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March 4, 2010

DiNapoli Fights For Investors on Natural Gas Drilling

Comptroller Wins Battle as SEC Rejects Cabot Bid to Block Shareholder Vote

New York State Comptroller Thomas P. DiNapoli today said the $129.4 billion New York State Common Retirement Fund (Fund) will continue to press energy companies to disclose to their shareholders the environmental and regulatory risks associated with unconventional natural gas extraction including hydraulic fracturing.

“Natural gas stores locked in dense shale formations like the Marcellus Shale in New York are an important source of energy, but there are reasonable concerns about the environmental impact and potential liabilities inherent in its development,” DiNapoli said. “Investors need to have quality information so they may weigh the risks and rewards of the companies they invest in. The development of the Marcellus and other shale gas plays must be done the right way. As shareholders, we want these companies to assure us that they have a full and complete appreciation of the liability risk, and that they’re taking steps to mitigate those risks.”

DiNapoli, as trustee of the Fund, has filed resolutions with five companies – Chesapeake Energy Corp., XTO Energy Inc., Range Resources Corp., Hess Corp., and Cabot Oil & Gas Corp. The resolutions request company boards to summarize for shareholders: the environmental impact of their unconventional natural gas operations; potential policies for the company to adopt, above and beyond regulatory requirements, to reduce or eliminate hazards to air, water, and soil quality from operations including those from hydraulic fracturing; and, other information regarding the scale, likelihood, or impacts of potential material risks, short or long term, to the company’s finances or operations, due to environmental concerns regarding fracturing.

One of the companies, Cabot Gas & Oil, attempted to block the resolution from a shareholder vote. DiNapoli prevailed when the Securities and Exchange Commission in late January issued a letter disagreeing with Cabot that the company had legal grounds to keep the resolution off the shareholder ballot at its annual meeting this spring.


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