Oil and gas investments are typically structured on an "invoice-cost" or "turnkey" basis. The invoice-cost structure means investors pay the actual cost to drill and complete the well after paying a one-time overhead fee, which covers the expense of managing and offering the project. The more common turnkey structure, on the other hand, means the company sets a fixed amount for drilling and completion efforts – an amount that is typically double or more than double the actual cost to drill and complete the well. This structure often affords the company a profit whether the well is successful or not.
Through our affiliate and issuer, Riley James Development Corporation, Lone Star Securities offers its projects on an invoice-cost basis. This structure ensures that our goals are aligned with those of our investors as we are both motivated by the anticipation of a successful well. In short, we don't profit unless our investors profit. We believe this structure results in a more favorable partnership for our investors.
Through our affiliate, Riley James Development Corporation, Lone Star Securities specializes in multi-well programs as opposed to the more common single-well projects. The multi-well approach helps to mitigate the investor's risk by spreading out your investment across multiple wells and providing a higher probability for success. To fully understand the benefit of this approach, it's important to understand the nature of the business and the complexities associated with the exploration and development of oil and gas. You may have to invest in a series of single-well projects before you find success. With the multi-well approach, you can invest in a series of projects with a single investment. Download our free eBook, "Understanding and Investing in Oil and Natural Gas Drilling and Production Projects" to learn more about the nature of the business, from the geology to exploration and drilling.