Chestnut Petroleum Due Diligence
Important information you should know to help protect yourself against oil and gas investment scams and securities fraud.
Chestnut Petroleum and its affiliated broker-dealer, Chestnut Energy Partners, are serious about providing due diligence information regarding our operations and processes. The following information has been taken directly from a U.S. Securities and Exchange Commission investor publication on oil and gas scams. Although Chestnut Petroleum does not offer or sell securities, we believe that the SEC recommendations are a strong guideline for individuals interested in learning more about oil and gas investments.
Download a copy of this information: Chestnut Petroleum Due Diligence
The following excerpts are from the SEC publication, “Oil and Gas Scams: Common Red Flags and Steps You Can Take to Protect Yourself.” Excerpts from the publication are in red. Chestnut Petroleum’s comments are in blue.
Sales Pitches Focused on Highly Publicized News. “Scam artists read the headlines, too. Often, they’ll use a highly publicized news item, like volatile gas prices, to lure potential investors and make their ‘opportunity’ sound more legitimate.”
As an owner-operator with direct control over the development of our acreage, Chestnut Petroleum has a stake in the success of every project. As such, our operations are not driven by headlines but by defined development plans backed by the experience of our in-house team of geologists, geophysicists, drilling engineers, production engineers and landmen. Led by founder and President Mark Plummer, we focus our efforts on proven producing fields where we can apply our expertise to increase production potential throughout our acreage.
“Can’t Miss” Wells.” “Every investment carries some degree of risk so you should be skeptical of any oil and gas investment opportunity pitched as completely safe. Fraudsters often spend a lot of time trying to convince you that extremely high returns are ‘guaranteed’ or ‘can’t miss’. Don’t believe it.”
With a combined average of over 30 years of industry experience, Chestnut Petroleum’s management and operations teams have been involved in the drilling and on-going operations of hundreds of wells. We can speak from experience on the risks involved with each and every well project, including both geologic and mechanical. There is no sure thing in the oil field, regardless of each project’s risk/reward profile. Our asset management approach seeks to mitigate risk by diversifying exposure to a variety of projects; our asset portfolios’ performance potential is never dependent on the outcome of any single well’s drilling outcome or continued performance.
Unsolicited Materials. “Be especially careful if you receive unsolicited materials about an investment. Simply ignoring investment-related ‘junk’ faxes, emails, voice mail messages, and regular mail may be your best strategy. And don’t let a package full of colorful marketing materials impress you, even if it’s sent by certified or overnight mail. If you’re not going to research an opportunity fully, do yourself a favor and put any unsolicited materials in the recycle bin immediately. If someone calls to follow up regarding the materials, tell him or her ‘thanks, but no thanks’ and hang up. [Hanging up is critical because scam artists often use scripted sale pitches to keep you on the phone.]“
Chestnut Petroleum and/or Chestnut Energy Partners do not send out unsolicited materials of any type. Materials are sent only to prequalified individuals who meet stringent accreditation requirements (accredited investors) and who have specifically requested to receive more information on our companies.
Limited Opportunities. “Scam artists often try to give you the impression that the ‘opportunity’ they are promoting is scarce, hoping you will hand over your money hastily before doing any due diligence. Resist the pressure to invest quickly, and take the time you need to investigate before sending money.”
Chestnut Petroleum takes a methodical approach to conducting drilling, re-engineering, and operations strategies designed to increase production throughout our properties. Our current asset portfolio encompasses approximately 250 wells in the following fields: Gillis English Bayou Unit (GEB), Calcasieu Parish, LA; East Texas Field, Gregg County, TX; Signal Hill East Unit, Long Beach, CA; Hardeman County, TX; Barnett Shale, Hood & Tarrant Counties, TX; Lea County, NM; and Eliasville Field, TX. Many of these properties include offsetting proven undeveloped drilling sites (PUDs) as well as recompletion and reentry projects. Our timelines for development vary by property; however, our development schedules include both short-term and long-term project initiatives.
High Rates of Return. “Compare promised yields with current returns on well-known stock indexes. Any investment opportunity that claims you’ll get substantially more could be highly risky. And that means you might lose money.”
There are no guarantees on any oil or natural gas project that any cash flow will be achieved. All investment projections are based on numerous specific assumptions and are necessarily hypothetical; the underlying assumptions may not be accurate, the results shown may not occur, and performance could vary significantly. In addition, the full amount of initial investment may be lost for a variety of reasons. These risks are fully outlined in each project’s Private Placement Memorandum (PPM).
Tips or Secrets. “A promoter may discourage you from talking about the opportunity with someone you trust, like a loved one, attorney or financial professional. If that happens, stop listening, and leave or hang up. Then, be sure to contact us.”
Chestnut Petroleum encourages you to seek advice from trusted individuals including attorneys and/or financial professionals in order to make informed decisions about all of your investments.
For the complete publication, see http://www.sec.gov/investor/pubs/oilgasscams.htm