{"id":33521,"date":"2018-04-18T17:13:52","date_gmt":"2018-04-18T22:13:52","guid":{"rendered":"http:\/\/olduvai.ca\/?p=33521"},"modified":"2018-04-18T17:13:52","modified_gmt":"2018-04-18T22:13:52","slug":"the-secret-of-the-great-american-fracking-bubble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=33521","title":{"rendered":"The Secret of the Great American Fracking Bubble"},"content":{"rendered":"<h3 id=\"page-title\" class=\"page__title title\"><a href=\"https:\/\/www.desmogblog.com\/2018\/04\/18\/finances-great-american-fracking-bubble\">The Secret of the Great American Fracking Bubble<\/a><\/h3>\n<article class=\"node-12803 node node-blog node-promoted view-mode-full clearfix\">\n<div class=\"field field-name-field-bimage field-type-image field-label-hidden\">\n<div class=\"field-items\">\n<div class=\"field-item even\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.desmogblog.com\/sites\/beta.desmogblog.com\/files\/styles\/full_width_blog_image\/public\/blogimages\/jonah-oil-and-gas-pad.jpg?itok=qZHUdFZi\" alt=\"Natural gas drilling well pad in Wyoming\" width=\"826\" height=\"620\" \/><\/div>\n<\/div>\n<\/div>\n<div class=\"new-horizontal-social-bar clearfix\">\n<div class=\"new-horizontal-share-wrapper new-horizontal-fb-wrapper clearfix\">\u00a0In 2008, Aubrey McClendon was the <a href=\"https:\/\/dealbook.nytimes.com\/2009\/05\/01\/list-of-highest-paid-ceos-for-2008\/\" target=\"_blank\" rel=\"noopener\">highest paid<\/a> Fortune 500 <span class=\"caps\">CEO<\/span> in America, a title he earned taking home $112 million for running Chesapeake Energy. Later dubbed\u00a0<a href=\"https:\/\/www.amazon.com\/Bloomberg-Businessweek-Aubrey-McClendon-1959-2016\/dp\/B01CWBLDA0\" target=\"_blank\" rel=\"noopener\">\u201cThe Shale King,\u201d<\/a>\u00a0he was at the forefront of the\u00a0oil and gas industry&#8217;s next boom, made possible by advances in fracking, which broke open fossil fuels from shale formations around the <span class=\"caps\">U.S.<\/span><\/div>\n<\/div>\n<div class=\"field field-name-body field-type-text-with-summary field-label-hidden\">\n<div class=\"field-items\">\n<div class=\"field-item even\">\n<p>What was McClendon\u2019s secret? Instead of running a company that aimed to sell oil and gas, he\u00a0was essentially flipping real estate:\u00a0acquiring leases to drill on land and then reselling them for five to 10\u00a0times more, something\u00a0<a href=\"https:\/\/www.desmogblog.com\/2015\/08\/02\/once-burned-twice-shy-utica-shale-touted-investors-shale-drillers-continue-posting-losses\" target=\"_blank\" rel=\"noopener\">McClendon explained<\/a>\u00a0was a lot more profitable than \u201ctrying to produce gas.\u201d But his story may serve as\u00a0a cautionary tale for an industry that keeps making big promises on borrowed dimes \u2014\u00a0while its investors begin losing patience, a trend\u00a0DeSmog will be <a href=\"https:\/\/www.desmogblog.com\/finances-fracking-shale-industry-drills-more-debt-profit\" target=\"_blank\" rel=\"noopener\">investigating in an in-depth series<\/a> over the coming\u00a0weeks.<\/p>\n<p>From 2008 to 2009, Chesapeake Energy\u2019s stock swung from $64 a share under McClendon to around $17. Today, it&#8217;s worth just\u00a0<a href=\"https:\/\/www.google.com\/search?client=safari&amp;rls=en&amp;q=NYSE:+CHK&amp;ie=UTF-8&amp;oe=UTF-8\" target=\"_blank\" rel=\"noopener\">$3 a share<\/a>\u00a0\u2014\u00a0the same price it was in 2000. A\u00a0visionary when it came to fracking, McClendon perfected the formula of borrowing money to drive the\u00a0revolution that reshaped American energy\u00a0markets.<\/p>\n<p><strong>An Industry Built on\u00a0Debt<\/strong><\/p>\n<p>Roughly a decade after McClendon&#8217;s rise, the\u00a0<a href=\"https:\/\/www.wsj.com\/articles\/wall-streets-fracking-frenzy-runs-dry-as-profits-fail-to-materialize-1512577420\" target=\"_blank\" rel=\"noopener\">Wall Street Journal reported<\/a>\u00a0that\u00a0\u201cenergy companies\u00a0[since 2007] have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore <span class=\"caps\">ISI<\/span>.\u201d<\/p>\n<p>As a whole, the American fracking experiment has been <a href=\"https:\/\/www.wsj.com\/articles\/wall-streets-fracking-frenzy-runs-dry-as-profits-fail-to-materialize-1512577420\" target=\"_blank\" rel=\"noopener\">a financial disaster <\/a>for many of its investors, who have been plagued by the industry&#8217;s heavy borrowing, low returns, and <a href=\"https:\/\/www.houstonchronicle.com\/business\/energy\/amp\/The-oil-bust-forced-more-than-330-North-American-12831308.php\" target=\"_blank\" rel=\"noopener\">bankruptcies,<\/a> and the path\u00a0to becoming profitable is lined with significant potential hurdles. Up to this point, the industry has been drilling the <a href=\"http:\/\/partners.wsj.com\/ceraweek\/connection\/sweet-spot-key-shale\/\" target=\"_blank\" rel=\"noopener\">\u201csweet spots\u201d <\/a>in the country&#8217;s major shale formations, reaching the easiest and most valuable oil\u00a0first.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"<p>The Secret of the Great American Fracking Bubble \u00a0In 2008, Aubrey McClendon was the highest paid Fortune 500 CEO in America, a title he earned taking home $112 million for running Chesapeake Energy. Later dubbed\u00a0\u201cThe Shale King,\u201d\u00a0he was at the forefront of the\u00a0oil and gas industry&#8217;s next boom, made possible by advances in fracking, which [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[195,5317,331,11782,722,723],"class_list":["post-33521","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-debt","tag-desmog-blog","tag-fracking","tag-justin-mikulka","tag-shale-gas","tag-shale-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33521"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33521\/revisions"}],"predecessor-version":[{"id":33522,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33521\/revisions\/33522"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}