W.Va. blast follows firm's filing for IPO

Yet to be seen if penalties will affect process

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A gas explosion at an Antero Resources Corp. site in West Virginia that sent five workers to West Penn Hospital's burn unit Sunday comes less than a month after the Colorado company initiated a $1 billion initial public offering.

Denver-based Antero filed its registration statement with the Securities and Exchange Commission on June 13, inviting the scrutiny of the federal agency and potential investors.

As the investigation into this weekend's accident unfolds, it remains to be seen if penalties from federal and state regulators, lawsuits or damage to the company's reputation will impact the IPO process.

Antero, the West Virginia Department of Environmental Protection, the federal Occupational Safety and Health Administration, and two independent fire investigators hired by the company are all still trying to piece together what caused the explosion and fire early Sunday morning. Workers employed by a contractor firm were pumping flow-back water out of a horizontal Marcellus Shale well in New Milton, Doddridge County, and installing production pipes down the hole when the incident occurred.

Antero is one of the largest drillers in the Marcellus region. Most of its activity is focused in West Virginia, although the company has about 25,000 acres in southwestern Pennsylvania, split between Washington, Westmoreland, Fayette and Greene counties. In 2010, it drilled its first and only two Marcellus wells in West Pike Run in Washington County, but Alvyn Schopp, a vice president with Antero, said there are no immediate plans to develop the rest.

Jay Ritter, a professor of finance at the University of Florida who tracks IPOs, said it's not uncommon for companies to adjust something about their public offerings in response to unexpected events.

"In situations like this, the company has a decision," Mr. Ritter said. "Do we postpone the IPO? Do we go ahead where the offer price will have to be lowered a little bit to compensate for both the higher cost [of mitigating damage] and potential damage to reputation?"

"It all depends upon just how material it is," he said.

Antero can't answer that question yet. "We haven't even thought about that," Mr. Schopp said. "Our concern is to finish our investigations and all that other stuff will get sorted out."

He also said the company is still months away from completing the IPO process.

"We haven't even gotten our first round of comments back from the SEC," Mr. Schopp said.

If previous oil and gas accidents are any indication, investors may not be swayed by such events.

Chesapeake Energy Corp.'s stock price was seemingly indifferent to a condensate tank fire in Avella that injured three workers in February. The Oklahoma City company ended up with a $188,000 fine for the accident three months later. The penalty, which came as part of a larger announcement of Pennsylvania's largest environmental penalty to date of $1.2 million for polluting groundwater, also didn't get a noticeable rise out of stockholders.

EQT Corp.'s stock price rose slightly for several days in February, even though the Downtown-based company had an explosion at one of its well sites in West Virginia where a truck driver transferring wastewater from a tank into a truck was killed.

Those who invest in energy companies tend to know the industry, Mr. Ritter said. That means they know accidents like these are rare, but not uncommon, and they can gauge the material impact on the company.

Between 2007 and 2012, the OSHA investigated 277 accidents at oil and gas sites where workers were either injured or killed.

"If this is an explosion where people are seriously injured, it raises questions [like], does the company need to devote more resources to safety, are there going to be regulatory problems, fines?" Mr. Ritter said.

Potential investors can get a sense of such costs by looking at Antero's compliance history to date.

According to its annual report, the company is anticipating more than $100,000 in fines and cleanup costs associated with an investigation by the Environmental Protection Agency that alleged Antero violated the Clean Water Act by discharging fill material into wetlands or waters.

The oil and gas firm has already paid more than $150,000 in penalties to the Pennsylvania Department of Environmental Protection for water contamination violations, and thousands more to the West Virginia DEP.

According to its registration statement, Antero is a defendant in lawsuits in Pennsylvania, Colorado and West Virginia where it's being accused of damaging plaintiffs' properties and exposing them to hazardous substances.

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Anya Litvak: alitvak@post-gazette.com or 412-263-1455


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