The Apple REIT series founder, Glade Knight, is jumping into the energy business and relying on a well-known energy player to source and transact deals.
In a recent filing, Knight, along with David McKenney, Anthony “Chip” Keating III, and Michael J. Mallick have registered a $2 billion blind pool offering targeting oil and gas investment opportunities. The four executives are indirect owners of Energy 11 GP, LLC, the general partner of the partnership.
Energy 11 LP will offer at least 5.3 million units at $19 each and up to 95 additional units at $20 each, for total proceeds up of up $2 billion for investments in U.S. onshore oil and gas properties.
Knight and company will rely on David Lerner Associates to raise capital for the partnership. Knight and McKenny, who work together managing and advisor the Apple REITs, have a long history with Lerner, as the broker-dealer raised capital for the Apple REITs.
The offering will terminate either when all units have been sold or September 30, 2016, whichever comes first.
For their part, Lerner will earn 6% of capital raised and after a preferred return to investors, a contingent, incentive fee that will be based on the distribution amounts paid.
Executive offices for Energy 11 are located in Fort Worth, Texas, where Mallick is based. He’s the founder of the Mallick Group, Inc., an energy and real estate investor based in Fort Worth.
Who’s managing the investments?
Aubrey McClendon. Yes, that’s right.
Through American Energy Partners, LP, McClendon will recommend and operate the energy investments that Energy 11 LP invests.
In December 2013, another partnership announced that McClendon would guide its energy investing. American Energy Capital Partners, LP (AEP), sponsored by AR Capital, LLC, a Nicholas Schorsch entity, was recently declared effective by the SEC and has already broken escrow. This is one of the few public, oil and gas partnerships being offered through the independent broker-dealer community.
Energy 11 may eventually provide additional information through www.energyeleven.com. This domain is listed in its filing; however, if you visit the site, it’s not yet live.
Conflicts of Interest
There are many.
The manager, McClendon’s AEP, is not obligated to provide Energy 11 opportunities to invest in any project that other entities controlled, directly or indirectly, may invest in.