understand the different types of oil and gas investments. Different experts on oil and gas investment tend to lump them up in various categories. In this case, let us look on the type of oil and gas companies that you could invest in.

1. Buying and Leasing

This is where you invest in oil and gas companies that deal with buying and leasing land that have gas reserve. They are not involved in production or drilling. So basically they are not as volatile as those oil and gas companies that involve directly in the said sectors. This kind of investment is suitable for oil and gas investors looking for long term stable income.

Risk : Medium

2. Oil and Gas Development

This is different from oil and gas exploration companies as they work around existing oil wells or reserves. Their oil production is quite stable as they are not actually faced with the many risk of oil exploration. Risks are minimal and the returns are usually high.

Risk : Medium
Example : Occidental Petroleum, OGDCL Pakistan,

3. Oils and Gas Service and Support

Some might not put this under different types of oil and gas investments but they are actually closely related to the industry. Basically, these companies are involved in back to back services for the oil and gas industry. They provide services and support from logistics to equipment manufacturing. It is relatively safe to invest in this oil and gas investment as it does not rely on fluctuation of oil prices. However, you do still need to consider the better industry or companies to invest in. Your end game as oil investors in this particular category is getting good stable returns on long term basis.

Risk : Low
Example : Global Industrial Solutions inc, Baker Hughes, BJ Services Company

4. Oil and Gas Exploration

These companies deal with drilling expedition in search of the next oil reserves. It is definitely risky as your investment could go down the drain if the exploration fails. However, the return of investment could be tenfold if the exploration succeeded. This type of investment is suitable for those who can afford the high risk.

Risk : High
Example : Shell Group of Companies, BP, Exxon Mobil

Larger companies naturally would be involved with more than one type of investment. However, understanding the different types oil and gas investments would assist you in making the right investment. One of the best decisions is to diversify your investment portfolio. Balancing it with high and low investments helps to minimize your risk and also gives you the chance to gain higher returns.