Investor Lawyers Blog
Investors in Atlas Resources 28-2010 L.P. (“Atlas 28-2010” or, the “Partnership”) may be able to recover investment losses through FINRA arbitration. Atlas 28-2010 is a Delaware limited partnership formed on April 1, 2010, with Atlas Resources, LLC serving as its Managing General Partner and Operator (“Atlas Resources” or “MGP”). Atlas Resources is an indirect subsidiary of Titan Energy, LLC (“Titan”). According to publicly available SEC filings, Titan is an independent developer and producer of natural gas, crude oil, and natural gas liquids, with operations throughout the United States.
As part of its business, Titan sponsors and manages certain investment partnerships, including Atlas 28-2010. As an oil and gas partnership, Atlas 28-2010 has drilled and currently operates wells located in Pennsylvania, Indiana, and Colorado. Atlas 28-2010 seeks to earn revenue through operation of its wells, which produce natural gas. The Partnership raised investor capital through a private placement offering governed by Regulation D (“Reg D”) of the federal securities laws, allowing for the sale of unregistered (or exempt) securities.
Investing in a private placement carries significant risk, and for this reason, is typically only available to accredited investors (in general, to be accredited an investor must have an annual income of $200,000 or joint annual income of $300,000, for the last two years, or alternatively, have a net worth in excess of $1 million, either jointly or with a spouse). One risk with private placements involves their high cost; many oil and gas limited partnerships have high expense ratios, making the investment a risky proposition from the outset. Up-front expenses may be as high as 7-10%, in addition to due diligence fees that may range from 1-3%. Furthermore, oil and gas private placements are risky because of the extreme volatility associated with the underlying commodity: oil. Due to recent sharp declines in the oil and gas market (crude oil has significantly declined in price from recent highs in 2014), many oil and gas limited partnerships are now teetering at the brink of default.