Aubrey McClendon quits Chesapeake Energy
The chief executive will leave Chesapeake Energy, the company which he founded
Chesapeake Energy chief executive Aubrey McClendon will leave the company he founded 25 years ago on 1 April. Last year he stepped aside as company chairman amid allegations of a conflict of interest.
The company insisted McClendon’s departure is not related to his financing arrangements and other matters that precipitated in a formal inquiry by federal authorities. In a statement, Chesapeake said an “extensive review to date has not revealed improper conduct” by McClendon, who used personal interests in Chesapeake wells as collateral to secure loans.
The company expects to release the results of its own review of the McClendon’s participation in the Founder Well Participation programme, and the involvement of third parties in it, on 21 February.
Shortly after McClendon’s resignation was announced, the company’s shares jumped 6% to $20.11 in trade on the New York Stock Exchange. They were worth $73.84 in 2008.
McClendon’s marks the end of a career which saw him parlay a $50,000 initial investment into the second-largest natural gas producer in the US. By his own numbers, the company was responsible for 40% of the increase in US gas production over the past decade. By that logic it was also responsible for the price crash that wiped out two-thirds of its market capitalisation in less than five years.
In the face of such headwinds, investors urged the company to scale back spending to match reduced cash flows. That’s exactly what the new management intends to do.
According to chairman Archie Dunham: “Capital allocation and operating decisions will be made with the goal of prudently growing the company’s intrinsic value per share for the long-term benefit of its shareholders.”
It also foreshadows a painful restructuring as Chesapeake sells assets. With McClendon’s farewell, Chesapeake will inevitably become a lot smaller and a lot less colourful.