Before signing on to any oil and gas venture, John Engel wants prospective partners to do their homework, and he speaks from experience. Now the chief operating officer at Gulf Coast Western, Engel came to the firm from a compliance background in the securities industry, and he brought that same scrutiny to evaluating the Dallas company before he ever agreed to work there.
Engel recently laid out his approach to vetting oil and gas firms on the “Wealthability for CPAs” podcast, describing what first caught his attention about Gulf Coast Western. Rather than promising easy returns, the company opened conversations by explaining plainly that a dry hole means no revenue, since no oil comes out of the ground. Engel said that directness stood apart from pitches that gloss over the possibility of loss entirely.
Practical Steps For Due Diligence
Engel recommends prospective partners start with the Better Business Bureau, since checking reviews and business practices there is a quick way to spot red flags. From there, he points investors toward detailed financial statements, Dun & Bradstreet reports, and the secretary of state’s office in whichever state a company operates, all of which can confirm a firm is legitimate and in good standing.
One check Engel considers essential is confirming a well’s American Petroleum Institute number, the unique identifier assigned to permitted wells. A company that cannot readily produce this number for a project it is promoting should raise immediate concern, he said, since legitimate operators have nothing to hide about a well’s permitting status.
Applying The Standard To Gulf Coast Western
Engel has applied this same checklist to his own employer, and he encourages Gulf Coast Western’s prospective partners to do the same rather than take reputation on faith. That willingness to be scrutinized, he suggests, is itself a sign of a firm operating the right way, and it is a habit Engel says every serious investor in this space should adopt before writing a check. Read this article for related information.
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