Oil & Gas projects

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Feb 5, 2007 9:37 pm

Hello,

I just started with a broker/dealer that sells Oil & Gas projects.  I've enjoyed reading all the info here, but I'm looking for more info on private placements.  Does anyone know of any good resources to find info on selling private placements to accredited investors?

Thanks

Feb 5, 2007 9:40 pm

[quote=GOEPP]

Hello,

I just started with a broker/dealer that sells Oil & Gas projects.  I've enjoyed reading all the info here, but I'm looking for more info on private placements.  Does anyone know of any good resources to find info on selling private placements to accredited investors?

Thanks

[/quote]

The commisions are very high, alot of these privately placed investments aren't so sucessful and they lack liquidity. Much better are publicly traded MLP's and/or Energy BDC's and/or MLP CEF's.

The various MLP CEF's are probably your best bet since K-1 forms are a nuisance.
Feb 6, 2007 9:47 am

[quote=AllREIT] [quote=GOEPP]

Hello,

I just started with a broker/dealer that sells Oil & Gas projects.  I've enjoyed reading all the info here, but I'm looking for more info on private placements.  Does anyone know of any good resources to find info on selling private placements to accredited investors?

Thanks

[/quote]

The commisions are very high, alot of these privately placed investments aren't so sucessful and they lack liquidity. Much better are publicly traded MLP's and/or Energy BDC's and/or MLP CEF's.

The various MLP CEF's are probably your best bet since K-1 forms are a nuisance.
[/quote]

Rich people understand risk and want to take it. They understand that they didn't get rich by being sissies and avoiding those pesky K-1's. They are very bored with the usual crap that brokers are slinging, but will write a big check for a private deal.

If your firm offers more than just oil and gas deals, you'll do real well. Don't get positioned just as the O&G guy in your clients minds.

Feb 6, 2007 1:35 pm

Thanks,

We are still in "start-up" mode (less than 2 years) and we have started out with oil and gas and real estate deals.  I have my series 22 & 63.

What other types of deals are out there that accredited investors are looking for?

What other type of licensing should I get?

Feb 6, 2007 2:10 pm

FYI- MLPs issue K1s.

DId I misunderstand or did Allreit say they dont? 

Feb 6, 2007 2:13 pm

[quote=Malcolm]

FYI- MLPs issue K1s.

DId I misunderstand or did Allreit say they dont? 

[/quote]

There are several closed end funds and BDC's that invest in MLP's. Those don't issue K-1's
Feb 6, 2007 4:35 pm

That's good to learn Allreit. I have a number of MLPs in my book and the K1s are a yearly source of aggravation so this is a decent way to get into the MLPs with out the K1. 

I just called Claymore  to confirm and yes their closed end issues a 1099.  Not as good as the individual stocks however not bad if you want to avoid the e.o.y. problems.

Feb 6, 2007 6:01 pm

[quote=Malcolm]

That’s good to learn Allreit. I have a number of
MLPs in my book and the K1s are a yearly source of
aggravation so this is a decent way to get into the MLPs with out
the K1. 

I just called Claymore  to confirm and yes their closed end issues a 1099.  Not as good as the individual stocks however not bad if you want to avoid the e.o.y. problems.

[/quote]

It's not just claymore, also Tortoise and Kayne/Anderson offer MLP CEF's.  Look closely at the management fee agreements and investment schedules.

Some of these MLP CEF's have a slightly weird structure in that they are C-corps as all the UTBI prevents them from being un-taxed RIC's per subchapter M. Or something like that.

The whole MLP thing is needlessly complex, and the MLP's should agitate for a simple REIT-like taxation scheme which would get rid of the tax shield and hassle's of K-1's. Letting people own MLP's inside of IRA's/tax free foundations/RIC's would greatly increase their value.

The confusing status of MLP taxation has kept me from owning them or using them with clients. The CEF's all trade at slight premiums b/c of thieir ability to issue 1099's.

When KFN converts to an LLC, I'll probably have to get up to speed in this area, although they have promised to have a structure that won't create K-1's.

I know several of the commodity ETF's are structured as trusts and so they issued K-1's.