Investments in oil & gas private placements, or direct participation projects should only be made by investors who understand, or learn how to implement a deliberate plan to minimize risk.
While clearly understanding a likely, and reasonable risk/reward ratio…investors need to accept the over-all risk they must take to achieve the upside necessary to justify taking the risk in the first place.
Investing in oil & gas projects usually takes a check-list approach in my view. Investors should realize that almost all oil & gas development operations involve technical challenges.
Deals take time to develop and come to fruition, actually, often up to two years before significant pay-back of capital is possible.
Oil & Gas investing is not for investors who don’t need the tax advantages, or who simply think they are going to get steady, and fixed rates of return each month immediately after they first start investing.
The only exception that I know of is when you find an oil and gas investment which is nearly fully funded already, and is one which is beginning to achieve some level of success when you find it.
Spreading-out your capital in multiple well drilling programs with people who control, or operate their own deals makes more sense to me than trusting a promotional company who wants to test a new drilling location with your money.
Investing in the Stock market where you get liquidity with public stocks on the larger exchanges, and your principal is typically safer is a better place to start when considering oil & gas investing.