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Lone Star Securities, Inc.
presents
Understanding and Investing in
Oil and Natural Gas Drilling
and Production Projects
www.lonestarsecurities.com15851 Dallas Parkway | Suite 105 | Addison, TX | 75001 | 972.701.8620 | Member FINRA
Understanding and Investing in Oil and
Natural Gas Drilling and Production Projects
Presented by Lone Star Securities, Inc. www.lonestarsecurities.com 1.866.859.7827
Table of Contents
Chapter 1: Introduction to Oil and Gas
Chapter 2: Oil and Natural Gas Formation
Chapter 3: Petroleum Exploration History and Technology
Chapter 4: Drilling Oil Wells
Chapter 5: Leasing and Working Interest
Chapter 6: Investing in Oil and Gas
Chapter 7: Future Trends in Energy Supplies
Chapter 8: Conclusion
1 Chapter 1:
Introduction to Oil and Gas
The purpose of this book is to educate potential investors on the fundamentals of oil and gas investment opportunities as it pertains to both drilling and production projects. In addition, it's designed to assist you in evaluating the inherent risk of any oil and gas opportunity. Its scope includes: the geology of oil and gas deposits; where and how they are found; the history of exploration technology; mineral rights leasing; the significance of the deal structure; and a little-known formula that will help you evaluate your ROI based on estimated production.
The economies of all industrialized and emerging nations depend on petroleum resources - not only for transportation but for thousands of products we all use on a daily basis. Together, oil and natural gas allow us unprecedented mobility, help generate our electricity, and are used to produce everything from fertilizer to synthetic clothing to product packaging and countless other items. Most oil is now used to create fuel for automobiles and airplanes, accounting for almost 57% of the total world oil consumption. More than half U.S. population depends on natural gas to heat their homes while 16 percent of our electricity comes from using natural gas to fire generators. Each year, more and more fuel is needed for the ever-increasing global transportation needs and the demand for natural gas climbs as more and more homes are built. As a result, the demand for both fuels continues to increase. An abundant supply of oil and natural gas remain vital in helping us and the industrialized countries of the world sustain their prosperity and way of life.
Source: Earth Science World and Exxon-Mobil
2 Global Oil and Gas Outlook
Oil has been discovered on every continent and is produced in more than 100 countries today. In 2002, the ten largest oil-producing countries were, in order: Saudi Arabia, Russia, United States, Iran, China, Mexico, Norway, Venezuela, United Kingdom, and Canada. With regard to natural gas, the ten largest natural gas-producing countries were: Russia, United States, Canada, United Kingdom, Algeria, Netherlands, Iran, Indonesia, Norway, and Uzbekistan. The United States Department of Energy estimated world oil production at 24 billion barrels in 2002 produced by over 830,000 oil wells with more than 520,000 of those wells located in the United States. On average, an oil well in the United States produces only eleven barrels a day compared to hundreds or thousands of barrels a day in other countries such as Russia and Saudi Arabia.
Source: Earth Science World and Exxon-Mobil
3 Chapter 2:
Oil and Natural Gas Formation
Oil and natural gas are products of plant and animal remains or organic material. For the most part, these plants, corals, and animals lived in seas. Over millions of years, the remains settled on the ocean floor together with sediment which washed down from exposed earth and rock. This sediment may have ranged in size from molecules that dissolve in water to small boulders. In later periods, these layers of organic material and sediment were covered by more sediment which, as a result of time and pressure, converted to layers of sedimentary rock. To get a clearer picture of how this process occurred we need to understand some geological history.
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