Securities Lawyers Blog
The investment attorneys with Gana Weinstein LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Pacific Coast Oil Trust (Stock Symbol: ROYT). Since the trust’s inception in May 2012 it has suffered a 95% loss in value.
Pacific Coast Oil Trust is a Delaware statutory trust formed by Pacific Coast Energy Company LP (PCEC) containing interests in California onshore oil properties located in the Santa Maria and Los Angeles Basins. PCEC owns the underlying properties which consist of proved developed reserves and other development potential on the underlying properties most of which is oil and natural gas related production.
Oil and gas royalty trusts, like master limited partnerships (MLPs), invest in the energy and commodities sector. However, unlike MLPs, royalty trusts generate income from the actual production of natural resources such as coal, oil, and natural gas and therefore the cash flows from royalty trusts are subject to swings in commodity prices and production levels causing them to be very inconsistent. Royalty trusts have no physical operations, no management, and no employees. Instead, royalty trusts are merely financing vehicles run by banks that trade like stocks. Another company actually mine the resources and pay the royalties to the trust.