Oily Deals: Pattern Emerging in Questionable Arkoma Gas Transactions

by Wythe Walker Jr. and David F. Kern  on Monday, Mar. 31, 2014 12:00 am  

In Alberta, where pricing practices are different, Jones’ strategy changed.

Contrasting to American marketing practices, Canadian producers seeking to sell to Alberta & Southern must belong to an exclusive 200-company pool. George R. Walsh questioned the methods that Jones used to enter that pool.

First, he says, Jones had no gas to sell. Walsh says a friendship between his former boss Don McMorland (now chief operating officer/senior vice president) and Jones caused Alberta & Southern to favor Arkoma over the other producers. Jones denies this.

Jones says he never met with McMorland outside his office and just used persistence in seeking Arkoma’s gas contracts.

Walsh also questioned Jones’ attempts to low-ball prices in Canada’s controlled gas system. Walsh viewed this as highly improper.

Again, Jones denies Walsh’ accusations and says he is just an embittered former employee.

Walsh’s speculation is that in exchange for offering the low prices, which would help Alberta & Southern get better prices from other suppliers, Arkoma would get a sure market for its gas. Arkoma could negotiate price increases later on, he speculates.

Jones wouldn’t estimate the size of his contract with Alberta & Southern, but a newspaper reporter in Canada estimates it at 2 million cubic feet per day — about 25 percent of Arkoma Canada’s production.

“We convinced them with persistence and a lot of hard work,” Jones says of the Alberta & Southern contract.

Offering lower prices may have helped open some doors but Jones says the company’s goal is to make profits.

“We want to get as high a price for our gas at all times.”

Since Then ...

2014: In 1990, when Arkansas Business produced a version of this story as part of a package of articles on the state’s oil and gas industry, the Arkoma rights transactions — from Arkla Gas Co. to Jerry Jones and back again — were the subject of litigation that would drag on for six more years.



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