Ways To Invest In The Oil And Gas Industry

The oil and gas industry is one with a wide range of highly lucrative opportunities. While it’s too has risks that could be as high as the returns it promises, investing in the industry can make a whole difference to your investment portfolio

The oil and gas industry is one with a wide range of highly lucrative opportunities. While it too has risks that could be as high as the returns it promises, investing in the industry can make a whole difference to your investment portfolio in a not-so-long period of time.

Now, getting into the business of oil and gas is capital intensive. By business, I mean about the groundwork of actually exploring, developing, or setting up a downstream or upstream oil service business. For this, there are different ways to break into the market.

The first is that you can buy or lease a land and invest money in drilling with the hope of finding oil. For something less speculative, you can also go close to proven reserves and try to obtain even more value from them.

The upside of this is that if you do find oil, even after all the taxes and expenses are deducted, you’ll still make a ton of money. However, when the losses hit as they will a lot of times, you could lose everything and possibly end up in debt.

Another way you can be a part of the core oil and gas industry is to be a part of the value chain. It could be in shipping and logistics, construction, drilling, transportation and so on.

However, the benefit of being an investor is that you can be a part of this industry without having to become an oil specialist. Just like all other industries, the oil and gas industry presents you with options. As a quick reminder, here are your options:

Oil and Gas Mutual Funds

Mutual funds are pools of investments by investors who are like-minded and have the same objective. Being part of a mutual fund that invests in this industry, gives you the opportunity to share the risks and rewards with other parties.

You will also have experts in the industry who have the objective of ensuring that you make the best returns for your investment. With a mutual fund, you gain great exposure to the energy sector without having to take too much risk.

Invest in the Stock Market

If you take a look at the heat map on our app, you’ll notice a number of these stocks traded on the Nigerian stock exchange. There is no easier way to break into the market than getting shares in these large companies that have made lucrative businesses out and obtained market shares in the industry.

Many of these large companies which have become stable over the years, will offer you amazing dividends that allow you generate good income from your investments periodically. Otherwise, your money will be used to grow the business and tap into the industry in a bid to increase the value of your shares in the company.

You even have the opportunity to invest in oil servicing companies as these are less volatile and will prevent you from taking a direct hit where the price of oil crashes.

Another key way to invest is to explore the futures market by purchasing derivatives. This is, however, riskier than the other options presented.

The oil and gas industry is brimming with amazing opportunities and you too can take the bull by the horn by joining in today. Written by

Lawretta Egba.