Anyone that invests in exploration and production stocks or works in the industry should look at this article published in the New York Times this past weekend. The writer basically accuses the industry of lying to investors through overstating reserves, understating decline rates and the economics of natural gas shale plays.
The infamous Art Berman is quoted in the article, but there are also nearly 500 documents from various industry insiders as well as from investment analysts on the buy and sell side. An excerpt from the article is below:
“In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.”