In this edition of Hot we feature an Oil and Gas company going after opportunities in this low-price oil environment.

The question on everyones mind... WHY?  The Oil industry is in turmoil. Oil is down > 50% since mid June 2014.  Supply is exceeding demand, globally.  Companies are laying off employees and cutting capital expenditures. The media is reporting daily about the troubles in the industry.  These are all good reason to be concerned with investing in an Oil and Gas company today.  But, with volatity and a depressed industry come tremendous opportunities.

Oil & Gas: The Opportunity

Here are some reasons why this is the ideal time to be invested with an Oil & Gas company that capitalizes on opportunities:

  1. Oil is extremely oversold and due for a rebound. Oil industry insiders have seen the ups and downs in oil prices and have experienced market pullbacks before.
  2. Oil consumption remains strong and is likely to increase thanks to cheaper prices.
  3. Historically oil rebounds quite quickly, especially when the U.S. economy is growing. The perceived "glut" of oil is much smaller than most people realize. Excess oil supply (over demand) is presently about 1 million barrels per day.
  4. If new production capital is deferred and demand growth continues at 2% or more, we'll see capacity constraints during 2016, an election year of course, drive prices higher.
  5. Over the next several years, as demand growth approaches 100 million barrels a day and the industry production falls short….. “2014 Discoveries Hit 25-year Low”, we will see higher gasoline prices and possible shortages of fuel.
  6. Oil's decline is not a major sign of global economic weakness; supplies are temporarily a bit higher than needed, the dollar has been strong, and because too many speculators held futures contracts that were suddenly liquidated after the OPEC meeting sparked a sell-off.

HotstockGranville Oil & Gas, Inc.

In the graph above, the fundamentals in the oil markets require companies to continue investing in new production to not only replace the decline from oil fields but to add new production to the growing demand.  However, oil companies are reluctant to invest in new production as their cash flows decline.

The company is currently pursuing an early round financing for investors that would like to participate in the growth of this company. 

There majority of oil and gas companies pursue capital financing through large institutional or Private Equity investors, not typically available to the average investor.  The concern with this type of investor is the Oil and Gas company gives up a large percentage of the company and, at times, control. Another option for the oil and gas company to pursue capital funding  is to provide wealthy investors to participate through Oil and Gas Limited Partnerships.  The problem with this type of investment, for the average investor, is the majority of limited partnerships are front-loaded and the only benefit for the investor are tax right-offs versus participating in the overall growth of the company and cash-flow from production of the project.