Ginger Oil AB, prioritizes a conservative use of investment funds and has through it\s subsidiary Ginger Oil Inc – with head quarters in Houston, Texas – developed an enterprise to build oil and gas reserves through both internal development of prospects and through acquisition of external prospects. The company prioritizes prospects with comprehensive and reliable data, based on modern geological, geophysical and engineering methods. With a conservative policy regarding risk and an assessment of projects, the company is offering its investors an investment that seeks to optimize the profit potential in a traditionally risk prone industry. An investment in Ginger Oil AB carries high risk and large potential.
Ginger Oil is active in the US oil and gas industry, mainly in Texas, Arkansas, Louisiana and Michigan. All activity is located to areas where geological and geotechnical documentation is available and of proven quality. The company is exploring both independently and together with partners. When a decision is made to explore an area, Ginger Oil uses modern methods of geological and geophysical analysis, preferably through seismic investigations. Possible reserves are located and the most interesting are designated as “prospects”.
Each prospect has to be drilled in order to be classified as a productive oil or natural gas discovery. The exploratory drilling is the most expensive activity during this phase. A confirmed discovery is a significant enhancement of value. It is customary in the industry to share the risk and upside potential with several partners. Ginger Oil has personnel covering all disciplines in the upstream field of the industry. It takes leadership role and a driving force in coordinating, organizing and developing a project. The company also divests all, or shares in projects when attractive financial terms can be reached.
Ginger Oil uses its profits from successful projects to invest in new projects in order to give a better rate of return on the capital invested.
1. Risk assessment of project possibilities.
All prospects evaluated by Ginger Oil are subject to a “risk threshold analysis" where the overall potential and individual risk factors are combined. The end result is a list containing an internal priority ranking. Considering the scope of the investment budget an annual drilling program is created.
Generally, the major portion of available funds to Ginger Oil will be used for prospects with low risk, i.e. drilling of shallow to medium deep wells in well analyzed prospects in known formations. A smaller portion of the annual investment funds is used in prospects with higher risk and also significantly higher potential. An example would be a large prospect in deeper formations with complex geology.
2. Operator ship
When starting a project where several partners are involved, an operator must be selected. The operator leads the process and coordinates activities. Ginger Oil has a complete organization with strong capacity and competence in geology, geophysics, engineering, land management, mineral rights, geographical mapping and accounting as well as total project management to be able to act efficiently as operator.
Ginger Oil has chosen to develop its business independently but in close cooperation with several strong and trusted partners. This independence ensures that the company can act with integrity following its own conviction and protecting its own interest. Independency is best maintained if all possible alternatives to a proposed activity are properly evaluated and if necessary pursued.
Ginger Oil is well structured and properly organized. The company is maintaining it’s long term financial integrity with weighing its commitments and risks in detail. To look for oil and gas is risky and results are only achieved through great knowledge. Methodical work and conservative valuations leads to success. To change a drilling program in order to save time is correct. To re-prioritize prospects to be drilled based on new analysis that shows new possibilities is also correct. Even in a conservative environment.
5. Guide lines
Ginger Oil has in order to act and align decisions made some central guide lines:
- Prioritize prospects with limited competition but with high development potential
- Avoid prospects where the first well has more then 25% of the areas total value
- A small part of a large prospect is preferred to a large share in a small prospect
- Prioritize prospects an assessed return on investment of > 200 %
- Seek to achieve an annual rate of return of at least 20 %
- A single investment should never have a ”payoff time” longer than 3,5 years