Cashing in on New Opportunities in the Energy Market

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Jun 11th, 2017
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The standard method of making money in the energy sector for investors was to simply take up open positions in energy company stocks. However, with alternative methods of extracting energy from the ground, new investment horizons have been discovered. This has made a lot of people a significant amount of money, and not just the average investor. The real question is how does an investor, or even an average person, get in on all the money coming from new methods of extracting energy? It actually happens on many different fronts.

The front is for land owners. In states where shale is open for fracking, land owners allowing their property to be used are receiving huge royalty checks from energy companies. To put some perspective on it, according to the University of Michigan, in 2013, royalty funds in excess of $15 billion were paid to land owners allowing their property to be used to extract shale oil. In addition, the longevity of these payments is also a huge benefit. Even having an oil company place a standard well on a person’s property can mean the well will pull oil out of the ground for a 10 to 30 year period. This means 10 to 30 years of royalty checks.

There is also a huge market for qualified individuals to help landowners negotiate land and mineral rights. These agreements can be quite involved and complicated, but with so many energy companies going this route to acquire oil, negotiating land and mineral rights is big business today.

Lastly, as an investor, taking advantage of stocks with companies that extract oil or negotiate land rights is huge. While major energy companies have slowly declined from a stock value, many alternative companies that deal in land rights have seen an uptick in stock value. In fact, for many energy ETFs, energy stocks baskets of different energy company stocks have now begun to incorporate smaller energy company stocks into the fold. Of course, an easy method is to open stock positions with some of these smaller energy companies directly.

A full description of the impact of land rights negotiations and smaller energy companies would be too much detail to get into in this article. However, with new ways of extracting oil and the money this sector has unleashed, there are plenty of ways people can get on the train and enjoy outrageous financial returns.

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