Investment Grows in Oil Projects Offered in Crowdfunding Platform

The passage of the JOBS Act and oil price downturn proved to be good things for Crudefunders, an online crowdfunding portal that offered direct investment in oilfield projects.

Last year, Rigzone spoke with Crudefunders in an article that explored the potential of crowdfunding in the oil and gas industry. Since that time, a lot of changes have happened at Crudefunders, David Taylor, co-founder of Crudefunders, told Rigzone.

The JOBS Act, which took effect May 16 of this year, allowed Crudefunders to offer investment opportunities across the United States to investors who lived around the country. Prior to the JOBS Act, Crudefunders had operated under an intrastate exemption, meaning that only Texas-based companies that had 80 percent of their revenues originating in the state and Texas-based investors could participate in the platform.

The passage of the law meant the company had to undergo some changes, as the law didn’t allow for a company to operate on an intrastate and an interstate basis. Crudefunders decided to shift to interstate operations, which meant it had to undergo some changes. These changes included redesigning the back of its investment portfolio and adding a new board of advisors. Taylor told Rigzone that the changes have been tough, but fortuitous in the end.

When Crudefunders first started as an intrastate crowdfunding platform, the company had between 1,000 and 2,000 investors. In a year and a half’s time, the company’s investor database has grown to 4,200, Taylor said. One thing that Taylor considers amazing is that the company didn’t have to close up shop when oil prices declined. Instead, the oil price downturn saw saavy investors take an interest in investment opportunities on the Crudefunders site.

Crudefunders’ investor base if far from homogenic. In fact, many of the investors are women. He believes that many of these investors work in the oilfield and have always wanted to invest in what they’re doing.

Investors have shown a great deal of interest in the Permian Basin, but opportunities still exist in oilfield operations near Houston, in East Texas and in the Eagle Ford, Taylor stated. Investors can put as little as $1,000 into a project and as much as $50,000.

Crudefunders is now in the midst of its first interstate project. Taylor’s goal for the company is to offer one project a month for the next four to five months, and ultimately, to offer one new project a week.

The company is agnostic when it comes to the operator, he said, adding all they have to do is pass a rigid securities background check, and demonstrate productivity and effective economic models.

“Getting more projects out is great, but we also want to focus on quality,” Taylor commented. “Success begets success. As long as projects do well and people are satisfied, it will grow.”

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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