Range, Cabot Said to Be Subpoenaed by N.Y. Over Natural Gas
Range Resources Corp. (RRC), Cabot Oil & Gas Corp. (COG) and Goodrich Petroleum Corp. (GDP) were subpoenaed by New York over whether they accurately represented the profitability and life spans of their natural gas wells, according to a person familiar with the matter.
Chesapeake Energy Inc. also is being asked similar questions about its wells, said the person, who declined to be identified because the person isn’t authorized to speak publicly about the matter.
The subpoenas, sent by New York Attorney General Eric Schneiderman Aug. 8, request documents related to the formulas used to determine how long the wells can be expected to produce gas without new “fracking,” or hydraulic fracturing, the person said. The subpoenas also seek information on how the companies report gas reserves to investors following a 2008 U.S. Securities and Exchange Commission rule change.
Goodrich said today in a statement that it received subpoenas from the attorney general and the SEC requesting information related to it Haynesville Shale gas wells and reserves. The company is cooperating, and there has been no allegation of wrongdoing, Goodrich said.
“The company is confident that its disclosures relating to its Haynesville Shale wells and reserves meet all applicable legal requirements,” it said.
Spokesmen for the other companies didn’t return calls seeking comment.
The subpoenas were sent under the Martin Act, New York state’s securities fraud statute, which doesn’t require intent to defraud as a prerequisite to prosecution. The state is looking at how the companies have represented viability and profitability to investors, which include New York state pension funds.
Lauren Passalacqua, a spokeswoman for Schneiderman, declined comment on the subpoenas. The subpoenas were previously reported by the New York Times.
Schneiderman said in a lawsuit filed in federal court in May that the Delaware River Basin Commission has proposed regulations that will allow fracking at 15,000 to 18,000 gas wells without a full environmental review, affecting the drinking water of 9 million New Yorkers.
Delaware River Basin
The Delaware River Basin covers 58 percent of the land area of New York City’s watershed west of the Hudson River, according to Schneiderman. The region targeted for exploration is protected by a 50-year-old agreement among the U.S. government, New York, New Jersey and Delaware.
The Delaware River Basin Commission, an authority which oversees activities in the gas-rich area known as the Marcellus Shale, has a pending application from XTO Energy Inc., a unit of Exxon Mobil Corp. (XOM), to explore in the area, and has refused to produce a full environmental impact assessment, according to Schneiderman’s complaint.
The lawsuit might shut down gas development in the Delaware River Basin “for many years to come,” according to court papers filed by trade groups representing oil and gas companies that hold natural gas leases in New York.
The Marcellus Shale, which lies beneath parts of New York, Pennsylvania, Ohio, Maryland, West Virginia and Virginia, has an estimated 400 trillion cubic feet of natural gas, one of the largest such formations in the world, the trade associations said.
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