In a filing yesterday, American Energy Capital Partners, LP (AE), a public oil and gas partnership sponsored by Nicholas Schorsch’s AR Capital LLC, announced that it has broken escrow. The SEC declared the partnership effective on May 8th.
In most states, an offering must receive $2 million in subscriptions in order to break escrow. Pennsylvania and Arizona require subscriptions of $100 million and $10 million, respectively, before their residents’ capital may be released from escrow.
It was unclear how many, if any, selling agreements AE has with independent broker-dealers at this time.
The initial investment comes from AE and AECP Management, LLC (AECP), consisting of $1 million in cash, each.
AECP, the manager of AE, is owned and operated by Aubrey McClendon, an industry tycoon best known for his success in building Chesapeake Energy into a shale gas powerhouse. In early 2013, McClendon left Chesapeake due to pressure from shareholders over extreme spending, which at times, exceeded cash flows.
By the summer of 2014, he was back at it raising capital and forming partnerships with the goal of building another empire.
In December of 2013, Nicholas Schorsch’s companies filed with the SEC its intent to raise up to $2 billion in capital for a public, onshore oil and gas deal with McClendon at the helm managing operations through AECP Management, LLC.
Most oil and gas partnerships are private, meaning information is not available to the general public. Potential investors, if qualified, may receive a prospectus from their advisors if and only if that advisor’s broker-dealer has a selling agreement with the sponsor for that particular offering.
In the case of a public offering, the partnership files their prospectus and all other information with the SEC, which makes the materials available through its EDGAR system.
Schorsch and his team through innovation and a tireless work ethic have transformed the non-traded REIT industry by shortening the time to liquidity for investors, delivering on performance, and providing transparency. And through RCS Capital Corporation, they have been on a crusade to build the premier investment platform providing advisors and investors access to best in class alternative investment solutions.
AE is AR Capital’s first energy partnership. While most oil and gas offerings raise anywhere from $25 million to a couple hundred million, Schorsch and his team hope to raise $2 billion in capital.
Read more about the REIT-like structure of American Energy here.
If successful in reaching that goal, and if McClendon is able to source and locate profitable wells that deliver positive returns for investors, AE and Schorsch stand to change how broker-dealers expect energy sponsors to structure their offerings, not to mention the hundreds of jobs they will create in the energy field.