Top Energy CEOs Skate on Thin Ice by Turning Against Shareholders

If Jeff Bezos (Amazon CEO) and Tim Cook (Apple CEO) jump off a cliff, should you, as CEO of an energy company, jump off too? The CEOs of ExxonMobil, Chevron, Marathon Petroleum and several other big oil and gas companies have just answered that question in the affirmative. Splat. Perhaps they were caught up in the euphoria of the moment. Perhaps they were shamed. (A new disorder for the DSM V: “CEO shaming.”) For whatever reason, a group of CEOs from some of the largest U.S. companies now say the people who buy their company’s stock and fund them via infusions of investment capital are no longer the #1 priority for their companies. We wonder what investors in those companies think. Have they had a change of heart? “Here, take my money and pee it away with no returns. Please! I don’t need this money any more.” Hey Jeff and Tim, we have a bridge in Brooklyn we’d like to sell ya…
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Chevron Leaves the Altar with $1B, Waves Goodbye to Anadarko

Whew, that was close. We’ve had a concern that if Chevron ended up buying Anadarko Petroleum (for Anadarko’s Permian Basin oil assets), it might lead to Chevron pulling back from their drilling program in the Marcellus/Utica (see Permian Love Story: Chevron Buying Anadarko in $50B Megamerger). We don’t have to worry any more. Even though Anadarko signed a deal to sell itself to Chevron, Occidental Petroleum made a bid to buy the company too (see Occidental Petroleum Offers 14% More than Chevron to Buy Anadarko). There’s a breakup clause in the signed Chevron deal. Anadarko would have to pay Chevron $1 billion for leaving them at the altar.
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Anadarko Leaves Chevron at the Altar to Elope with Occidental

The battle to buy Anadarko Petroleum by Chevron and Occidental Petroleum (Oxy) has taken an interesting turn. Over the weekend Oxy revised its offer. It will still pay Anadarko shareholders $57 billion (as before), but the offer was revised to dial up the amount of cash and dial down the amount of stock swaps. Never hurts to use cash as a sweetener. The new offer did the trick. Although Anadarko previously signed an agreement to sell itself to Chevron, Anadarko announced yesterday they are leaving Chevron at the altar and riding off into the sunset to elope with Oxy.
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Anadarko Decides Occidental Petroleum Deal Better than Chevron’s

An interesting development in the bidding war to buy Anadarko Petroleum. Two weeks ago Chevron announced a deal to buy Anadarko Petroleum for $33 billion plus assuming outstanding debt, a deal worth $50 billion (see Permian Love Story: Chevron Buying Anadarko in $50B Megamerger). Paperwork was actually signed. But Occidental Petroleum previously had offered a “better” deal, and went public with their offer last week (see Occidental Petroleum Offers 14% More than Chevron to Buy Anadarko). Now that the Oxy offer is public, Reuters is reporting super secret inside sources say the Anadarko board has decided to drop Chevron and pursue a deal with Oxy instead.

4/30/19 UPDATE: Anadarko officially announces decision to resume negotiations with Occidental. See announcement below.
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Occidental Petroleum Offers 14% More than Chevron to Buy Anadarko

Less than two weeks ago Chevron announced a deal to buy Anadarko Petroleum for $33 billion plus assuming outstanding debt, a deal worth $50 billion (see Permian Love Story: Chevron Buying Anadarko in $50B Megamerger). At the time we told you about a potential cloud on the horizon–that Occidental Petroleum had offered more for Anadarko. Indeed, Oxy wants Anadarko too, and a full-blown bidding war has now erupted. Yesterday Oxy made it’s offer public, an offer 14% higher than Chevron’s offer: $57 billion.
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Will Chevron Dump its M-U Assets to Chase Permian Black Gold?

A week ago MDN brought you the news that Chevron has cut a $50 billion deal to buy Anadarko Petroleum (see Permian Love Story: Chevron Buying Anadarko in $50B Megamerger). Although Chevron will benefit in a number of ways from the transaction, as we indicated in the headline, the primary motivator is to gain valuable acreage in the oily Permian Basin of West Texas. The question now becomes, will Chevron hold on to its Marcellus/Utica assets? Or sell them in order to concentrate on the Permian?
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Permian Love Story: Chevron Buying Anadarko in $50B Megamerger

Another truly huge merger/buyout was announced Friday when Chevron said it is buying Anadarko Petroleum for $33 billion. When you factor in Chevron assuming Anadarko’s debt, the total deal is valued at $50 billion, a number hard to wrap your brain around. The key question for us is: What does this mean for Chevron’s drilling program in the Marcellus/Utica?

UPDATE: See our note below about Anadarko in PA.
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More Royalty Theft by PA DCNR – Streambeds Leased for $497K

The Pennsylvania Dept. of Conservation and Natural Resources (DCNR) is grabbing more money that we think belongs to private landowners. This time from leasing land underneath the Youghiogheny River and Little Pine Creek. DCNR has leased 124.2 acres for a signing bonus of $496,800 (or $4,000 per acre). Plus the state’s customary royalty rate of 20% on anything produced. And no, the state does not allow post-production deductions–they get their full 20% royalty.
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PA Leases Youghiogheny River Land in SWPA to Chevron $4K/Ac

Youghiogheny River (credit: Wikipedia)

The Pennsylvania Dept. of Conservation and Natural Resources (DCNR), every now and again, will lease state-owned land for gas drilling. The DCNR has just leased land under the Youghiogheny River in Allegheny and Westmoreland counties. We have the full lease, and lease terms, below…
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PA Says Forget Amazon’s 50K Jobs, We’ve Got Shale & 100K Jobs!

Both Pittsburgh and Philadelphia were in the running to become Headquarters 2 (HQ2) for online shopping behemoth Amazon. But neither got it. They both bent over backward, forward, and sideways, wined and dined Amazon people, and in general did everything they could short of bribery to attract Amazon to their respective cities. In the end, Amazon decided to split HQ2 between New York City and a suburb of Washington, D.C. Now that the distraction of pursuing Amazon is gone, a couple of energy industry players in Pittsburgh say it’s time to focus again on reality. Amazon offered 50,000 jobs to the winner(s) of HQ2. The PA Marcellus industry offers 100,000 jobs that pay way more, IF we hurry to capitalize on it. So says Morgan O’Brien, president and CEO of Peoples Natural Gas, and Stacey Olson, president of Chevron Appalachia.
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Chevron Donates $250K to Fund Corp Social Responsibility Program

If we were ask you, “What is corporate social responsibility (CSR)–what does it mean?” How would you define it? We have to admit that when we first began to see CSR mentioned a few years ago, we were a bit confused by what it meant, largely because everyone defines it their own way. Here’s a real basic definition (the MDN definition) for CSR: Giving back. Giving back to a local community or to a larger sector of society with time, money and volunteers. Think of it as the “heart” of a company. Companies make money. It is increasingly expected those companies should be “good corporate citizens” and help out the people and areas where they make their money. Why do we mention it? Because companies in the shale industry are big into CSR. For example, Chevron (Pittsburgh) is funding a new Center for Corporate Social Responsibility at Waynesburg University with a $250,000 gift.
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SWPA Farmer Claims Shale Damaged Cattle Health, Reproduction

A farmer who raises Angus beef cattle in East Millsboro (Fayette County), PA, in the southwestern corner of the state, claims that a shale well drilled on his property in 2010 by Atlas Energy (now owned by Chevron) created a “seep” that is affecting the health of his cattle. A seep is a place where water/liquids leak out of the ground. Soon after the well was drilled the farmer began to have trouble with his yearling heifers not getting pregnant. For those grazing near the well, only half got pregnant. The farmer then kept his herd from grazing near the well and noticed the pregnancy rate went from half to 100%–except for those who had previously grazed near the well. They continue to struggle with no pregnancies and miscarriages. All of which sounds like conclusive evidence that there is a problem with the well leaking something into the environment. However, both Chevron and the state Dept. of Environmental Protection have investigated and have not found any evidence that the well is impacting the health of the farmer’s herd. What do you do in a case like that?…
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San Francisco Play Exposes $18B Environmental Fraud

A shocking and at times farcical tale of how an environmental lawsuit turned into the world’s biggest fraud is revealed in a new play. The world premiere of “The $18-Billion Prize,” based on the true story of rainforest natives and their New York lawyer “fighting for justice” against one of the world’s biggest oil companies, opens May 19 at San Francisco’s Phoenix Theatre. Performances continue through June 3. Written, or perhaps a better word is assembled, by Phelim McAleer and Jonathan Leaf, the play uses exact words from transcripts of court documents. In 1993, Steven Donziger, a Harvard-educated American lawyer, represented indigenous groups from Ecuador’s rainforest in a class action lawsuit against Chevron–a shakedown. The case received an enormous amount of media attention, including major coverage by Vanity Fair, Rolling Stone and 60 Minutes to name a few, and it drew the support of international celebrities. Chevron, to their credit, fought back. An American court found evidence of fraud and ordered Donziger to hand over his files and diaries, which exposed a massive bribery and corruption scheme. The play will make you laugh, and cry, and make you angry that such a long-running fraud could be perpetrated here in the United States…
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NatGas, Oil Industry Partnership to Accelerate Methane Reductions

Yesterday America’s natural gas and oil industry announced “a landmark partnership”–called the Environmental Partnership–to “accelerate improvements to environmental performance in operations across the country.” How will they do that? The first area of focus will be to reduce methane and volatile organic compound (VOC) emissions. The Environmental Partnership includes 26 natural gas and oil producers, including several major Marcellus/Utica drillers (Chesapeake Energy, Cabot Oil & Gas, Chevron and Southwestern Energy). The list of 26 produce a “significant portion” of American energy resources–we’d peg it at around 80% of all production. The participating companies (full list below) will begin implementing the voluntary program starting January 1, 2018. Did you get that? It’s VOLUNTARY. Yet they will do it and they will voluntarily hold themselves and each other accountable–because they are good corporate citizens and (gasp) actually care about the environment. They don’t need the jackboot of government to force them to do it. Here’s how profoundly biased mainstream media reports it: Oil Firms Pledge to Plug Methane Leaks in Bid to Burnish Image (Bloomberg News). Yep, according to the anti-everything people, these companies are only doing it to “burnish” their image. They don’t really care about the environment. They’re evil, nasty fossil fuel companies (icky). MDN readers know differently. These companies are respectable, providing jobs and investment in local communities AND protecting the environment in those same communities–where they live. The other side? Groups like the Sierra Club destroy jobs in the name of “protecting” Mom Earth…
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RAND Report: Fracking Creates Jobs for STEM Workers in PA-OH-WV

In 2014, Chevron launched the Appalachia Partnership Initiative (API) with $20 million to fund education (for students) and training (for workers) in STEM–Science, Technology, Engineering and Math across 27 counties in Pennsylvania, West Virginia and Ohio (see Chevron Launches Appalachia Partnership Initiative with $20M). Chevron’s partners in the effort are the Allegheny Conference and the Claude Worthington Benedum Foundation. So how is the API doing in its mission? That was what RAND Corporation was hired to study. RAND has just published an analysis of the first two years of API’s efforts (see the study below). Among the key findings: “Horizontal drilling and hydraulic fracturing has created a need for workers in Pennsylvania, Ohio, and West Virginia.” Although the oil and gas industry is just now coming out of a several-year slump, RAND says in the future there will be a shortage of workers for the industry. API is hoping to fill that gap, and is (according to RAND) making progress. But more needs to be done…
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