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A.G. Schneiderman Reaches Agreement With Natural Gas Developers To Increase Disclosure Of Fracking Risks To Investors

Anadarko Petroleum And EOG Resources Commit To Disclosing More Information On Financial Effects Of Regulation, Litigation, And Environmental Impacts Related To Hydraulic Fracturing

Schneiderman: Investors Have A Right To Know All Relevant Information About Risks

NEW YORK - Attorney General Eric T. Schneiderman today announced agreements with two natural gas development companies that will ensure the public disclosure of information on the financial risks that hydraulic fracturing – commonly referred to as fracking – poses to their investors.   Under the agreements, Anadarko Petroleum Corp. (Anadarko) and EOG Resources, Inc. (EOG) commit to providing publicly accessible information on the financial effects of regulation, litigation, and environmental impacts of their fracking operations.   

“Investors and the public have a right to know all relevant information about the environmental, financial, and regulatory risks associated with the companies they are considering investing in,” said Attorney General Schneiderman. “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.”

In their agreements with Attorney General Schneiderman, Anadarko and EOG committed to disclose certain detailed information related to fracking operations in their federal securities law filings such as the Form 10-K, the annual summary report on a company’s performance required by the Securities and Exchange Commission (SEC).  The agreements also committed the companies to make certain additional information related to their fracking operations available through other publicly accessible sources such as company websites, annual reports to shareholders, and environmental or safety reports. The agreement with Anadarko can be found here.  The agreement with EOG can be found here.

Under the agreements, the companies committed to disclose information and analyses concerning:

  • 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.

EOG explores for, develops, produces, and markets crude oil and natural gas.  The company has reported over 5,000 billion cubic feet of estimated net proved natural gas reserves, located predominately in the United States, Canada and Trinidad.  Anadarko’s operations in the United States include oil and natural gas exploration and production onshore and in the Gulf of Mexico.  Both EOG and Anadarko have conducted fracking in the Marcellus Shale formation in Pennsylvania, as well as in other geological formations and states.

Richard Liroff, Executive Director of the Investor Environmental Health Network,said, “These agreements give a boost to investors seeking increased disclosures about fracking.  Attorney General Schneiderman’s agreements represent important progress in illuminating for investors how well companies are managing fracking’s environmental risks and community impacts.”

Mindy Lubber, president of Ceres, a nonprofit sustainability group that coordinates a $11 trillion investor network,said, “Without robust reporting, shareholders cannot be assured that a company is taking tangible steps to minimize the risks associated with fracking.  These agreements with Anadarko and EOG will set a bar for stronger disclosure that the rest of the industry should follow."

In June 2011, the OAG subpoenaed Anadarko and EOG and other companies seeking information regarding their disclosure practices related to the development of oil and gas through hydraulic fracturing.  The Attorney General issued subpoenas under New York State’s Martin Act, a 1921 state securities law that grants the Attorney General broad powers to access businesses’ financial records. The companies subsequently provided responsive documents to the OAG and have voluntarily increased the information regarding natural gas development involving fracking that they provide to investors in their SEC Form 10-K filings, as well as on their websites.  The agreements being announced today, known as Assurances of Discontinuance, conclude the OAG’s investigations into Anadarko and EOG. 

The OAG is continuing to evaluate information related to the disclosure practices of other companies.

This matter was handled for Attorney General Schneiderman by Assistant Attorneys General Andrew Gershon, Michael J. Myers and Isaac Cheng, and Policy Analyst Jeremy Magliaro of the Environmental Protection Bureau, with support from Bureau Chief Lemuel M. Srolovic, Executive Deputy Attorney General for Social Justice Alvin Bragg, and First Deputy for Affirmative Litigation Janet Sabel.