Inventive JV Structure Shows Off Merits Amid Low Gas Prices

摘要

The joint-venture agreement US independent Noble Energy and coal giant Consol Energy signed last August to develop a portion of Appalachia's gas-laden Marcellus Shale looks awfully prescient these days, with its $4-per million Btu "circuit breaker" triggered just three weeks after the deal closed last fall. That "circuit breaker" - whereby Noble's agreement to carry a portion of Consol's development costs is suspended until prices improve - not only protects Noble but also demonstrates how the skewed incentive structures of more traditional joint ventures are keeping gas flowing at a time when the market is grossly oversupplied.