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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.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.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.
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