Have a look at list of our most popular Frequently asked questions & answers:

 

The Securities and Exchange Commission (SEC) defines an “accredited investor” as an individual or a business entity that is allowed to deal in securities that are not registered with financial authorities. These are typically high-net-worth individuals or institutional investors.

Accredited investors have special privileges in terms of access to private investment opportunities not available to the general public. This categorization is in place because accredited investors are deemed to be more financially sophisticated and better able to sustain the potential loss of an investment.

Here are the qualifications as they stood January 2022:

For Individuals:

  1. Income Test:

    • An individual with an income of more than $200,000 per year, or $300,000 for those married, for the last two years with the expectation that they will earn at least the same in the current year.
  2. Net Worth Test:

    • An individual or couple with a net worth exceeding $1 million, excluding the value of their primary residence.
  3. Certain Professional Certifications, Designations, and Credentials:

    • Holders of the Series 7, Series 65, and Series 82 licenses.
  4. Knowledgeable Employees of a Private Fund:

    • This applies to individuals who participate in the fund’s investment activities.
  5. Entity Composed of Accredited Investors:

    • An entity in which all equity owners are accredited investors.

For Entities:

  1. Assets Test:

    • An organization with over $5 million in assets, such as a business, nonprofit, or trust, can be considered an accredited investor.
  2. Registered Investment Companies:

    • This includes mutual funds, exchange-traded funds (ETFs), and others.
  3. Business Development Companies:

    • Defined by the Investment Company Act of 1940.
  4. Small Business Investment Companies:

    • Licensed by the U.S. Small Business Administration.
  5. Employee Benefit Plans:

    • If the investment decisions are made by a bank, insurance company, or a registered investment adviser, or if the plan has total assets in excess of $5 million.
  6. Family Offices:

    • With at least $5 million in assets under management, and their prospective family clients.
  7. Exempt Reporting Advisers:

    • Advisers who would be required to register under Section 203(l) or 203(m) of the Investment Advisers Act.

Other Entities:

Entities, including Indian tribes, governmental bodies, funds, and entities organized under the laws of foreign countries, that own “investments,” as defined in Rule 2a51-1(b) under the Investment Company Act, in excess of $5 million and that was not formed for the specific purpose of investing in the securities offered, can also be considered accredited investors.

It’s crucial to be aware that the qualifications can change, and the SEC may periodically update the definitions and requirements. Always refer to the latest documentation from the SEC or consult with a financial or legal professional when determining your accredited investor status.

FAQ's About Benefits & Risks of Oil Investing

  • Diversification: Oil and gas investments can diversify an investment portfolio, as they often don’t move in tandem with stock markets.
  • Potential High Returns: Historically, oil investments have offered substantial returns, especially during periods of supply shortages or geopolitical tensions.
  • Hedge Against Inflation: Oil and gas can act as a hedge against inflation since oil prices often rise when inflation does.
  • Tax Advantages: There are specific tax deductions available for oil and gas investments, especially for drilling projects.
  • Price Volatility: Oil prices can be highly volatile due to various factors like geopolitical events, supply-demand imbalances, and currency fluctuations.
  • Exploration Uncertainty: Not all drilling activities result in discoveries, leading to potential losses.
  • Operational Risks: Accidents, equipment failures, or natural disasters can impact operations and investments.
  • Regulatory and Environmental Concerns: Changes in regulations or environmental policies can affect profitability.

The returns on oil and gas investments are closely tied to the prices of these commodities. When prices rise, investments in the sector can yield higher returns, and vice versa.

  • Investors can benefit from specific tax deductions, such as intangible drilling costs and depletion allowances. However, it’s essential to consult with a tax professional to understand the full implications based on individual circumstances.
  • Environmental Impact: Concerns about climate change and environmental degradation can make oil and gas investments controversial.
  • Social Impact: Some argue that investing in renewable energy sources is more sustainable and socially responsible.
  • Indigenous Rights: Drilling activities can sometimes infringe upon the rights of indigenous populations.

FAQ's in Relation To Geopolitical Factors

Geopolitical events, such as wars, sanctions, or diplomatic tensions, can disrupt supply chains, leading to price fluctuations.

  • Geopolitical Tensions: As mentioned above.
  • Technological Advancements: Improvements in drilling technology can increase production.
  • Exploration Success: Discovering new reserves can boost production.
  • Regulatory Environment: Government policies can either promote or restrict production.
  • Supply and Demand: Basic economic principles play a significant role.
  • Geopolitical Events: Wars, sanctions, etc.
  • Currency Strength: Oil prices are often denominated in dollars. A stronger dollar can lead to lower oil prices and vice versa.
  • OPEC Decisions: The Organization of the Petroleum Exporting Countries (OPEC) can influence prices by adjusting production levels.

FAQ's About Government Regulations on the Oil Industry:

The U.S. government regulates the oil industry through various agencies like the Environmental Protection Agency (EPA) and the Department of Energy. Regulations can cover environmental standards, safety protocols, and trade policies.

No, the U.S. oil industry is primarily private. However, the government can influence the industry through regulations, taxes, and policies.

Yes, government policies, such as subsidies, taxes, or regulations, can influence production costs and, consequently, oil prices.