The only gotcha part of my original question was to gauge your experience in direct investing in oil and gas. If you haven't done that, there is, of course, no shame. In fact, as I said before, I do not recommend it.
Actually, since there are no regulations of investing in oil wells other than the usual prohibitions of fraud and such, you, reaper, can invest directly in oil and gas wells. In fact, you can get together with 10 or so of your friends, lease some land, contract with a drilling company and there you go. Several months ago, I understood the "qualified investor" thing and my memory is that it has to do with marketing. I am sure you understand it better than I.
Now, that is a short discussion, there are all kinds of regulations on the actual drilling, but not much in the raising money leg. I have actually watched the process take place many times. An individual picks an unleased tract of land, thinks up a justification for drilling, goes to the Petroleum Club and talks to laymen about the prospect, gathers investors and drills a well. The pitfall is that the investor needs to have the technical expertise to evaluate the "reason" for drilling and the risk involved and also how the "promote" affects risked rate of return. Because of this, a wealthy doctor who is impressed by the cashet of the oil business, is a juicy target for a promoter.
A good oil finder will function in the same way, so if one knows someone who is trustworthy, then it can work out. A layman still doesn't have the tools to evaluate risk on his own, though.
Here is a true story, though shortened. I was standing in the office of an individual who had gotten into the oil business less than a year prior. He was explaining a prospect using a map on his wall. He said, "See these two wells? They are completed in sand bars in a river bed. We know that these bars tend to occur at regular intervals, so we think one is under our lease." I said, "You show the channel meandering over to your lease. How do you know it does go over here?" He said, "Well, our lease is over here. This was the only available lease." It is amazing the influence on 150 million year old river beds that an available lease can have. I am sure he sold the prospect. He had sold others.
In the case of BECC, the company's growth in their working interest drilling ventures is closely tied to their ability to find oil or to evaluate other people's prospects. I believe that if they don't have that ability, they will eventually run out of direct investors. When that will happen is unknown and I certainly never said they lost money on any well--how would I know?
