NY Friends of Clean Air and Water: Farmers: Beware of the Shale-Gas Bubble!

"It won't be long, before I'm gonna need somebody to lien on."
-- Aubrey McClendon sings Bill Withers

DIRTY BUBBLE ECONOMICS
A farmer signs a lease with Chesapeake,
but not yet in a spacing unit.

He goes to refinance his property (wants to buy a new truck)
and he gets a BIG surprise!

AS YOU KNOW if you've been reading my blogs,
there is ZERO cash in shale-gas exploitation
(cf. Chip Northrup¹, Deborah Rogers², David Hughes³ ... see footnotes for links).
None of the majors are making any money.

All of the drilling is being financed by Wall-St credit lines
("funny money").

Here's one way they do it:

SIGN Farmer Bob whose property is an outlier--
not in a "sweet spot", but near enough.
Convince CitiBank, Goldman Sachs, Barclays, or CapitolONE, etc
to underwrite a $500M line of credit based
on Farmer Bob's FUTURE O+G production,
Take a lien on Farmer Bob's property without his knowledge.
Drill a few wells with the cash, but mostly acquire a bunch of new leases.
Repeat until the bubble bursts.