Ever the masochist, I was listening to Bloomberg radio while driving yesterday. Nevertheless, I heard a very interesting account by two reporters of their investigation of methane emissions from older gas wells in the US.

As far as I can tell, neither knew much about the oil and gas business. But that didn’t matter much for their story. They found the owner of the largest number of mature wells in the country, Diversified, and went around with a $100,000 infrared camera and other equipment to measure and record emissions from some of them. Perhaps unsurprisingly, they found a lot of methane leakage.

They also pointed out that when wells like this finally give up the ghost, the owner is legally obliged to “cap,” i.e., plug up and seal, them …and went on to question whether Diversified, which has financial statements that I find entertainingly complex, will have the wherewithal to do so when the time comes.

The stock fell by 20% on the publication of their article.

My first thought was “So much for efficient markets,” since shareholders appear not to have had the faintest idea what Diversified does for a living.

The article also points out that the kind of wells Diversified operates might have been originally drilled by one of the oil majors, but they’ve likely changed hands a bunch of times since before ending up in the Diversified portfolio. That doesn’t sound particularly good–and may not actually be. I’m not sure the authors appreciate, though, either that special US tax breaks for oil and gas incentivize this activity or that big company wildcatters have tended to look down on on the humdrum engineering work that shepherding to mature wells requires. So for an optimist Diversified might be seen as, say, a TJX of the oil patch.

When I got home, I looked the company up on Yahoo Finance. Turns out that despite being run by Americans and operating solely in the US, Diversified is a UK-listed company. It came public in 2017 on the AIM board in London (the US equivalent would be somewhere between an OTC and a JOBS Act listing–meaning less financial disclosure) but has since made it into the FTSE 250 index.

It seems to me that Diversified’s decision not to list in its home market is the question potential investors in the US have to have a good answer for before considering the stock, given London’s “regulation lite” history that helped create the US financial crisis of a decade and a half ago. This decision may also bear on the issue of emissions that the Bloomberg reporters are interested in.