“It’s OBAMA’s FAULT”, screamed MDN

It’s Friday, weekend ahead, and after a long week, we all can use a laugh. I would usually take a stroll over to the Onion for a chuckle, but today, it wasn’t the Onion that provided my guffaws, it is the Marcellus Drilling News (MDN).

For those not familiar with MDN, it’s a very much pro-gas drilling blog, comprising of news links and opinion. It’s also a regular “source” for the Energy-in-Depth Marcellus skreeds. MDN’s front door won’t let you in unless you are a subscriber, however, a google search for a particular story will provide you with a side door entrance for free.

The particular story which caught my attention was entitled: Chesapeake Says They’re in the Crosshairs of Justice Dept. According to MDN, the Obama Justice Department (MDN’s words not mine) didn’t waste time going after Chesapeake Energy.

If you haven’t been following Aubrey McClendon’s troubles at Chesapeake, here’s a quick overview. In December 2011, Reuters published Special Report: Energy giant hid behind shells in “land grab”.

Excerpt: Chesapeake had created one shell company that set up another, Northern Michigan Exploration. Next, Northern hired brokers who signed leases with residents such as Boyer-Lashuay. And those brokers were under strict orders not to divulge Chesapeake’s role, records reviewed by Reuters show.

This was followed by several other stories from Reuters about Aubrey McClendon’s deals, such as Chesapeake CEO took out $1.1 billion in unreported loans. Soon after, McClendon was removed as Chairman of the Board, although he still remains CEO, and this was followed by a complete shakeup of the Board of Directors and the entrance of two very large shareholders taking a more active position.

The Securities and Exchange Commission (SEC) began an informal inquiry into Chesapeake Founders program and possible conflicts of interest.

In June 2012, Reuters broke the story regarding Chesapeake and Encana - Chesapeake and rival plotted to suppress land prices.

Excerpt: In emails between Chesapeake and Encana Corp, Canada’s largest natural gas company, the rivals repeatedly discussed how to avoid bidding against each other in a public land auction in Michigan two years ago and in at least nine prospective deals with private land owners here.

In one email, dated June 16, 2010, McClendon told a Chesapeake deputy that it was time “to smoke a peace pipe” with Encana “if we are bidding each other up.” The Chesapeake vice president responded that he had contacted Encana “to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim.” McClendon replied: “Thanks.”

Michigan legislators called for an investigation, the US Justice Department opened a probe into the Chesapeake-Encana relationship.

So, where is the guffaw? The MDN is spinning the investigation as some sort of personal attack on Chesapeake by the “Obama Justice Department”. I don’t see it. Obama has come out 100% in support of natural gas, so this couldn’t be spun as an environmental crusade. MDN’s logic escapes me.

MDN ends with blaming Reuters for the investigation.

“MDN still would like to know, did Reuters aid and abet a criminal act, or commit a criminal act themselves, in obtaining copies of emails (i.e. private property) from Chesapeake? ( You can bet your bottom dollar Justice is not investigating Reuters.”

MDN has hit on the perfect defense, the answer to every defense attorney’s dream - blame the LAW for your crimes! MDN is saying its Reuters fault for reporting a story, and the Justice Department for investigating.

As far as Spin Doctor’s go, MDN needs more practice.