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$280 Billion NY State Pension Fund Dumps 21 Shale Companies Because They Haven't Committed To Low Emissions

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by Tyler Durden
Thursday, Feb 10, 2022 - 02:40 PM

Today in "we're abiding by our fiduciary obligations by avoiding the hottest sector on Wall Street" news...

It was reported yesterday that New York’s state pension fund is going to be selling $238 million worth of stock and debt that it owns in 21 shale companies because they "have not shown they are ready to move to a low-emissions economy."

Energy has been, by far, one of the best performing sectors of the market over the last 18 months.

The fund is planning on dumping shares of Chesapeake Energy Corp, Hess Corp and Pioneer Natural Resources, while continuing to hold names like CNX Resources Corp and EQT Corp, according to a Reuters report

New York Comptroller Thomas DiNapoli commented: “To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future.” 

In other words, to protect the fund, we must destroy its returns. 

The report says that while the $280 billion New York State fund is not a major holder of shale companies, its investment cues are often followed by other institutions. And this isn't the first foray the fund has had tapping into its "ESG" side. 

"DiNapoli said the fund would sell $7 million worth of securities in Canadian oil sands companies," the Reuters report commented.

Meanwhile, back in the real world, we reported yesterday that high cost shale production is once again ramping up to meet demand for oil at prices over $90. 

Energy companies are once again starting to "kick the tires and light the fires" at high-cost shale basins, which have once again become economically feasible thanks to oil's dramatic rise in price over the last 12 months. The same projects that were shuttered during the beginning of the pandemic are once again "buying properties and adding rigs and frack crews", according to Reuters

This is as benchmark oil prices rose over $93 last week, marking a stunning 65% move higher in a year and the highest prices since 2014. The report notes that this has catalyzed U.S. producers to spend "at double-digit rates as fuel demand has soared and fears have waned that OPEC will again punish them by flooding the market with crude".

Executives are calling the economics of the industry "the best in years". 

But enjoy your shares of Tesla, New York State. Godspeed.

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