American Energy Capital Partners Yet to Own an Oil or Gas Well

AR Capital’s public oil & gas partnership filed its quarterly report today. American Energy Capital Partners, LP (AE), the first energy related investment for the Nicholas Schorsch firm, is a $2 billion offering.

Schorsch and AR Capital are best known for real estate investing so when it came time to offer a direct energy LP, they partnered with an industry expert to manage the investments, much like business development companies hire sub-advisors to source and evaluate deals.

In the case of AE, Schorsch and company chose Aubrey McClendon and his AECP Management, LLC (AECP).

Be sure to read Aubrey McClendon – His Connection to the Direct Investment Industry.

McClendon, best known for building an empire of Chesapeake Energy’s shale gas business, has been busy structuring various entities and raising capital hand over fist since being pressured to resign in early 2013 (from Chesapeake).

AE was declared effective in May 2014 and broke escrow in June thanks to an initial investment from its general partner.

Filed today, AE’s 10-Q indicates they didn’t raise any cash during the quarter, most likely due to not having selling agreements in place.

After October 1st, RC Securities, the managing broker-dealer, raised $944,000 through sales of common units.

It appears that AE has not invested in any acreage, producing or non-producing wells just yet, which makes sense given that it just began raising capital through the independent broker-dealer channel.

The current fiasco related to American Realty Capital Properties (ARCP) could be a potential hurdle for AE’s capital raising and deployment efforts as well.

According to the filing, “Recent disclosures made by [ARCP] an entity previously sponsored by an entity under common ownership with our ARC sponsor, regarding certain accounting errors have led to the temporary suspension of selling agreements by certain soliciting dealers.”