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June 27, 2011


DC O'Connell

John - I think you miss one of the main points of the article. Fraud. There may not be a great alternative to NG in the short/medium term, but obfuscating facts for financial gain is a problem. When these firms cook the books it's fraud.


DC - as always thanks for the comment. I agree that there is likely some hyperbole, if not fraud, amongst the hundreds of firms engaged in shale drilling.
The article cites many instances of overly optimistic reserve estimates - which are always read with skepticism - but production for a field, not a single well, is harder to fake since it results in actual cash flow.
I now realize that the reporter got the "Enron" reference from a former Enron employee, but I found it sensational.
When I entered this business people were trying to sell me CMGI, Excite, and Siberian Outpost because TMT boom was forever. Then we had Enron, then the housing boom, and now LinkedIn, Pandora and Groupon. Capitalism is always hyperbolic, the biggest lie is that we can escape the business cycle.

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