oil and gas consulting

Investment Investigation: Sales of Adageo Energy Private Placements

February 5, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating potential unsuitable investments and recommendations in a number of oil and gas related ventures including Adageo Energy. According to the company’s website Adageo Energy specializes in high-growth, high-return opportunities in the energy sector. The company’s focus includes the identification, acquisition, drilling, development, and operation of oil and gas properties. Adageo Energy is a sponsor of several oil and gas private placements.

One such issuance is Adageo Energy Partners, LP which according to SEC filings sought to raise $50 million and raised at least $31 million of that amount through brokerage firms including Direct Capital Securities, Inc., Madison Avenue Securities, Inc., WFP Securities, Inc., Arete Wealth Management, LLC, Newbridge Securities Corporation, Charter Pacific Securities, LLC, ePLANNING Securities, Inc., Sunset Financial Services, Inc., Jesup & Lamont Securities Corp., and Capital Guardian, LLC.

As reported in Reuters for issuers other than Adageo Energy, many of these types of private placement deals fail and investors take outsized risks compared to the scant compensation they are likely to receive. The issue with oil and gas private placements is two fold. First the much of the investor’s funds are eaten up by fees and costs and are never used for investment purposes. For instance and analysis of Atlas Energy LP found that the issuer typically charged between 15 percent and 20 percent in upfront fees from investors and paid brokers an additional 10 percent of the total offering in sales commissions. According to Reuters, investors only get to see 65-70% of their capital actually put to work on oil and gas projects.

Investor Recovery Options for Goldman Sachs MLP and Energy Renaissance Fund (GER) Losses

February 4, 2016 | by Staff Attorney

The investment fraud attorneys with Gana Weinstein LLP continue investigate oil and gas and commodities related investment losses. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Goldman Sachs MLP and Energy Renaissance Fund (Ticker Symbol: GER) is a Master Limited Partnership (MLP) closed-end mutual fund. The Fund opened at about $20 per share in September 2014. However, since that time, due to the fund’s holdings in MLPs, the value for the fund has plummeted to $4.19 representing an almost 80% loss.

About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. According to Bloomberg, many oil companies are in trouble and are going bankrupt as U.S. high-yield debt issued to junk-rated energy companies grew four-fold to $208 billion. The bankruptcies have been devastating causing forced selling at fire sale prices.

Moreover, our firm has been receiving an alarming number of complaints concerning how these speculative investments are being marketed and sold to investors. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income. However, in the past year, investors have lost $20 billion in publicly traded in master limited partnerships and publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.

Investor Recovery Options for Milagro Oil & Gas Losses

February 2, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Milagro Oil & Gas and several of its affiliates filed for Chapter 11 bankruptcy protection in July 2015. At that time, Milagro Oil reported that it had $1 million to $10 million in assets and $500 million to $1 billion in liabilities that it would not be able to pay because its business became unprofitable in light of the decline in the oil market. The company has 1,200 wells in South Texas, Gulf Coast, and in Louisiana. The company plans to sell its oil and gas properties and liabilities to Houston-based White Oak Resources VI for $217 million in cash and equity.

Our firm continues to file complaints on behalf of investors who have been overconcentrated in oil and gas investments. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.

Mutual Fund Tortoise Energy Infrastructure (TYG) Investor Recovery Options

February 1, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Our firm has been tracking a number of leveraged Master Limited Partnership (MLP) closed-end funds that have suffered significant losses. Among those funds is Tortoise Energy Infrastructure (NYSE:TYG) with $2.2B billion in assets. Over the past year the fund has suffered a 43% loss.

As a background, about 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.

Our clients tell us similar stories that their advisors hyped MLPs as high yielding investments without significant discussion of risk. In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas private placements were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

Investor Recovery Options for Swift Energy Co. Losses

February 1, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Swift Energy Co., a U.S. shale driller, recently sought Chapter 11 bankruptcy protection. The Houston driller was founded in 1979 by Aubrey Earl Swift and had trimmed 60 percent of its capital budget, cut 20 percent of its workforce, and made other capital expenditure reductions in order to adjust to a 68% percent fall in oil prices over the past 19 months.

Swift Energy operates oil fields in the Eagle Ford Shale in South Texas and in Louisiana fields with listed assets of about $1 billion and with debts of $1.35 billion. The company’s revenues sank 55 percent from the same period last year and posted a $354.6 million net loss from July to September. In November lenders reduced the company’s borrowing base by $45 million.

Our firm continues to file complaints on behalf of investors who have been overconcentrated in oil and gas investments. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

Odebrecht Offshore Drilling Finance Investor Recovery Options

January 30, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP continue to report on investor losses in oil and gas related investments. Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

According to Bloomberg, bonds of Odebrecht Oleo & Gas SA (Odebrecht), the oil services arm of Latin America’s largest construction conglomerate plunged to record lows after Petroleo Brasileiro SA, the corruption plagued stated owned oil company, canceled a contract to rent one of its drilling rigs. Odebrecht Offshore Drill Finance’s $1.5 billion of bonds come due in 2022 and are backed by cash flows coming from four drilling rigs. On the news back in September 2015, shares of the bonds fell 12% to about 26 cents on the dollar. Also $550 million in perpetual dollar bonds from Odebrecht Oil & Finance also declined.

More recently, Fitch Ratings has downgraded the senior secured notes issued by Odebrecht Offshore Drilling Finance Ltd. (OODFL) to ‘CCC’, and affirmed the senior secured notes issued by Odebrecht Drilling Norbe VIII/IX Ltd. at ‘B’.

UBS Closes Two MLP ETNs – ETRACS 2x Monthly Leveraged S&P MLP Index (MLPV) and ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure ETN (MLPL) After Massive Investor Losses

January 24, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investors that were recommended to invest in two UBS exchange traded notes (ETNs) that concentrated in master limited partnerships (MLPs) that are now being shuttered. The first ETN, ETRACS 2x Monthly Leveraged S&P MLP Index ETN (MLPV) only recently was issued in July 2015 and is an $11 million fund. Since starting at a high of around $21 per share the fund has collapsed to only around $6.6 per share. The other fund being closed is the $113 million ETRACS 2x Monthly Leveraged Long Alerian MLP Infrastructure ETN (MLPL) which reached a high of around $73 in July 2014 only to fall to about $12.6. According to a press release by UBS the funds “will be mandatorily redeemed in accordance with the terms of the Securities as a result of the occurrence of an Acceleration Event, triggered as a result of the intraday indicative value of the Securities being equal to or less than $5.00 on January 20, 2016.”

The liquidation of a $113 million fund like MLPL under these circumstances is shocking. The notes were supposed to expire by the earliest in 2040. However, the rapid fall of the price of oil triggered an acceleration provision. Investors recommended to hold such funds by their advisors were probably not aware that the funds could be required to automatically liquidate their holdings under duress and at firesale prices that will erase shareholder value. The liquidation provisions in the ETNs is a risk that financial advisors may not be aware of when they recommend buying and holding this speculative asset class that offers leveraged exposure to a volatile commodity like oil. Further, at this point it would take a mathematician to figure out what an investor is likely to receive in repayment.

Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, leveraged ETFs, mutual funds, and individual stocks. Our firm has written numerous articles concerning the dangers of MLP investments. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. However, most of these companies are heavily reliant on high oil prices to sustain their business models.

Wells Fargo Financial Advisor Charles Lynch Accused of Unsuitable Energy Related Investments

January 24, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a number of customer complaints involving Wells Fargo Advisors, LLC (Wells Fargo) brokers, including financial advisor Charles Lynch (Lynch), concerning allegations that the investors have been recommended or their advisory accounts have been mismanaged to hold high concentrations of energy related investments. According to Lynch’s publicly available records, there are 11 customer complaints with 9 of those complaints being filed in 2015 all related to energy investments. The customer complaints against Lynch allege securities law violations that including unsuitable investments among other claims.

Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks. Our firm has written numerous articles concerning the dangers of MLP investments. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. However, most of these companies are heavily reliant on high oil prices to sustain their business models.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Many of these companies relied upon high energy prices in order to sustain their operations. As reported by the Wall Street Journal the drop in oil and energy prices and the industry downturn has made it difficult for many companies to refinance their debts.

Investor Recovery Options for NGL Energy Partners (NGL) Losses

January 20, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. NGL Energy Partners (Ticker Symbol: NGL) is a Master Limited Partnership (MLP). About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. NGL Energy Partners has declined 66.9% in value from its 52-week high and is trading at only $11.14 a share. NGL Energy Partners business focuses in the oil and gas midstream sector.

In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas private placements were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.

Investor Recovery Options for Alliance Resource Partners (ARLP) Losses

January 19, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. Alliance Resource Partners (Ticker Symbol: ARLP) is a Master Limited Partnership (MLP). About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. Alliance Resource Partners has declined 67.9% in value from its 52-week high and is trading at only $14.01 a share. Alliance Resource Partners business focuses in the coal sector.

In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas private placements were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.