DEAL STRUCK: Texas Gas Drillers Agree With New York to Disclose Financial and Environmental Risks

Two Texas-based natural gas drillers have signed agreements with New York Attorney General Eric Schneiderman to publicly disclose to investors the risks arising from their respective hydraulic fracturing operations. EOG Resources Inc. (EOG) and Anadarko Petroleum Corp. (APC) have agreed to post detailed information and analyses on the financial risks associated with their operations, including:

  • 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.

The disclosures, according to the AOG, will aid investors and the public in making better financial decisions about the matters that most impact the financial health of drilling companies. “By joining with my office to commit to greater public disclosure of the environmental and financial risks associated with their actions, these companies are setting a strong example for the rest of their industry,” Schneiderman said.

Although both companies operate in multiple states, including in Pennsylvania where the Marcellus Shale formation reaches well into New York State, neither company currently has operations in New York. This State has imposed a moratorium on hydraulic fracturing pending the completion of its ongoing environmental impact analysis (known as a Supplemental Environmental Impact Statement, or SGEIS).  Governor Cuomo will decide whether to lift the moratorium once the NYS Department of Health completes a health study and the SGEIS is published.

EOG and APC stated that, through online sources and SEC filings, they had already been providing information about drilling practices and risks. The agreements, however, go a step further in terms of the content offered and also aggregates the information in one online location.

The Agreement arises out of formal probe initiated by New York State under the Martin Act, a tool used by the State for the investigation and enforcement of securities laws. The Act authorizes the Attorney General’s office to access a business’ financial records. In 2011, the Attorney General’s office had issued subpoenas to both EOG and APC.

Further reading on the agreements can be found here:

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