Oil-drilling partnerships. Are they really a good investment? Or are they too risky?

I audited a seminar given by an investment firm in Marina Del Rey. The speaker insisted that oil-drilling partnerships can lead to riches. He spoke of inflation, increasing oil prices, and the devaluation of the dollar. Yet the initial investment is several thousand. Is this worth it?

Generally these oil/gas limited partnerships or other "investments" are for wildcatting or other completely speculative ideas. Usually they are just a tax write-off for the wealthy but can give huge returns. The bottom line is this is not an investment but a speculative issue. If you can lose the money or really want the tax write off then it's a consideration but if you need the money I would say it's absolutely not a good idea.

Just a couple of other points Oil/Gas are not really the best inflation hedge at this point in time. Sure oil prices are going up but how much more? Probably not that much more lest people actually invest in alternative energy. What does the devaluation of the dollar have to do with oil and gas? The answer- nothing really. It just makes exporting far better for us and importing far more expensive. Last anyone around here knew we didn't sell a lot of oil on the worlds markets but imported plenty. This sounds like a infomercial/scam type problem.

There is no certainty in oil drilling itself ,leave alone partnership making you rich!

These seminars are like infomercials. What he says is true, if they find oil and/or gas. Thats a big if sometimes. I would want to see the leases they intend to drill, at least, and production from nearby leases. The state Geological Survey should be helpful for specific lease and well information. Contact the Corporation Commission, or whatever agency in the state overseas oil and gas drilling. They should be able to tell you if they're a legitimate oil and gas operator, their background and the drilling permits they have filed before.. There are a lot of scams in the business. These promoters in the limited partnerships make money right off the top from advisory fees, and a big share of the profits if there are any. What you have as an investor is a working interest in the wells. You incur all the expenses of drilling and maintaining the well before profits. And at least 1/8 of the production goes to the royalty interest owner, who doesnt have to pay any of the expenses. And these limited partnership promoters may have to be registered with the National Association of Securities Dealers, because they're selling an investment. Many investors in oil and gas limited partnerships are looking for a tax write off, because it can be very risky.