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I have been "invited" by a company named Rockwell Energy
(http://www.rockwellenergy.com/) to join a limited partnership. The fact
that I have never invested in anything riskier than a mutual fund based on
the value of gold, I would think I have no business even considering such a
gamble. But I figure the least I can do is a little homework before I make
my final decision.
The minimum investment is $100K. Participation would involve moving the
$100K from my current IRA to a Sunwest Trust IRA where I would now be
subject to an application fee of $50 and annual fee of $190 plus a fee of
$10 per transaction after the first transaction per year for a single asset
account. For a multiple asset account, instead of the $190 annual fee, I
would be charged 0.5% of the asset value if it is more than $38K. I assume
that as long as I limit my Sunwest portfolio to the Rockwell LP, I would not
be subject ot the multiple asset account fees.
The money they are collecting would be used to acquire the rights to
additional natural gas wells within the U.S. and to outfit all the wells
with a passive dehydration system (PDS) (see cpshouston.com) that is alleged
to be greener and more efficient than current extraction methods. As I
recall, I was told that 30% of the NG is lost using less advanced extraction
methods.
I was also told that the price of NG would have to slip to $3 for me to lose
money on the deal. The "guaranteed - I mean projected ROI" will be 18% the
first year increasing to 30% for each ensuing year. I would be capped at a
200% return and the period of the partnership would be 3 to 5 years. I do
not understand why the period would be a range of years. I would think it
would be a specific time period, for example 3 years, and that the
partnership would end after 3 years or when the 200% cap was reached,
whichever happens first. I'm also told I would have the first right of
refusal for future partnerships.
Rockwell currently has the rights to 20 wells in the Houston area, 11 of
which are already outfitted with the PDS extraction hardware. Some number
of the 20 are already producing NG and I could expect my first check some
time in October (which I would arrange to have deposited in my Sunwest IRA).
I am far from a wealthy person. With all assets included, I barely make the
minimum portfolio requirement of $1M and a $100K loss would be significant
for me. Of course, I'm asking myself the question, why me and why now? I
figure this is related to the current difficulty in getting loans.
Companies, who would normailly seek bank loans, are now being forced to
acquire capital in atypical ways. To me this could mean there might be
reasonable LP opportunities for folks like myself that would not normally
exist.
Last night I received an e-mail from Sun Trust with all the paperwork and
documentation needed to complete the transaction. I am reviewing it now but
of course, I am not an attorney.
My instincts tell me to run, not walk, away from this. But I know there are
people out there in the news groups who know much more than I ever will
about such investments and why not get their opinions? I am posting this to
a broad spectrum of NGs because I know there are many considerations in
making such an investment (investment risk, legal, energy, taxes, etc.). If
you feel I am posting this to an inappropriate NG, I apologize. If you can
suggest an NG I have missed, please let me know. I will try to post all
future articles on this matter to the appropriate NGs based on the feedback
I receive.
I will be contacted by a Rockwell representative Monday night and I'm sure
it'll be one of those "I must have your commitment today" deals (which will
end it right there if it happens). Any insights, warnings, cautions, advice
you may want to give me will be greatly appreciated. Thanks so much for
taking the time to read this.
Terry
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In article <sUBDk.22581$J63.16742@newsfe08.iad>,
"ritpg" <r...@g...com> wrote:
> I am far from a wealthy person. With all assets included, I barely make the
> minimum portfolio requirement of $1M and a $100K loss would be significant
> for me. Of course, I'm asking myself the question, why me and why now?
I will again quote an old cliche. In any game of poker, if you don't
know who the stooge is, then you are the stooge. Why you and why
now? Because you have money, and they want that money.
To move to more of a financial point of view, you should be building
your investment portfolio like a pyramid. There should be a base of
very solid holdings, then layers that are smaller but carry a bit
more risk going after a bit more return. At the very peak, you
have a bit of money that you can invest in the most risky items
that you are comfortable with. Some suggest that peak is only
a few percent of your investments, 5% at the most. Others want
retirement money excluded from the calculation.
In your case, 5% would be $50,000. You never put all your eggs
in one basket (hey, another great cliche), so I would cap off a
investment like this at maybe $5,000, $10,000 if you think that
it is an absolute sure thing guaranteed three ways from Tuesday.
$100K??? No way.
One last cliche for you. When a person with money meets a person
with experience, the person with the experience ends up with the
money, and the person with the money ends up with an experience.
Your money is hard earned, don't give it away in this manner.
-john-
--
====================================================
==================
John A. Weeks III 612-720-2854 j...@j...com
Newave Communications http://www.johnweeks.com
====================================================
==================
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
ritpg wrote:
> The money they are collecting would be used to acquire the rights to
> additional natural gas wells within the U.S. and to outfit all the wells
> with a passive dehydration system (PDS) (see cpshouston.com) that is alleged
> to be greener and more efficient than current extraction methods. As I
> recall, I was told that 30% of the NG is lost using less advanced extraction
> methods.
>
> I was also told that the price of NG would have to slip to $3 for me to lose
> money on the deal. The "guaranteed - I mean projected ROI" will be 18% the
> first year increasing to 30% for each ensuing year.
These operations are getting very common now. Over labor day I was in
Oklahoma and read about an LP much like the one you've described that
went belly up. Turned out it was a Ponzi scheme and the operator of the
LP eventually went broke taking all the investors with him. _Money_
magazine had a small sidebar warning about the proliferation of these
scams last month as well.
> To me this could mean there might be
> reasonable LP opportunities for folks like myself that would not normally
> exist.
This may be true, but there are plenty of cash heavy oil and gas folks
out there, why does Rockwell need your money?
> My instincts tell me to run, not walk, away from this.
Trust your instincts on this one.
-Will
william dot trice at ngc dot com
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.
ritpg wrote:
> The minimum investment is $100K. Participation would involve moving the
> $100K from my current IRA to a Sunwest Trust IRA
Even just that piece of it is interesting. Ask for some guidance about
the tax advantages of holding an LP in an IRA. It's a trick question so
it could be entertaining to hear the answers.
I'm guessing you have little or no real interest in this investment. If
you do...take a copy of the PPM to an attorney, and pay someone to
evaluate the thing before plunking down $100k/10% of your net worth from
your IRA. That's why securities laws in the US restrict private
placements to "accredited investors"...you are assumed to have the
resources to properly assess the thing. You are also assumed to have
enough common sense to use a resource other than Usenet, and not to go
writing big fat checks without doing your own due diligence. =)
-Tad
--------------------------------------
Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
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which we respond. For all of the other tips and suggestions, see "FROM THE
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