Wednesday, August 8, 2012
Letter To The Editor: Oil and Gas Financial Reporting
Below is a letter to the editor from John Teesdale of Michigan, and it shows that oil and gas companies must disclose their risks to investors. There is also a link to the report John is referencing. Very interesting stuff.
The Oil and Gas industry is spending millions on ads to convince the public that fracking is safe,
clean and in our best interest. What people do not realized is that they are under no obligation
to be honest with the public or property owners where they operate. They are, however,
required to be absolutely honest with their shareholders and investors. So if you want to know
what is really going on you should read their 10-k filings with the Security and Exchange
Commission. Here is a direct quote from Cabot Energy, December 2011 10-k.
“We face a variety of hazards and risks that could cause substantial financial losses. Our
business involves a variety of operating risks, including: well site blowouts, cratering and
explosions; equipment failures; pipe or cement failures and casing collapses, which can
release natural gas, oil, drilling fluids or hydraulic fracturing fluids; uncontrolled flows of
natural gas, oil or well fluids; fires; formations with abnormal pressures; handling and
disposal of materials, including drilling fluids and hydraulic fracturing fluids; pollution and
other environmental risks; and natural disasters.
Any of these events could result in injury or loss of human life, loss of hydrocarbons,
significant damage to or destruction of property, environmental pollution, regulatory
investigations and penalties, suspension or impairment of our operations and substantial
losses to us.
Our operation of natural gas gathering and pipeline systems also involves various risks,
including the risk of explosions and environmental hazards caused by pipeline leaks and
ruptures. The location of pipelines near populated areas, including residential areas,
commercial business centers and industrial sites, could increase these risks.
We may not be insured against all of the operating risks to which we are exposed.
We maintain insurance against some, but not all, of these risks and losses. In addition,
pollution and environmental risks generally are not fully insurable.”
http://www.sec.gov/Archives/edgar/data/858470/000104746912001751/a2207418z10-k.htm#dg70901_item_1a._risk_factors
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Won't be seeing this in USA Today, The Wall Street Journal, Bloomberg or any other newspaper any time soon.
ReplyDeleteHas legal genius David Poole seen this?
US insurer won't cover gas drill fracking exposure
ReplyDeletehttp://pikecountycourier.com/apps/pbcs.dll/article?AID=/20120802/NEWS01/120809969/US-insurer-won%27t-cover-gas-drill-fracking-exposure--
Let's see if will change their mind by industry spin.
Investors to Challenge ExxonMobil and Chevron to Disclose and Minimize Environmental & Community Impacts of Fracking
ReplyDeletehttp://www.greencentury.com/news/news/investors_challange_exxon_chevron_on_fracking
May 23, 2012—On Wednesday, May 30, shareholders will press Chevron* and ExxonMobil* to disclose critical information about how the companies are managing the risks inherent to hydraulic fracturing, or “fracking,” a controversial method of natural gas production. Each faces a shareholder proposal challenging the company to disclose the risks to their operations and finances from new regulations, moratoriums, and the growing public opposition to fracking.
“Companies that engage in fracking are meeting significant opposition from affected communities,” said Michael Passoff, Senior Strategist at As You Sow, a shareholder advocacy group that filed the ExxonMobil resolution on behalf of the Park Foundation. “Bans, moratoriums, and increased regulatory scrutiny all impose a wide range of costs and risks which need to be disclosed to investors."
***NOTE: While this may be a plus for fractivists, keep in mind the motive behind investor pressures to disclose is not due to concerns about the impact to the environment and people, but rather how much will such impacts harm their investments.
They will exercise care only when the environmental costs and risks ("externalities" that are borne by the public and future generations, and not by shareholders) affect the bottom line of these companies. When the true costs of fossil fuel extraction are represented in balance sheets and income statements, investors will go elsewhere. The public (we the people, supposedly embodied by our elected governments) must choose representatives that will not cower before capital!
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