Did Your Broker Recommend 'Atlas Resources Series 34-2014 LP?'

Atlas Energy LP is asking for investors to contribute at least $25,000 in a partnership that will drill for oil and gas in Texas, Ohio, Oklahoma and Pennsylvania.  They will then share any revenue from the wells output according to a recent article in Reuters.  The subsidiary, Atlas Resources LLC wants to raise up to $300 million before December 31^st.  They would then add up to $145 million of their own capital.
However, there was a confidential memo stating that not all would be equal in this endeavor.  Investors should know that up to $45 million of the money raised will be paid to Atlas’ affiliate Anthem Securities. This is to cover commissions to broker-dealers who market the deal. Up to $39 million more will be used to buy drilling leases from another affiliate. Atlas-affiliated suppliers may also get some of the $53 million set aside for buying drilling and transport equipment. When drilling begins, Atlas will pay itself nearly $52 million in various other fees and markups.
So what does this mean for the investor? Atlas’ $145 million exposure is reduced by at least 40%, and more, after payments to group affiliates and markups. If and when the venture starts generating revenue, Atlas is entitled to a 33 percent cut, reflecting the size of its stake before accounting for those payments and markups.
Atlas is raising money for the venture, called Atlas Resources Series 34-2014 LP, in a private placement.  Private placements are sales of unregistered securities through broker-dealers to a limited number of investors.  However, this offering suggests that it is structured for the company to win. Private placements have a long history in the oil and gas sector.
For more than half of 43 private placements that Atlas issued over the past 30 years, the outside investors lost money or just broke even. In 29 of those deals, Atlas did better than the investors.
Atlas even warned in its memorandum for its offering that private placements are speculative and involve a high degree of risk. They also say that they should only be purchased if you can afford losing it all.
There are six private placements that were issued over the past 15 years by four companies that were reviewed by Reuters: Atlas; Reef Oil & Gas Partners of Richardson, Texas; Discovery Resources & Development LLC of Frisco, Texas; and Black Diamond Energy Inc of Buffalo, Wyoming.
Atlas is offering the typical template by charging between 15 percent and 20 percent in upfront fees from investors, while paying brokers an additional 10 percent of the total offering in sales commissions.
The Financial Industry Regulatory Authority (FINRA), requires that brokers perform due diligence on each issue they sell to ensure its suitability for investors. But as Reuters reported, many brokers rely on outside due-diligence firms that are in fact paid by the issuers, which is a multi-billion dollar fraud.
These private placements should never be recommended to the investor who wants a conservative/retirement oriented portfolio.  The risks should always be explained to the investor and clearly laid out to them before making such a high-risk investment.  Oil and gas private placements are especially risky due to the hidden fees and the fact that the issuers often make money when the drilling is not yielding oil or gas.
Investors are taking huge risks in oil and gas private placements and are not getting paid for the risks they take. If you expect a safe, profitable return and an income producing investment, think twice.  The volatility in oil and gas prices can drain your investment to nothing.
If you have experienced losses in any of the following:  Reef's Income & Development Fund, Reef Oil & Gas Partners, Discovery Resources & Development LLC, Black Diamond Energy Inc, Atlas Resources Series 34-2014 LP, or Atlas Energy LP, call Soreide Law Group and speak to a lawyer and no-cost to determine the possibility of recovering your losses at:  888-760-6552.