Author Topic: Would this situation pass the JOBS Act Jack spoke about last week?  (Read 1769 times)

Offline AZDuffman

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Jack talked about Act 3 of the 2010 JOBS Act last week on the show and it got me to thinking how and what to do to remain in compliance for something I have wanted to do for a few years now.

The details are that as an Oil and Gas Landman I see how well deals evolve over time.  I have found a source where I can get a well drilled and running for about $160,000 when all is said and done.  The problem of course is I do not have $160,000 to place at risk.  But neither do most "wildcatters."  So they sell shares in the well to spread the risk.

My plan would be to sell shares of 1% interest in the well each at a price to be determined, but probably $3-5,000 to cover drilling and initial start-up costs.  I would market them via a website and follow-up calls to discuss.  I would have a lawyer draw all needed disclaimers, etc to keep it above board.

So the question is, does anyone know if this would neatly fit into the standards of the act?  Jack said something about <35 investors and $500,000.  I would easily fit below both of these numbers.  I have looked at parts of the act and am still not sure if this would clear the initial test before I hire a lawyer to set up the LLC /Co and such.

Can anyone give some basic advice here?  Thanks!

Offline chuck_3

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Re: Would this situation pass the JOBS Act Jack spoke about last week?
« Reply #1 on: February 22, 2014, 09:04:08 AM »
I have had experience with securities laws and oil and gas in Texas nad Oklahoma.  Each has parts of laws specific to raising money for oil and gas ventures.  In spite of the Jobs Act provisions, I think you would have a lot more hoops to jump through.  I think you still have to meet state securities laws irrespective of the Jobs Act. 

In some instances, people with existing relationships can partner on drilling and development, but that would preclude any public offering. 

Those regs are the reason I never had any partners, except when I became General Partner of two Ltd Partnerships after their formation. 

I would talk to a lawyer before trying anything, since "talking it up" before an offering can create problems under at least Texas securities laws, something I learned in doing some recent research.