Exclusive: Chesapeake CEO search extends beyond deadline - source

Thu Mar 28, 2013 1:05am EDT
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By Anna Driver

HOUSTON (Reuters) - Chesapeake Energy Corp's (CHK.N: Quote) search for a new chief executive to replace Aubrey McClendon is likely to extend beyond an April 1 deadline, according to a person familiar with the situation.

McClendon is expected to step down on Monday even if a successor has not been named, leaving Chief Operating Officer Steve Dixon and Chairman Archie Dunham to lead the U.S. oil and gas company in the interim, the source said.

McClendon's departure was announced in late January, following a governance crisis and a liquidity crunch caused by heavy spending on oil and gas properties, and a collapse in the price of natural gas.

Chesapeake's board of directors is considering both internal and external candidates for the job they had initially said would be filled by April 1.

The reason for the delay was not immediately clear. A spokesman for the Oklahoma City, Oklahoma-based company did not return a telephone call seeking comment on the process.

Analysts said several factors may be complicating the search: the second-largest U.S. natural gas producer faces financial and regulatory headwinds, it has a knotty financial structure that needs to be simplified, and there is a crowded field of public energy companies on the hunt for a CEO.

McClendon, who co-founded Chesapeake in 1989, was one of the first oil and gas executives to recognize the vast potential of the country's shale basins. But he oversaw $43 billion in spending over 15 years to snap up drilling rights across the country, putting the company under severe financial strain when natural gas prices tumbled.

Chesapeake has to fill a projected $4 billion gap between cash flow and spending this year and sell up to $7 billion in assets to help make up that shortfall in an environment where deal valuations have softened.   Continued...

Chief Executive Officer, Chairman, and Co-founder of Chesapeake Energy Corporation Aubrey McClendon walks through the French Quarter in New Orleans, Louisiana March 26, 2012. REUTERS/Sean Gardner