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Andrew Tobias

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Andrew Tobias
Andrew Tobias

Money and Other Subjects

Gas Me Up

April 14, 1997March 25, 2012

“I am looking into buying a share in a company that wants to drill a gas well in NY State. I was wondering if you had any experience with this and might point out some things I should look at closely. I plan on putting their prospectus in front of my lawyer and my broker, and doing a little investigation on my own. I can afford the $5000 a share as high risk capital, but I don’t want to throw money away. They only need $100,000 to start drilling and they have $20,000 already. If you could spare me a few minutes, please let me know what your thoughts are.” — Paul Fischer

Well, Paul, I fear it’s not a lawyer or a broker you need to consult so much as a geologist. My guess is that if these folks have no money, there’s a reason. And if they’re trying to raise it from people with no experience in this, there’s a reason for that, too. It may not be that they’re crooks or anything but well-meaning. But why go with unproven rookies? (I am assuming they are unproven rookies, or they would have $100,000 of their own, or prior investors eager to back them for more.) If this were an exciting speculation, wouldn’t someone closer to the situation have grabbed the deal for him/herself? Of course, I know NOTHING about this deal. But sometimes that’s an advantage.

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