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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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Shale Executives Make Millions As Their Company Goes Bankrupt


It has been a catastrophically bad year for shale, and few (if any) could have predicted the industry’s struggles this year. The most notable of those struggles came in April when the West Texas Intermediate crude benchmark plunged below zero and into uncharted territory.  The previously unthinkable price crash was spurred by a series of unfortunate events: the spread of the novel coronavirus caused a drop in global oil demand, which in turn caused the OPEC+ leaders to turn against one another, which fomented an all-out oil price war and global supply glut that maxed out

oil storage around the world and sent the markets into pandemonium. In the Permian Basin, the fallout has been legions of fired and furloughed employees, a wave of bankruptcies, the near-abandonment of major oilfield services companies like Halliburton, and the transition of Texas boom towns to ghost towns as local economies dry up overnight. 

But while West Texas plunged into chaos, some shale founders were apparently cutting fat checks. “On July 7, the board of directors at Texas fracking sand supplier Hi-Crush granted nearly $3 million in bonuses to four top executives, including $1.35 million for CEO and founder Robert Rasmus,”

reported Reuters in an expose published this week. “Five days later, the company declared bankruptcy.”

According to the damning report, this considerable payout is not the anomaly. In fact, it’s just “the latest in a series of board decisions that allowed the oilfield supplier’s top executives and founders to rake in tens of millions of dollars as shareholders saw the stock price plummet to pennies.” 

While the payout is certainly in bad taste, the Reuters report suggests that there may have been unethical and even illegal elements at play amongst the decisions of the company’s three-member independent board as well. Since 2013, the board has “ included two people with close ties to Rasmus: John Kevin Poorman, a former next-door neighbor in Illinois, according to deed records; and John Affleck-Graves, who until 2019 was the chief financial officer of the University of Notre Dame, Rasmus’ alma mater and a recipient of his donations.” The donations under scrutiny here comprises “an undisclosed amount of money for a new 4,000-square-foot entertainment facility - dubbed the Rasmus Family Club – that opened in 2017 at Notre Dame stadium.” The money was donated at a time that Affleck-Graves held the role of the university’s chief financial officer in “a conflict of interest with a board member who also served as the university’s CFO and could have benefitted from an associate’s major

Related: U.S. Oil Rig Count Falls Despite Stabilizing Crude Prices

donation to the school.” “Since 2014,” says Reuters, “the board has approved $640 million in company purchases of three sand mines and other assets in which Rasmus and his two co-founders each held a 12.78 percent stake, according to regulatory filings. The sales grossed the founders a combined $245.5 million, a windfall that came at the expense of other shareholders.”

The report goes on to detail myriad other distasteful if not outright illegal activity from the Hi-Crush board, including questionable stock purchases and a number of executive windfalls at the expense of shareholders, not to mention company employees. “The founders’ windfall from the sand-mine

deals, which has not been previously reported, reflects lax corporate governance in the oil patch that has raised investors’ risk,” Reuters paraphrases the opinion of Ed Hirs, “a veteran oil industry manager and an

energy fellow at the University of Houston.” While reporters reached out to all Hi-Crush officials, founders and directors mentioned in the expose, they reportedly received zero responses.


By Haley Zaremba for Oilprice.com 

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Leave a comment
  • GasTransporter on August 15 2020 said:
    Nothing unique here. How hapless/stupid are the shareholders to allow this to happen? And what would motivate a bankruptcy court charge to rubberstamp this kind of a deal? Is it always necessary to filet the shareholders on the way out? Is greed always good? Maybe not :(

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