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Rising oil prices apparently are not enough to save the once-promising master limited partnership (“MLP”) Seadrill Limited.  Seadrill stock plummeted, going down 54% on April 4, 2017 as the company announced that it will likely file for bankruptcy.

The most ominous news from Seadrill was its warning to investors of its substantial debt load and its expectation that shareholders are “likely to receive minimal recovery for their existing shares.”

Seadrill, as many oil and gas companies, has seen its value drop dramatically over the last three (3) years.  But the company was once highly-valued by Wall Street, with a market capitalization of $23.7 billion as recently as 2013.  Today, the company has dropped approximately 98% in value and sits at a market capitalization of just under $400 million.

According to PLS, Inc., a Houston-based oil and gas research firm, the oil and gas industry raised quite a bit of money in 2016 despite featuring almost 115 bankruptcies over the last two (2) years.

PLS compiled data reviewing the capital markets activity for 2016 according to a news release.  Some of the more notable figures included the $186 billion the oil and gas industry raised through U.S. public offerings across 346 bond and equity deals.  The $186 billion raised was actually $10 billion less than what was raised in 2015, according to PLS.

According to PLS, banks obtained an aggregate of $2.3 billion in fees on the money raised in 2016.  PLS also listed the top-10 banks for U.S. energy equity deals in 2016.  Among others, notable inclusions in that list were Morgan Stanley, Barclays, Credit Suisse, RBC Capital Markets, Citigroup, and Wells Fargo.

Linn Energy exited its chapter 11 bankruptcy leaving many shareholders with nothing but a worthless piece of paper.

Linn Energy is an oil and gas master limited partnership (“MLP”) founded in 2003.  The company went public just three (3) years later in 2006, raising approximately $261 million.

Linn Energy was once the darling of the oil and gas industry, reaching peaks of $40 per share in late 2012.  The company went on an acquisition spree, including Berry Petroleum for $4.3 billion at the height of the oil boom in 2013.  Unfortunately, the oil boom didn’t last, and the debt Linn Energy took on was too large to support when the price of oil began to plunge in June 2014.

Linn Energy, LLC (LINE) filed for bankruptcy protection in May 2016.  U.S. Bankruptcy Judge David Jones issued an Order today confirming LINE’s chapter 11 bankruptcy restructuring plan.  Our attorneys have previously written on the subject of LINE and continue to update accordingly.

It is believed that under the bankruptcy plan, LINE will be able to shed approximately $4.3 billion of the $6 billion debt it claimed in its May 2016 bankruptcy filing.  The remaining $1.2 billion in debt will be absorbed by Berry Petroleum Co. LLC, a company LINE acquired in 2013, which will now become a separate entity.

Both LINE and Berry Petroleum are expected to emerge from bankruptcy and business will continue as usual, leaving many investors in a lurch and in many respects “holding the bag.”  The Securities Arbitration and Investment Litigation Lawyers at the Silver Law Group, The Law Office of David Chase, LLC and Ciklin Lubitz & O’Connell (www.oilgasfinraarbitration.com) continue to investigate and have matters pending against firms/broker that underwrote, sold and recommended LINE to investor customers.

Silver Law Group, The Law Firm of David R. Chase, P.A., and Ciklin, Lubitz & O’Connell are continuing their investigation in the suitability of recommendations made by numerous financial advisors and brokerage firms to purchase risky oil and gas securities.

The price of oil has historically been volatile, risky, and difficult to predict. In turn, securities reliant on the commodity’s favorable pricing are highly risky and prone to huge swings in value depending on the price of oil. Such risky investments include but are not limited to:

• Master Limited Partnerships (MLPs)

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