subject: Direct Ownership In Oil And Gas Drilling Programs - Part Two - Memorandums [print this page] State and Federal Securities Laws require that investors be provided a Private Placement Memorandum before any contracts are signed.
The following list of Sections in the Table of Contents should be provided to all investors before sale is made. Each section should include an indepth overview of that section's topic.
TABLE OF CONTENTS
Summary of the Offering
Risk Factors
Terms of the Offering
Plan of Distribution
Proposed Activities
Additional Assessments
Allocation of Interests
Use of Proceeds
The Initial Offerings
Participation in Profits and Losses and Distributions
Compensation and Benefits to the Managing Partner and its Affiliates
Management
Conflicts of Interest
Prior and Current Activities of Managing Partner and Affiliates
Responsibilities and Indemnification of the Managing Partner
Tax Aspects
Competition, Markets and Regulation
Summary of the Partnership Agreement
Other Matters
Related Party Transactions
Financial Condition of the Partnership
Legal Proceedings
Definitions
Exhibits: (these attachments are general in nature)
A. Agreement of (Type of Partnership) B. Geological Reports
C. Forms of the Turnkey Contracts
D. Form of Operating Agreement
E. Subscription Documents
A properly prepared Memorandum will always protect the Issuer who is making the offering, but it should also be fair to the investor. The Investor is the life-blood of any oil and gas company. Without Direct Participation from investors, oil and gas companies would cease to drill wells. Any well constructed Memorandum should be constructed to be fair to both parties involved in the drilling program. It is unfortunate that many potential investors fail to read any of the material in the Memorandum before they purchase working interest in the program. Many companies are hoping that is the case, because they may have prepared a Memorandum that is inadequate as to "Full Disclosure". Alway remember, that when you sign the contracts, you are agreeing to all of the terms in the memorandum.
When an investor purchases Working Interest in an oil and gas well, that ownership is filed with their State Securities Agency. Remember that all companies are required to file a copy of the Memorandum with State Securities Agencies in your state within 15 days of your purchase. There are a few states that do not require this registration. The memorandum that is submitted will be scrutinized by that State Securities Agency, thus giving some validity to that Memorandum's construction. Ownership in Oil and Gas Wells can be extremely rewarding, but you must take your time and read the the Memorandum.
