Oil and gas investments experience certain unique aspects of taxes and finances that are not seen in any other industry. When high oil inventories drive commodity prices and oil investment prices down, it becomes smart to add oil investments to a portfolio. There are many people across the world who invests in oil and gas, Paul Favret being one of them. Paul is the President and Founder of Abundant Investments, LLC. It is a Colorado-based firm that makes limited real estate and private equity investments. Paul also is an accomplished oil and gas executive who has commendable technical, managerial, and business development experience.
Paul Favret marks a few investment avenues associated with the oil and gas industry
The oil and gas industry comprises of many upstream, midstream, and downstream companies. The upstream ones explore and produce the energy sources, while the midstream firms transport and store oil and gas. The downstream companies additionally are the ones responsible for refining energy sources into finished products. The companies that provide oil field drilling equipment and services are also considered to be a part of oil and gas industry. There are many ways to invest in such companies, or to invest in oil and gas directly. Buying shares of oil and gas companies, for instance, is one of the most popular ways to exposure to oil and gas in the investment portfolio. Investors may choose to get started for a cost of a single share, or even less if their brokerage enables them to buy partial shares. Stocks are a highly liquid investment. They are also less volatile than commodity prices in many cases. A number of oil and gas companies also pay dividends, through which one can enjoy cash flow from their investment. There are also many mutual funds and ETFs that focus on the oil and gas industry, and hence people can always choose to invest in them.
In comparison to stocks, futures are more direct ways to invest in oil and natural gas. A future contract basically involves an agreement between a buyer and a seller to complete a transaction at a previously set price, at a specific date in the future. Traditionally, futures were used by large businesses that desired greater certainty in their raw materials costs. In case a company depends on a particular commodity, a major commodity price change would obviously impact its profit. Futures allow buyers to secure prices for raw materials they might require in the future, so as to make production costs more predictable. Oil futures enjoy high popularity as they are quite liquid and have the potential for significant returns.
To gain a better understanding of oil and gas investments, one can explore the type of investments made by proficient investors in the domain. Abundant Investment, for instance, is a company that previously invested majorly in the oil and gas sector. This company was founded in 2001 by Paul Favret with the aim of investing in energy, real estate, and equities.