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Friday fracking video

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Enron style accounting

Submitted by loftT on Thu, 05/31/2012 - 8:28pm.

great diary in the community spotlight on Kos

For 19 of the past 21 years, the company has operated at what investors call “cash flow negative” – last year by $8.547 billion dollars – meaning that Chesapeake has consistently spent a whole lot more than it earned. For decades.

To fund all that fracking, the company has been flipping land, engaging in so many financial transactions that it’s been said to resemble a hedge fund more than a gas driller.

McClendon's company has become the environmental Enron, with Chesapeake's accountants creating some of the most labyrinthine and impenetrable books since Enron, according to some investors.

The company has used all sorts of tactics to cover for its losses and to make fracking look economically plausible even as gas prices have plunged.

What a business model.

Progressives are the true conservatives.

There's more to this than meets the eye

Submitted by Stan on Thu, 05/31/2012 - 11:20pm.

because Chesapeake has a lot of leases that will expire if no production is going on at the end of the lease term. Meanwhile they've commissioned a 3D geophysical survey covering about 20...or more...sq miles...and the CEO has a side business procuring right of way to build a pipeline to collect product from wells and potential wells in the area. I figure there's about a 12-18 month window for Chesapeake to flip the leases to someone who has the cash to drill before the leases expire. Whatever happens, Chesapeake investors are likely in for some nasty surprises. JP Morgan is among them....woo hoo....surprise....having purchased the output from a particular "play" for a 10 year period on the cheap...yet still about 2X current gas prices. Several $Billion involved.

My guess..long haul...is that gas prices will rebound due to market speculation and realizations that the reserves are not as large as projected. Meanwhile all the electric utilites switching to cheaper-than-oil-cleaner-than-coal gas will find themselves in deep $$yogurt and the price of electricity will go WAY up. Environmental damages and who pays....??? My guess, you and me.

Here in NC..I can't figure out who wants to drill and why. The current market is at historic lows and it's not cheap to drill even if the mineral leases were obtained cheaply.

Stan Bozarth