The Collapse in Oil and Gas Investments
The oil and gas REITs and limited partnerships that were supposed to provide “diversification” and limit risk are now eating up investor’s portfolios. Last year, oil was trading above $100 a barrel, and had been for four years. Now, it is trading at about $50 a barrel.
Analysts have cut their forecasts and energy master limited partnerships and companies are cutting their dividends. Kinder Morgan (ticker: KMI), an oil pipeline company, has cut its dividend by more than 75%. Marathon Oil Corp (ticker: MRO) has followed. Magellan Midstream Partners, LP (MMP) , Buckeye Partners (BPL), Enbridge Energy Partners (EEP), QEP Resources (QEP), Pioneer Natural Resources (PXD), ClearBridge American Energy MLP Fund (CBA) and EOG Resources (EOG) have dropped precipitously, as have the share prices of energy mutual funds like Tortoise North American Energy Independence Funds (TNPTX, TNPIX, TNPCX) and TD Energy Funds. Investors whose brokers advised them to invest more than ten percent of their savings in the energy sector have a claim against their advisor or broker for violation of the FINRA “concentration” rule.
Unfortunately, stockbrokers have sold billions of dollars of oil and gas partnerships, REITs and stocks to investors by misrepresenting that they are safe and provide dependable income. But that isn’t true. Dividends and stock prices go up and down. Retired investors in energy limited partnerships are now feeling a lot of pain. They have two choices: hold these and accept the small dividends and risk losing more money–or sell. BUT, if they sell a limited partnership, like KMI, Buckeye, Magellan or Enbridge, they have to pay taxes on the distributions they received earlier. That hurts. It also surprises investors whose brokers did not inform them of this when they bought.
Groups of investors in Ridgewood Energy partnerships, Buckeye, Enbridge, TD Funds, ClearBridge American Energy funds and Tortoise funds are banding together to pursue claims. Aggrieved investors should contact a qualified securities attorney if they believe that their broker did not give them complete and accurate information as to the risks of investing in energy stocks, partnerships or REITs. Contact attorney Diane Nygaard at with any questions about your energy investments.