Ayear ago, Chesapeake Energy, at one time the nation’s largest natural gas producer, announced it was selling off its Ohio Utica shale drilling rights in a $2 billion deal with a little-known private company based in Houston, Texas, Encino Acquisition Partners.

For Chesapeake, the deal offered a way to pay off some of its debts, incurred as its former CEO, “Shale King” Aubrey McClendon, led Chesapeake on a disastrous shale drilling spree. Shares of Chesapeake Energy, which in the early days of the fracking boom traded in the $20 to $30 a share range, are now valued at a little more than $1.50.

Encino has marketed itself as a stable source of long-term returns (something the industry overall has struggled so far to create), attracting the managers of one of the world’s largest pension funds to drill and frack the land that Chesapeake sold off to repay its enormous debts from fracking nationwide.

“A Unique Model” for Shale Drillers

Chesapeake, of course, is not alone in discovering that shale drilling can be financially disastrous for investors. In 2018, the top 29 shale producers spent $6.69 billion more than they earned from operations, an April report by Reuters concluded — a spending record racked up two years after investors began pushing shale drillers to start turning a profit. In December 2017, The Wall Street Journal found that shale producers had spent $280 billion more than the oil and gas they sold was worth between 2007 and 2017, the first 10 years of the shale drilling rush.

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