The sharp decline in oil prices has sent the worldwide energy market into a tailspin. But according to a Texas State Securities Board emergency action, West Texas oilman Kenneth Wayne Wooldridge is telling investors he can earn profits at almost any price.
According to an Emergency Cease and Desist Order entered April 16, Wooldridge, the owner and operator of Texas Shallow Oil & Gas LLC, is offering for sale working interests in wells that he says will deliver profits even if the price of oil falls to $20 per barrel. Texas Shallow is based in the Young County town of Graham, about 100 miles northwest of Dallas-Fort Worth.
Wooldridge is claiming that investors in Texas Shallow projects will "set [themselves] up for retirement," according to the order.
Wooldridge is touting his decades of experience in the oil and gas business and relationships with oil giants like Schlumberger Ltd. and Halliburton Co. But he is omitting a pending lawsuit by an investor and Orders against Texas Shallow entered by the Texas Railroad Commission. Neither Wooldridge nor Texas Shallow are registered to deal in securities in Texas.
In 2019, a company sued Wooldridge to recover the $20,500 it paid to Texas Shallow to buy a 16% working interest in a well field project in Young County. The suit is pending in the 90th District Court of Young County.
The Railroad Commission in 2018 entered a consolidated Order against Wooldridge's company that require him to pay penalties totaling $50,000. Wooldridge has not resolved the debt, according to the emergency order.
Besides not disclosing the lawsuit and Railroad Commission sanction, Wooldridge, according to the order, is committing fraud by not disclosing risks of investing in oil and gas wells. Chief among them: changes in the price of oil or declines in demand can affect the profitability of investments in oil and gas wells.
Wooldridge is publicly soliciting investments in oil and gas wells on www.texasshallow.com and through two worldwide platforms, LinkedIn and Dealstream.
Dealstream is an online marketplace with more than 500,000 members in 100 countries. The platform facilitates the purchase and sale of businesses, real estate, oil and gas assets, and private investments.
Wooldridge is representing that he has expertise in the exploration of leases in northern Young County and the Gun Sight Oil Sands Formation, which runs through Young County. Texas Shallow and Wooldridge are promoting “silent investment programs” in the Gun Sight formation.
Texas Shallow and Wooldridge, however, aren’t disclosing any geological or geophysical information that can be used to independently evaluate oil wells in Young County and the Gun Sight Oil Sands Formation.
Texas Shallow and Wooldridge have been promoting their unregistered investments in Texas wells over the course of sharp decline in oil prices over the past year. The price of West Texas Intermediate crude hit $21 per barrel on April 1, a decline of 65% in the past 12 months.
In the Gun Sight formation, Texas Shallow is offering a 1% working interest in wells for $1,000. Wooldridge is telling investors the wells have the potential to produce up to seven barrels of oil a day, according to the order, but production could rise to 55 to 110 barrels a day.
Wooldridge and Texas Shallow are also promoting investments in other Young County exploration projects.
In DealStream advertisements in March and April, Wooldridge solicited investors to fund new oil wells, one injection well and one water supply well for $17,500 per well. According to the order, Wooldridge is telling investors the project has potential to produce 25 to 60 barrels per day to start and production could rise as high as 125 to 300 barrels of oil a day.
Wooldridge and Texas Shallow have 31 days to file a challenge to the order at the State Office of Administrative Hearings.