SPECIAL REPORT: Chesapeake, McClendon endure rocky year; more uncertainty ahead

Thu Dec 27, 2012 2:29pm EST
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By Brian Grow, Anna Driver and Joshua Schneyer Dec. 27 (Reuters) - The stock price of his energy company is down nearly 30 percent. The board stripped him of his chairmanship amid scandal. Today, his estimated billion-dollar personal fortune has shrunk by more than half.

Aubrey McClendon, 53, endured a trying year running the second-largest natural gas producer in the United States, Chesapeake Energy Corp. But as corporate, state and federal probes into McClendon and the company continue, 2013 isn't looking much easier.

Facing a cash crunch, the natural-gas giant that McClendon founded had been counting on profits from land that was leased in Colorado, North Dakota and Wyoming. The deals, however, have soured - at a cost to Chesapeake of more than a billion dollars, the company told investors in November.

Like property owners in Michigan and Texas, land owners in North Dakota have sued Chesapeake over allegations that the company reneged on leasing agreements. And now, one of its leading regional contractors is suing Chesapeake for allegedly failing to pay a $15 million bill, court documents show.

McClendon's personal finances also remain strained: This autumn, according to a document filed in Oklahoma County, Oklahoma court, he put up at least part of his renowned wine collection as collateral for a loan from a fellow Oklahoma tycoon.

In building Chesapeake to the size and stature it holds today, McClendon oversaw $43 billion in spending over 15 years to snap up drilling rights across the country, holdings equal in area to West Virginia. But that empire, and the personal fortune he intertwined with it, is now under severe financial and legal strain across much of America.

In April and May, Reuters reported that McClendon had arranged more than $1.5 billion in undisclosed personal loans and that his largest personal lender was also a major investor in Chesapeake. The company removed McClendon as chairman and cut short a perk that enables him to invest in Chesapeake wells. The Securities and Exchange Commission and Chesapeake's board of directors continue to examine the financial relationship between McClendon and the company.

Reuters subsequently found that Chesapeake and rival Encana Corp had discussed taking measures to avoid bidding against the other for land they hoped to acquire in Michigan. The Department of Justice and the Michigan Attorney General are investigating whether Chesapeake, at McClendon's behest, violated anti-trust laws. New emails reviewed by Reuters suggest the talks between the companies may have been more extensive and detailed than previously reported.   Continued...