Harrisburg

Harrisburg 1 and Harrisburg 2

At this time, and subject to further investigation and possible litigation, the collective assets of both Harrisburg lease funds projects consist almost entirely of an approximate 5,000 acres of leasehold acquired in Stephens County, Oklahoma.  The leases were acquired at values of between $100.00 and $200.00 per acre.  Approximately $256,080.27 was spent acquiring leases for Harrisburg 1, and approximately $295,342.23 was spent acquiring leases for Harrisburg 2.  The remaining capital invested under the offering memorandum for Harrisburg 1 (approximately $5,737,500.00) was either misappropriated by OEE, or its principals, or expended to maintain the operations of OEE and/or Gates.  The majority of the remaining capital raised under the offering memorandum for Harrisburg 2 (approximately $2,196,000.00) was either loaned to Gates and/or used by OEE or Gates to pay expenses associated with business operations.  Pursuant to its financial records, Gates owes approximately $1,300,000.00 to Harrisburg 2.   On April 25, 2014, the Receiver received some financial and accounting records for Harrisburg 1 (via OEE), but the materials are not exhaustive and paint an incomplete picture.

The Receiver is actively soliciting bids from the industry to purchase the lease acreage Harrisburg 1 and Harrisburg 2 own.  Because a very small percentage of the invested capital was actually utilized to acquire the leases, the Receiver must receive nearly 20 times the actual acreage cost to recoup all investor funds (approximately $7,933,500.00) in the Harrisburg programs.  Whether such a market exists and/or will develop as a result of exploration activity by third parties is not known at this time.  Market values for non-producing oil and gas leasehold interests generally decline as a lease approaches the midpoint of its initial primary term.  Fortunately, a fair amount of the leases that have less than 1 year remaining on initial primary terms also have 2 year option provisions, which should stabilize value over a longer term.

The Receiver is also investigating whether claims exist against the OEE principals, the managing entity for Harrisburg 1, and/or claims against Gates, the managing entity of Harrisburg 2, or the principals of both entities, in respect to the approximate $6,700,000.00 of investor funds (collectively) that was not spent in accordance with the terms of the Offering Memorandums.

During the pendency of the Receivership, the Receiver will maintain custody and control of all assets belonging to the Harrisburg entities, and any proceeds therefrom.   In the event the Receiver receives competitive offers for the Harrisburg leases, the Receiver will, after notice and opportunity for hearing, seek Court approval of any sale involving a significant acreage position.

 

PLEASE TAKE NOTICE THAT IF YOU BELIEVE YOU HAVE PURCHASED UNITS IN THE HARRISBURG PROSPECT LEASE FUND, LLC AND/OR THE HARRISBURG 2 PROSPECT LEASE FUND, LLC, YOU MUST SUBMIT DOCUMENTATION OF THE SAME TO THE RECEIVER’S ATTORNEY NO LATER THAN AUGUST 5, 2014.

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