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Energy Products Investors May Have Arbitration Claims your broker or financial advisor recommended an oil and gas investment(s), and you have sustained losses in connection with that energy product(s), you may be able to recover your losses through FINRA arbitration.  According to data and statistics disseminated in February 2017 by Oilfield Services counsel at Haynes and Boone, LLP, a total of 118 bankruptcies have been filed by North American oil and gas companies since early 2015.  Further, the data indicates that the total amount of aggregate debt administered in oilfield services bankruptcy cases (spanning early 2015 – early 2017) is approximately $20.7 billion, with an average debt load of $175 million in each case.

With the recent collapse in energy prices (in 2014, a barrel of crude oil was trading around $90-$100 – currently crude is hovering around $50 per barrel), many oil and gas companies are encountering severe financial distress after leveraging their balance sheets in order to fund exploration, drilling and related operations.  Predictably, this overleveraging his contributed to another ‘boom and bust’ cycle in the energy markets, leading some companies to file for bankruptcy protection.  Some of the largest reported bankruptcy cases involve total debt of approximately $2.8 billion (Vantage), $2.5 billion (Paragon Offshore), $2.1 billion (Tervita), $1.7 billion (Seventy Seven Energy), $1.7 billion (C&J), $1.3 billion (Hercules Offshore), $1.1 billion (Basic Energy Services), $1.0 billion (Key Energy Services), and $1.0 billion (Toisa Limited).

When a broker and/or brokerage firm recommends an oil and gas investment to a client, the financial advisor should first ensure that the investor is aware from the outset of the volatile nature of an oil and gas investment (essentially, such an investment is a commodity play attached to the price movement of oil).  Further, the financial advisor has a duty to determine if the investment is suitable in light of the investor’s profile and stated investment objectives.  In addition, in instances where an investor’s account becomes over-concentrated in oil and gas investments, of a broker fails to disclose the risks associated with such an investment or investment strategy, the broker and his or her firm may well be liable for losses on the investment.

According to the Bankruptcy Monitor, all of the following oil and gas companies have at least $650 million in unsecured debt, and many have over $1 billion in unsecured debt:

  • Sandridge Energy, Inc.;
  • Breitburn Operating LP;
  • Linn Energy, LLC;
  • Memorial Production Partners L.P.;
  • Atlas Resource Partners, L.P.;
  • Swift Energy Company;
  • Pacific Exploration & Production Corp.;
  • Troublesome Creek Gas Corporation;
  • Ultra Petroleum Corp.;
  • Energy XXI Ltd.;
  • Enquest PLC;
  • Stone Energy Corporation;
  • Samson Resources Corporation;
  • Sabine Oil & Gas;
  • Chaparral Energy Inc.;
  • Berry Petroleum Company, LLC;
  • Penn Virginia Corporation;
  • Bonanza Creek Energy, Inc.;
  • Vanguard Natural Resources, LLC;
  • Midstates Petroleum Company, Inc.;
  • Halcon Resources Corporation;
  • Venoco, Inc.;
  • Quicksilver Resources;
  • Magnum Hunter Resources Corporation;
  • Milagro Oil & Gas, Inc.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors in non-conventional investments, including oil and gas-linked investments.   .  Depending on the facts and circumstances, investors may be able to recover their losses in FINRA arbitration, and in some instances, securities litigation.   Investors contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at for a no-cost, confidential consultation.

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