Oil and gas deals on the Internet
Paul H. Pause'
I just returned from the SW Section AAPG meeting. A hot topic of
discussion involved the offering of oil and gas deals - prospects,
production, leases, etc. - on the WWW and also in this newsgroup.
On geologist - a past president of national AAPG and a very
experienced geologist, prospector, and investor, stated flatly that
this was illegal for most geologists and companies to be doing, unless
they were registered security brokers, which most of us are not.
His reasoning:
1) oil deals are strictly classified as securities
2) any offering of securities across state lines requires SEC
registration and offering by a licensed broker
3) the Internet is not just interstate, it is international
4) therefore, to post announcements (i.e. offer for sale) about oil
and gas deals is illegal unless the individual and/or company making
the offer is a registered security broker.
Any comments?
Any oil and gas lawyers out there? What do you think?
Who wants to be a test case?
Paul H. Pause
Permian Basin Graduate Center
Midland, Tx
Sanjay Sinha
Paul H. Pause' (geo...@lx.net) wrote:
: I just returned from the SW Section AAPG meeting. A hot topic of
If i understand points 1 and 2 as listed above - an oil deal
which is offered within the state does not fall under SEC rule book.
in that case, the web page can have big bold notice up front
stating that the oil properties on offer for the residents of
xyz state only. if someone from out of state insists on looking
at it, the advertiser cannot held responsible.
i was under the impression that any offer to sell securities must
be accompanied by a prospectus. since prospectuses have reporting
requirements, they contain much more negative informaton.
i thik i've seen discalimers statng things like "this is not a
solication. please see prospectus for offer."
my $0.02
sanjay
p.s. not a lawyer, not a finanical advisor and have no means to
become an investor.
-----
Sanjay Sinha Resident of Washington D.C.
DoD #1224 Statistically speaking, i'm safer in Beirut.
CB 650 'The Cow' Standard disclaimers apply.
VT 700C 'nonameyet'
Eric D. Siegmund
I'm not a lawyer, but I've been buying and selling producing properties
for ten years, which may or may not qualify me to express an opinion on
this subject. It does qualify me to add to the confusion by asking more
questions!
I tend to believe that, like with most Internet-related legal questions,
this issue is going to be a "work in-progress." Since each state can
establish its own regulations regarding the definition and marketing
of securities,in addition to whatever the good folks at the SEC come up
with, obvious questions arise regarding jurisdiction. Who has
jurisdiction in these cases? The state where the server is located? The
state where the property is located? The state where the seller lives?
The auction companies went through this regulatory quagmire a few years
ago, with the end result being the licensing of their key employees as
securities brokers, and a great deal of pre-screening of "qualified"
bidders (I just happen to be looking at a new Oil & Gas Asset Clearing-
house sales brochure as I type this) and inclusion of abundant disclaimer
language. They seem to rely a great deal on bidders' self-assessment as
"knowledgeable and sophisticated investors". The question arises as to
whether a properly constructed website, perhaps with a login screen
requiring such attestation, would cover some of the regulatory/legal
issues raised below.
In the past, I've spoken with several of the people who put together
such sites, intending to use them to market oil and gas properties.
Invariably, they assured me that they had done their legal homework and
had no concerns. OTOH, none of them are still active on the Web...
I think the bigger question is whether this is a solution in search of
a problem...does the market really need an online method for publicizing,
buying and selling producing properties (or leases)? I'm not convinced
that it does...but I also didn't think, a year ago, that I'd be making
my plane and rental car reservations via the Internet.
Eric Siegmund
ARCO Permian, Midland, Texas
esi...@is.arco.com
Paul H. Pause' wrote:
>
> I just returned from the SW Section AAPG meeting. A hot topic of
> discussion involved the offering of oil and gas deals - prospects,
> production, leases, etc. - on the WWW and also in this newsgroup.
>
> On geologist - a past president of national AAPG and a very
> experienced geologist, prospector, and investor, stated flatly that
> this was illegal for most geologists and companies to be doing, unless
> they were registered security brokers, which most of us are not.
>
> His reasoning:
> 1) oil deals are strictly classified as securities
> 2) any offering of securities across state lines requires SEC
> registration and offering by a licensed broker
> 3) the Internet is not just interstate, it is international
> 4) therefore, to post announcements (i.e. offer for sale) about oil
> and gas deals is illegal unless the individual and/or company making
> the offer is a registered security broker.
>
> Any comments?
> Any oil and gas lawyers out there? What do you think?
> Who wants to be a test case?
>
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