Insight: How SandRidge Energy's CEO adapted the Chesapeake playbook

Mon Jan 14, 2013 1:09pm EST
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By Michael Erman, Anna Driver and Brian Grow

(Reuters) - For 17 years, Tom Ward and Aubrey McClendon teamed up to build Chesapeake Energy Corp into the second-largest natural gas producer in the United States.

The two Oklahoma City energy men were a study in contrasts. CEO McClendon was brash and aggressive; company president Ward came across as steady and soft-spoken.

When Ward left in 2006 to start his own natural-gas company a few miles away, however, he borrowed from the Chesapeake playbook. At SandRidge Energy Inc, Ward adopted some of the same idiosyncratic business practices deployed by McClendon.

At Chesapeake, McClendon intertwined his personal financial deals with the company he runs.

Similarly, Ward has melded his own financial interests with those of publicly traded SandRidge more than many of the company's shareholders may know, an examination of court documents, Oklahoma state records and Securities and Exchange Commission filings shows.

Like McClendon, Ward has faced criticism from shareholders and others for running a public company like a private firm, drawing large paychecks and bonuses even during periods when his company struggled.

In 2008, Ward received personal loans from the chairman of Bank of Oklahoma - one of SandRidge's key lenders. He also took the unusual step of opening the company's books for the lender's review of that personal deal. The mixing of personal and corporate roles posed a potential conflict of interest for the CEO, analysts say.

Now, the question is whether Ward will be forced to change his ways as McClendon was earlier this year, when shareholders shook up Chesapeake's board and stripped him of his job as chairman following a series of Reuters reports. On Monday, Chesapeake said it was not awarding McClendon, who remains CEO, a bonus for 2012.   Continued...

SandRidge Energy CEO Tom Ward (R) speaks with chairman and majority shareholder of BOK Financial George Kaiser during an energy panel discussion at the Creativity Oklahoma World Forum in Oklahoma City, in this November 15, 2011 file photo courtesy of the Journal Record. REUTERS/Maike Sabolich/The Journal Record