Perhaps the most celebrated diviner in the annals of mythology was the blind prophet Tiresias of Thebes. His blindness was no accident of birth as will be clarified shortly. Anyway, legend has that Mr. Tiresias was strolling through the forest on Mt. Cithaeron minding his own business when he came upon two snakes coupling. When he struck the female with his staff she was so infuriated she turned him into a woman. Fast forward some years and again Tiresias gazed upon snakes in their mating. On this occasion his staff made contact with the male and with that he regained his manly attributes. More time passes and the venue shifts high atop Mt. Olympus where Zeus and cantankerous wife Hera engage in dissension as to who enjoys the pleasures of lovemaking more, man or woman. Hera insists it is man while Zeus casts his lot with females. Since Tiresias had expertise as member of both sexes, he was summoned as final arbiter. (Take note here.) Tiresias responds “if the number ten represented the total for these pleasures, woman enjoys nine parts, man but one.” Hera became so incensed that she blinded Tiresias. Taking pity on the young man Zeus made recompense by bestowing upon him the power of prophecy and long life which was to last seven ordinary lives.
By my calculations Chesapeake Energy CEO Aubrey McClendon is getting nine parts and he’s trying to get part ten and leave shareholders with nothing. Much has transpired over the past fortnight or two since my first Aubrey diatribe. Now from a few thousand feet above it is time to collate and assimilate. Firstly, the SEC, astute birddogs that they are, have launched “informal” (does that mean casual dress?) investigations into Aubrey’s “Founders Well Participation Program”. It’s hard to expect much from this august agency, probably just the usual phlegmatic dillydallying. Gosh, it only took a few million words of press coverage to rouse them from stupor. And were they not the recipients for ten years of repeated warnings on the Madoff scandal? Ostensibly one focus is on the propriety on Aubrey’s “free ride” on well soft costs. Before a drilling campaign is undertaken leases are acquired, 3-D seismic is procured and analyzed which yield to a more intelligent assessment of the reserve potential. Add legal, organizational costs, rent and it can be many millions. Of course of all the hundreds of thousands of acres only the choice most favorable are drilled. But millions are spent acquiring and analyzing the discarded or undrilled acreage. That is the “free ride” Aubrey piggybacks on. (It is more detailed in my previous article.) Is it legal? Time will advise but as I say sometimes, there is no justice there is only the law and these days the law is a malleable concept. At a minimum in my opinion it is wrong and immoral and fraught with conflicts (see other article).