McClendon, A ceo

suicide, flip real estate

==

http://oklahomawatch.org/2015/11/30/pacs-tied-to-pruitt-reach-out-nationally-for-donors/

In an apparent move to bolster his future election prospects, campaign workers for Oklahoma Attorney General Scott Pruitt have formed two PACs to raise money nationally for other politicians seeking election to federal offices in 2016.

The political action committees were registered in February with the Federal Election Commission and are housed in Pruitt’s state campaign headquarters in downtown Tulsa. The groups raised nearly $228,000 combined from March through June, primarily from corporate executives, corporations and PACs representing companies, FEC records show. The two groups have since raised additional funds, which are due to be reported to the FEC in January.

One of the groups, Oklahoma Strong Leadership PAC, is classified as a multi-candidate political action committee, which means it can accept limited contributions and donate to multiple candidates.

The other group, Liberty 2.0, is a ‘Super PAC,’ meaning it can raise unlimited contributions and spend money on advertising that supports or opposes candidates, although it cannot coordinate with or contribute directly to a candidate’s campaign.

Pruitt, a Republican, ran unopposed last year and cannot run for re-election in 2018. He is considered to be a possible candidate for governor or another office.

Elected officials seeking higher office will often establish multi-candidate PACs to help fundraise for other political candidates, said Lawrence Noble, general counsel for the Campaign Legal Center in Washington, D.C. That helps raise their national profile and create a larger network of fundraisers for themselves in the future.

“I have heard of (state) elected officials with federal ambitions trying to set up PACs to gain political credits,” Noble said. “I guess one of the questions is, does he (the politician) have ambitions for the future?”

Pruitt’s name does not appear on any of the documents establishing either PAC. However, not only are the PACs located in his campaign office, but the primary consultant and fundraiser for his state campaign, Tamara Cornell, is the main consultant, incorporator, record-keeper, vice-treasurer and a board member for both Oklahoma Strong and Liberty 2.0.

Oklahoma Ethics Commission records show Cornell has not been employed by any other state campaign except Pruitt’s. Cornell declined comment on the two PACs.

Other documents confirm Pruitt’s ties to the Oklahoma Strong PAC. In disclosing donations to the PAC, a lobbying group and a corporate PAC both listed Pruitt as the “candidate” being supported by Oklahoma Strong.

Pruitt declined requests for an interview. However, Millan Hupp, who is on the governing boards of Liberty 2.0 and Oklahoma Strong Leadership and is listed as a paid consultant for both groups, issued a statement authorized by Pruitt.

Hupp said that Pruitt serves as “honorary chair” of Oklahoma Strong but does not have a leadership role in Liberty 2.0.

“Liberty 2.0 is an independent expenditure committee formed by individuals who share AG Pruitt’s priorities,” the statement reads.

Hupp did not address questions about whether the groups were formed at the behest of Pruitt or he had a fundraising role in them. Under her name on the statement, Hupp lists her title as “Team Pruitt,” a phrase used by Pruitt’s campaign workers.

Noble said federal election laws probably allow a sitting attorney general to form a federal multi-candidate PAC or a Super PAC to assist other candidates, but it is rare for any sitting politician to set up a Super PAC.

“They won’t set up Super PACs generally, because they could be considered coordinating with them and anything they (Super PACS) do to support them (the politician) would be an illegal contribution,” Noble said. “I haven’t heard of anything like that directly.”

Super PACs are not allowed to coordinate with candidates who benefit from their activities, said Viveca Novak, editorial director at the Center for Responsive Politics, which promotes transparency in government.

When asked whether she had seen a state attorney general form such groups, Novak said she had not.

“I would say that’s pretty unusual,” Novak said.

Sources of Funding

From March to June, Oklahoma Strong Leadership raised $182,198.

Contributors included energy companies and executives, loan company executives, real estate developers, car dealership owners, attorneys and PACs representing drug company Pfizer, Walmart and Fox media company.

A report on political donations made public by the Pfizer PAC refers to Oklahoma Strong Leadership as being directly affiliated with Pruitt.

A Foreign Agents Registration Act statement filed with the U.S. Department of Justice by Dickstein ShapiroLLP, a law and lobbying firm that donated $1,000 to Oklahoma Strong in March, lists Pruitt as the “candidate” represented by the PAC.

Between March and June, Oklahoma Strong received $26,000 in donations from coal and power companies. The largest portion came from Alliance Coal in Tulsa, the company’s executives and their family members.

The Liberty 2.0 has raised $45,500 from six donors since March. The three largest contributors were Louisiana-based Woodvine Group LLC, which owns chemical and industrial equipment firms and made a $25,000 donation; American Energy Partners, which is headed by former Chesapeake Energy Corp. CEO Aubrey McClendon and made a $10,000 donation, and Ada-based Legal Shield, formerly known as Prepaid Legal Services.

Noble, of the Campaign Legal Center, said the appearance of conflicts of interest with sitting politicians is a concern when corporations and other interests donate to PACs or campaigns.

“If it is interests who want something from him (the politician), then it does raise appearance issues,” he said.

As attorney general, Pruitt has taken various actions and been given expanded authority in areas related to interests that have donated to the PACs.

In energy, Pruitt has filed several lawsuits against the Environmental Protection Agency, including one in July asking the court to stop federal plans to reduce carbon emissions from coal-fired power plants. The suit was later dismissed.

In December, the New York Times reported that Pruitt had sent a letter to the EPA, drafted by Devon Energy lawyers, stating that federal regulators were overestimating the air pollution caused by energy companies drilling new wells in Oklahoma.

In July, Gov. Mary Fallin, acting on a recommendation from Pruitt, issued an executive order requiring many state regulatory boards to submit licensing and prohibition actions to the Attorney General for review before taking action. The order was aimed at keeping the boards exempt from antitrust lawsuits.

Since then, the Oklahoma Board of Nursing, the Real Estate Appraiser Board, the Motor Vehicle Commission and the Board of Medical Licensure and Supervision and other boards have submitted dozens of actions to Pruitt’s office for approval, state records show.

Donations to Others

Both Oklahoma Strong and Liberty 2.0 have, as yet, made few donations this early in the election cycle, with the majority of their expenditures going toward business expenses and fundraising, FEC records show.

Liberty 2.0, which can’t donate to candidates’ campaigns, has not yet purchased advertising, according to the records.

Oklahoma Strong has made two donations to politicians. In March, the PAC made a $1,000 donation to West Virginia Attorney General Patrick Morrisey. On Sept. 30, the day after presidential candidate Jeb Bush visited Oklahoma for a fundraiser and tapped Pruitt to head his campaign’s Restoring Federalism Task Force, Bush’s campaign received a $2,700 donation from Oklahoma Strong.

Oklahoma Strong also paid registration fees at the Conference of Western Attorneys General and the Southern Republican Leadership Conference, as well as a $500 donation to the Republican Party of Tulsa County, records show.

The finances of the two organizations are separate from those of Pruitt’s own Attorney General campaign fund.

Since its formation, Pruitt’s 2014 Attorney General campaign committee has raised $712,489 and spent $573,432, despite Pruitt not having an opponent in the primary or general election, The Oklahomanreported in November.

By contrast, Republican State Treasurer Ken Miller, who also ran unopposed in 2014 and is expected to run for governor in 2018, raised $200,000 and spent only $2,679 from his re-election fund.

Oklahoma Ethics Commission records show that contributions going to Pruitt’s state campaign began to drop off early this year, around the time the two new groups were formed.

In explaining the fundraising, Hupp said in her statement that “smart campaigns take nothing for granted.” She added Pruitt is often encouraged to run for office in the future.

“While General Pruitt has made no decisions about seeking office in the future, he is maintaining core campaign functions, including fundraising and organizational activities, to ensure that he is in a position to aggressively pursue such an opportunity.”

Donors to Oklahoma Strong Leadership PAC

From March through June 2015, Oklahoma Strong Leadership PAC received $182,198 in contributions, including the 21 shown below at the maximum amount of $5,000.

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Donors to Liberty 2.0 PAC

Between March and June 2015, six companies donated to Liberty 2.0, a "Super Pac" that can spend money on advertising in campaigns but can't donate directly to candidates.

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==

https://www.desmogblog.com/2018/04/18/finances-great-american-fracking-bubble

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 “The Shale King,” he was at the forefront of the oil and gas industry's next boom, made possible by advances in fracking, which broke open fossil fuels from shale formations around the U.S.

What was McClendon’s secret? Instead of running a company that aimed to sell oil and gas, he was essentially flipping real estate: acquiring leases to drill on land and then reselling them for five to 10 times more, something McClendon explained was a lot more profitable than “trying to produce gas.” But his story may serve as a cautionary tale for an industry that keeps making big promises on borrowed dimes — while its investors begin losing patience, a trend DeSmog will be investigating in an in-depth series over the coming weeks.

From 2008 to 2009, Chesapeake Energy’s stock swung from $64 a share under McClendon to around $17. Today, it's worth just $3 a share — the same price it was in 2000. A visionary when it came to fracking, McClendon perfected the formula of borrowing money to drive the revolution that reshaped American energy markets.

An Industry Built on Debt

Roughly a decade after McClendon's rise, the Wall Street Journal reported that “energy companies [since 2007] have spent $280 billion more than they generated from operations on shale investments, according to advisory firm Evercore ISI.”

As a whole, the American fracking experiment has been a financial disasterfor many of its investors, who have been plagued by the industry's heavy borrowing, low returns, and bankruptcies, and the path to becoming profitable is lined with significant potential hurdles. Up to this point, the industry has been drilling the “sweet spots”in the country's major shale formations, reaching the easiest and most valuable oil first.

But at the same time energy companies are borrowing more money to drill more wells, the sweet spots are drying up, creating a Catch-22 as more drilling drives more debt.

“You have to keep drilling,” David Hughes, a geoscientist and fellow specializing in shale gas and oil production at the Post Carbon Institute, told DeSmog. But he also noted that with most of the sweet spots already drilled, producers are forced to move to less productive areas.

The result? “Productivity goes down and the costs remain the same,” he explained.

While Hughes understands the industry's rationale for continuing to drill new wells at a loss, he doubts the sustainability of the practice.

“I don't think in the long-term they can drill their way out of this,” Hughes told DeSmog.

While politicians and the mainstream media tout an American energy “revolution,” it is becoming clear that — like the housing bubble just a few years earlier — the American oil and gas boom spurred by fracking innovations may be one of the largest money-losing endeavors in the nation's history. And it caught up with McClendon.

In 2016, the shale king was indicted for rigging bids at drilling lease auctions. He died the very next day in a single car crash, leading to speculation McClendon committed suicide, a rumor impossible to confirm. However, the police chief on the scene noted: “There was plenty of opportunity for him to correct and get back on the roadway and that didn't occur.”

The same could be said of the current shale industry. There is plenty of opportunity for these energy companies to correct their path — for example, by linking CEO pay to company profits rather than oil production volumes — but instead they are plowing full-speed aheadwith a business model that seems poised for a crash.

But Hope Springs Eternal

Of course, business media and conservative think tanks are still selling the story that the fracking industry has produced an economic and technical revolution.

In 2017 Investors Business Daily ran an opinion piece with the title, “The Shale Revolution Is A Made-In-America Success Story.” It was authored by Mark Perry of the American Enterprise Institute — a free market-focused think tank funded in part by the oil and gas industry.

How does the author measure success? Not via profits. The metric Perry uses to argue the success of the fracking industry is production volume. And it is true that the volumes of oil produced by fracking shale are increasing and currently at record levels. But here is the catch — when you lose money on each barrel of oil you pump and sell — the more you pump, the more money you lose. While it is true that the industry has been successful at getting oil out of the ground, its companies have mostly lost money doing it.

However, much like with the U.S. housing boom, this false narrative persists that the fracking industry is a money-making, rather than money-losing, venture.

A Wall Street Journal headline published in early 2018 projected this eternal optimism about the fracking industry: “Frackers Could Make More Money Than Ever in 2018, If They Don’t Blow It.”

This headline manages to be, at the same time, both very misleading and true. Misleading because the industry has never made money. True because if oil and gas companies make any money fracking in 2018, it would be more “than ever.”

However, the nuance comes in the sub-headline: “U.S. shale companies are poised to make real money this year for the first time since the start of the fracking boom.”

Poised to make “real money” for “the first time.” Or to put it another way, the industry hopes to stop losing large amounts of real money for the first time this year.

In March 2017, The Economistwrote about the finances of the fracking industry, pointing out just how much money these businesses are burning through:

With the exception of airlines, Chinese state enterprises, and Silicon Valley unicorns — private firms valued at more than $1 billion — shale firms are on an unparalleled money-losing streak. About $11 billion was torched in the latest quarter, as capital expenditures exceeded cashflows. The cash-burn rate may well rise again this year.

Some historic money-losing has been going on, and is expected to continue, as reported by the Wall Street Journal: “Wood Mackenzie estimates that if oil prices hover around $50, shale companies won’t generate positive cash flow as a group until 2020.” However, Craig McMahon, senior vice president at Wood MacKenzie, notes, “Even then, only the most efficient operators will do well.”

U.S. oil produced via fracking is priced as West Texas Intermediate (WTI), which averaged $41 a barrel in 2016 and $51 in 2017. The consensus is that WTI should average over $50 a barrelin 2018, thus providing the industry another reason to keep pushing forward. However, even in 2017 with the average over $50 a barrel, the industry as a whole was not profitable.

Irrational Exuberance

In the introduction to The Big Short, Michael Lewis’ book-turned-movie about how the 2008 financial crash unfolded, he describes the finances of the housing bubble:

“All these subprime lending companies were growing so rapidly, and using such goofy accounting, that they could mask the fact that they had no real earnings, just illusory, accounting-driven, ones. They had the essential feature of a Ponzi scheme: To maintain the fiction that they were profitable enterprises, they needed more and more capital to create more and more subprime loans.”

If you substitute “shale oil and gas development companies” for “subprime lending companies,” it becomes an apt description of the current shale industry. These companies are losing more money than they make and can only sustain this scenario if lenders continue to bankroll their efforts, allowing the fracking industry to drill more wells as it points to production increases, rather than profits, as progress. Which — for now — Wall Street continues to do in a big way.

This article is the first in a series investigating the economics of fracking and where the vast sums of money being pumped into this industry are actually going. The series will look at how fracking companies are shifting these epic losses to the American taxpayers. It will review the huge challenges facing the industry even if oil and gas prices rise: the physical production limits of fracked wells, rising interest rates, rising water costs, competition from renewables, OPEC’s plans, and what happens if Wall Street stops loaning it money.

The oil industry has always been a boom or bust industry. And during each boom someone inevitably declares that “this time is different,” assuring everyone there won’t be a bust. The sentiment about the early 2000s housing bubble was much the same, with critics being drowned out by the players claiming that, this time it was different, arguing “Housing doesn’t go down in value.”

And what about for shale production? Is this time really different? Some in the industry apparently think so.

“Is this time going to be different? I think yes, a little bit,” energy asset manager Will Riley told the Wall Street Journal.“Companies will look to increase growth a little, but at a more moderate pace.” There is little evidence of restraint or moderation in the industry. Until analysts and investors start talking about profits instead of growth, however, this time is likely to end, at some point, in a completely familiar and predictable way: bust. A fate even Aubrey McClendon, the highest-paid CEO, the shale king, eventually met.

David Hughes summed up his take on the industry's financial outlook: “Ultimately, you hit the wall. It's just a question of time.”