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New York Issues Subpoenas Over Production Estimates

The attorney general of New York has issued subpoenas to three companies looking to develop oil and gas resources in the Marcellus Shale, part of an investigation into how the companies calculated production estimates and drilling costs to investors.

A source with knowledge of the investigation confirmed to NGI's Shale Daily on Thursday that New York State Attorney General Eric Schneiderman issued subpoenas to Range Resources Corp., Cabot Oil & Gas Corp. and Goodrich Petroleum Corp. on Aug. 8. The source confirmed that a fourth company, Chesapeake Energy Corp., is being asked to provide similar information as part of the investigation.

The probe by Schneiderman coincides with another by the Securities and Exchange Commission (SEC), which began serving subpoenas this summer on shale gas producers -- including Quicksilver Resources Inc. and EXCO Resources Inc. -- for its own investigation of production and reserve estimates (see Shale Daily, Aug. 10; Aug. 3).

In a statement Thursday, Houston-based Goodrich acknowledged receiving subpoenas from New York and the SEC, the latter of which requested information on gas wells and reserves in the Haynesville Shale. The company said it believes both subpoenas were the result of a series of articles in the New York Times maligning the shale gas industry (see Shale Daily, July 19; June 28).

"There has been no allegation of wrongdoing by either the New York state attorney general or the SEC," Goodrich said, adding that it was cooperating fully with the requests. "The company is confident that its disclosures relating to its Haynesville Shale wells and reserves meet all applicable legal requirements. All of Goodrich's annual proved reserve estimates have been prepared in accordance with all applicable SEC regulations by an independent petroleum engineering firm."

Representatives from Range Resources and Cabot Oil & Gas could not be reached for comment Friday.

The source from Schneiderman's office also confirmed that in June subpoenas were issued to five companies -- Chesapeake, Anadarko Petroleum Corp., Baker Hughes Inc., EOG Resources Inc. and Talisman Energy Inc. -- ordering them to provide details of what information was given to investors about the environmental risks associated with hydraulic fracturing.

According to the source, both investigations being conducted by Schneiderman are authorized under the Martin Act, a state law from 1921 that empowers the attorney general to investigate fraud.

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