We have an offer to invest in a saltwater disposal facility. The numbers that returns are based on look reasonable. 4000 barrels per day at 35 cents per barrel. The partnership says it bought a distressed property for $1.5 million in Sterling county, Texas and intends to ramp it up to it’s capacity of 25,000 barrels a day as the market comes back. A search on the internet show that the operator has fifty wells or so that they are running in Texas. Don’t know much about the firm that is putting the deal together. We’re looking for some advice on how to evaluate the deal and what questions we should ask. We own inherited leases and mineral rights, we’re also in one partnership on a well that about to be completed, but we still have an awful lot to learn about investing in oil and gas. Any advice would be appreciated.
My advice is run away & be very afraid. Too many things can go wrong & they will.
Ditto!
If you are new to oil and gas, get informed! Read extensively, join NARO, attend meetings when they resume, get a good lawyer, Oil & Gas accountant and financial planner. This business is ripe with very expensive pitfalls!
Thanks, I get it; but I’d appreciate specifics and ways to play it smart in this industry.
Thanks! How do you find an oil and gas accountant familiar with the area and able to help evaluate an offering such as this?
Sterling County has a very small population, so you might search online for accountants in the nearby counties with larger populations and oil activity. Call and interview a few of them to see who does oil and gas work. If a certain one does not, then ask who they would refer. Again, I think this “opportunity” is not for a novice.
In my opinion, investing in a saltwater disposal well is not investing in the oil and gas business. From an investment perspective, I would first ask why does a company that already owns 50 disposal wells as you stated, want or need someone else as an investor? Let alone someone with Zero experience in that business. Red Flag for me. There are huge environmental liabilities with salt water disposal. If you are prepared to pay big insurance premiums and put all of your assets at risk, go for it. “The best business experiences in life are those of others”. 35+ years in the industry. Todd M. Baker
Thanks for the input, that opens a lot of areas for me to educate myself. I appreciate your time.
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