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Monday, October 6, 2014

NY AG wins increased disclosure of fracking risks to investors from 2 producers

I've blogged previously about efforts being made by investors to get the oil and gas industry to report on the financial risks posed by their operations and the steps companies are taking to reduce them. Those investors aren't alone.

Last week, New York state Attorney General Eric T. Schneiderman announced agreements with two natural gas development companies - both of which operate in Pennsylvania - that, according to Schneiderman's office, "will ensure the public disclosure of information on the financial risks that hydraulic fracturing poses to their investors." 

In June 2011, the OAG subpoenaed a number of natural gas producers seeking information under New York State's securities law regarding their disclosure practices related to hydraulic fracturing. Under the agreements, Anadarko Petroleum Corp. and EOG Resources, Inc. have committed to disclose (again quoting the OAG press release):
  • financial risks posed by the environmental impacts associated with fracking -- such as effects on drinking water aquifers, as well as those arising from chemical use and handling, water use and wastewater handling and disposal, and air emissions – and detailed discussions of the companies’ efforts to minimize these environmental impacts;
  • financial risks posed by present and probable future regulation and legislation related to fracking, such as state or federal moratoriums, local bans or restrictive ordinances, or requirements for disclosure of chemicals used in fracking fluids; and
  • company strategies and actions for reducing, offsetting, limiting, or otherwise managing the financial effects of regulation, litigation, or environmental impacts related to fracking.
There is an investor need and a business case for not only disclosing these (and other) risks, but embedding them into both company decisionmaking on technology/practice selection and regulatory development.  I've discussed both frequently in this blog and around the country, including last year at Widener Law School and recently at Princeton's Woodrow Wilson School.

These are important agreements. The rest of the industry should follow suit.

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