Many of these properties, Erich Schwartzel reports, aren’t too promising:
But in Brooke County, the CEO’s personal portfolio is aligned with some of his company’s least promising assets.
One cluster of land that he has borrowed against has a sizable chunk of necessary property missing in the middle — courtesy of a neighbor who refuses to sign a lease. Another is a jagged assembling of properties that looks nothing like the other pooled units in Brooke County.
Even in the case of the most promising land units, the risk of using these oil and gas interests as collateral seems high.
Industry activity underground has slowed because natural gas prices have dipped to levels that not even the private equity firms granting the mortgages anticipated when underwriting them. And up on the surface, the promise of lucrative future drilling is compromised by the politics and drilling delays of the Marcellus region, whether it’s because of neighbors who refuse to allow drilling on their land or firms that lease land right next door.
Brooke County’s example raises the question: How valuable are the properties being used to raise this controversial capital?
Need some context on what’s going on here? Start with the Post-Gazette’s initial report on McClendon’s West Virginia leases, then check out the Reuters report that nationalized the story, and led to an SEC probe into McClendon’s activities.