Is Natural Gas a Good Investment?
Is Natural Gas a Good Investment?
If you could poll the entire human population on their greatest desire in life, nearly everyone would place financial security near the top of the list. Aside from winning the lottery, a lucrative vocation and prudent diversified investment strategies are the two most common paths to attain this goal. To achieve financial security, most people strive to prudently invest their disposable income to accumulate wealth. Let’s take a closer look at what makes a prudent diversified investment so we can answer the question: “Is natural gas a good investment?”
What Exactly Is a “Good Investment”?
More than 13.9 million online investors are seeking good investment opportunities. Most individuals do not have knowledge, expertise, temperament, or opportunity, to pursue a secondary career as an amateur stock broker or day trader. Below is a discussion of possible attributes of a “Good Investment.”
Attributes of a Good Investment
Prior to making any investment, decisions may be required to determine your personal objectives and investment features, functions, expectations, and rewards coupled with risk profile. The following five questions may assist you in assessing the quality of a specific potential investment:
|1. Is the asset currently undervalued?|
|2. Is the value projected to rise over time?|
|3. Will this investment increase your liquidity?|
|4. Is the expected holding period reasonable?|
|5. Does a divestiture strategy exist, and is it adequately described in the business plan, model, or financial forecast?|
Consideration of direct natural gas ownership may provide a unique opportunity to diversify your investment portfolio and enhance your wealth accumulation goals.
When Is Natural Gas a Good Investment?
Natural Gas commodity prices and the timing of pricing cycles of decline and escalation directly impact owning working interest in a natural gas well(s). The objective is to acquire working interest in oil and gas wells after a decline in commodity prices occurs and to divest the working interest once commodity prices escalate—seeking to benefit as the commodity pricing cycles fall and rise.
Benefits and Challenges of Investing in Natural Gas
- Natural gas is used in many products; therefore, demand should remain high.
- Natural gas is a cleaner form of energy generation than most other conventional sources.
- Tax incentives are available for investing in oil and natural gas.
- Natural gas prices are not static and can be significantly influenced by factors such as political regulations and environmental events that may impact production and mid-stream transportation of natural gas through pipelines.
- Acquisition of natural gas working interest in wells is typically restricted to accredited investors.
While often limited to accredited investors, prudent investors utilize a proven strategy for investing in natural gas.
The Best Strategy for Investing in Natural Gas
For optimal participation of acquiring natural gas working interest in wells clear implementation procedures are recommended for acquisition, development, and divestment cycles described below.
The Best Plan for Natural Gas Investment
Knowing what to buy—and when—is the first important step in a successful investment plan. For natural gas, it is better to invest in an asset or Fund that includes known viable extraction sites and allows you to benefit from the entire operation. Additionally, income tax incentives, participation year deductions such as intangible drilling costs, and bonus depreciation of tangible costs become available to investors.
The property should also offer growth potential. The most successful oilfield development investment structure requires the investing entities to own all facets of the oilfield being developed including the oil and gas mineral leases, existing and proposed producing wells, development of undeveloped drilling locations (PUDs) and surface and below surface infrastructure such as tank batteries, collection vessels, gathering systems and downhole casing, tubing, rods, downhole pumps, other tangible assets.
A divestment strategy as part of the initial vision may greatly enhance the possibility of achieving a multiple return on invested capital.
Investment plans that utilize the above strategy may allow an affirmative “yes” when applied to the five queries described above.
|Is the asset currently undervalued?||✅|
|Is the value projected to rise in time?||✅|
|Will this investment increase your liquidity?||✅|
|Is the expected holding period reasonable?||✅|
|Does a strategy exist for divestiture?||✅|
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Investments in oil and natural gas partnerships are speculative and involve a high degree of risk. Oil and natural gas wells are naturally depleting assets. Cash flows and returns may vary and are not guaranteed. Past performance is no indication of future performance. Nothing herein shall be construed as tax or accounting advice. Investors may lose money. Some of the risks other than those described herein associated with investment in Larimer County Energy Fund are described in the Risk Factors section of the Confidential Private Placement Memorandum concerning the Larimer County Energy Fund accompanying, preceding, or following this Executive Summary. Prospective investors are urged to read and consider carefully the risks described in that section. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the investment opportunity described in this Executive Summary. Neither the Securities and Exchange Commission nor any state securities commission has determined the accuracy or completeness of the information contained within this Executive Summary or in the Confidential Private Placement Memorandum concerning the offering of limited partnership interests. The offering of limited partnership interests is made only by the Confidential Private Placement Memorandum, which must accompany, precede, or follow this Executive Summary, and an investment decision can only be made by the execution of definitive investment documents. Investors in Larimer County Energy Fund are required to be “Accredited Investors,” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933.