Commission Halts Unregistered Activity by XL Hydrocarbon Assets Z-2, LLP, XL Hydrocarbon Assets, LLC, and Steve Hamilton
HARRISBURG, Pa., Aug. 10, 2012 /PRNewswire-USNewswire/ -- To halt the offer and sale of unregistered securities in Pennsylvania, the Pennsylvania Securities Commission (Commission) issued a Summary Order to Cease and Desist against XL Hydrocarbon Assets Z-2, LLP (XL, LLP) and XL Hydrocarbon Assets, LLC (XL, LLC), both entities, and Steve Hamilton (Hamilton), an individual, all with an address in Austin, Texas. XL, LLP was offering for sale limited liability partnership interests (Interests) for the drilling and/or completion of the Zalman 1 Production and Zalman 2 Development oil and gas wells in Wharton County, Texas. XL, LLC was the managing partner of XL, LLP. Hamilton was offering for sale the Interests.
In or about July 2012, Hamilton cold-called at least one Pennsylvania resident (PA Resident) and offered for sale the Interests. Hamilton stated that the investment involved a two-well project with one of the wells already producing 35 barrels per day; that the second well had not yet been drilled; and that the PA Resident would "make money right away." He further stated that the PA Resident could be looking at making $5,000 per month with an investment in one Interest; that the minimum investment is $19,000; and that Hamilton would e-mail offering materials (Materials) to the PA Resident.
During the same month, a representative (Representative) of XL, LLP e-mailed the Materials to the PA Resident. The Materials state that XL, LLP is offering for sale 100 Interests at a cost of $39,500 per Interest for a total offering of $3,950,000; that the immediate projected return on an investment in the Interests is 7.4%; and that within 30 days of the closing of the offering, XL, LLP intends to contract for a reworking of the Zalman 1 well, which will increase the projected rate of return to 11.8%. The Materials further state that within 120 days of the closing of the offering, XL, LLP intends to contract for the drilling and development of the Zalman 2 well, which will increase the projected return to 131%; that XL, LLC is the manager of XL, LLP; and that XL, LLC "shall have the authority and responsibility for the management and control of all aspects" of XL, LLP's business and operations.
The PA Resident had no substantive, pre-existing relationship with XL, LLP, XL, LLC, Hamilton, or the Representative. The PA Resident was not an "accredited investor" under Rule 501 of Regulation D, and did not have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment.
The Commission ordered XL Hydrocarbon Assets Z-2, LLP, XL Hydrocarbon Assets, LLC and Steve Hamilton to immediately Cease and Desist from offering and selling the Interests in the Commonwealth of Pennsylvania, in violation of the 1972 Act, and, in particular, Section 201 thereof.
Any further solicitations or sales made by XL, LLP, XL, LLC, Hamilton, or their affiliates in Pennsylvania will constitute further violations of the 1972 Act. Any person who is solicited by or has information about XL, LLP, XL, LLC or Hamilton is asked to immediately notify the Pennsylvania Securities Commission by calling the toll-free line 800-600-0007 (PA only); in Harrisburg: (717) 787-8061; in Pittsburgh: (412) 565-5083; or, in Philadelphia: (215) 560-2088.
SOURCE Pennsylvania Securities Commission (PSC)Back to top