CEO leaves Chesapeake cash-starved
Chesapeake Energy Corp.'s departing chief executive officer will leave to his successor a shrunken, cash-starved version of what was once the preeminent natural gas producer in the world's biggest market for the fuel.
Aubrey McClendon's agreement to resign effective April 1 culminated a shareholder revolt by Carl Icahn and Southeastern Asset Management Inc.'s O. Mason Hawkins that earlier had cost the CEO the chairmanship he'd held for more than two decades. McClendon also relinquished his annual bonus and saw executive perks curtailed amid federal investigations of a portfolio of personal loans that topped $840 million.
Chesapeake climbed 6 percent to $20.11, after earlier reaching $21.20 for the biggest intraday gain in almost nine months.
Chesapeake lost as much as 43 percent of its market value in 2012 as scrutiny of McClendon's financial transactions destroyed investor confidence in management and cratering gas prices drained the company of cash. Unfinished tasks facing the next CEO include raising $8 billion from asset sales this year to plug a funding shortfall, and converting a company that pumps enough gas to supply 20 percent of American household demand into an oil producer.
“Companies have life cycles and during various stages it can make sense for some people to leave,” Philip Weiss, an analyst at Argus Research Corp. in New York, said. “Aubrey McClendon was very good at accumulating land but now that Chesapeake is moving into an asset-harvesting mode, they must have decided they needed someone with another set of skills.”
An internal board investigation of McClendon's use of his stakes in thousands of company-owned wells to secure personal loans so far has found nothing improper, Chesapeake said in a statement released on Tuesday.
“The imminent departure of CEO McClendon proves that major strategy changes are likely, and we envision a reduced spending environment that is less reliant on asset sales,” Tim Rezvan, an analyst at Sterne Agee & Leach Inc. in New York, who has a neutral rating on Chesapeake shares, wrote in a note to clients today.
Archie Dunham, the former ConocoPhillips chief who replaced McClendon as chairman in June, thanked the outgoing CEO for his “enormous achievements,” in an e-mail to employees.
The company isn't for sale and employee perks such as on-site childcare and a fitness center at the company's Oklahoma City headquarters won't be discontinued, Dunham wrote.
In a separate e-mail to Chesapeake employees, McClendon attributed his imminent departure to “certain philosophical differences” between him and the board without elaborating. Dunham and McClendon declined to be interviewed, according to Michael Kehs, a Chesapeake spokesman.
Icahn and Hawkins, who together control 22 percent of Chesapeake's stock, pushed for McClendon's resignation.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- As historic breakup nears, Alcoa works to redefine its ‘advantage’
- Older workers try to cut back on hours at job
- Batteries key to alternative energy’s success
- Asian bug threatens oranges in Florida
- Program lets public service workers be forgiven for student debt
- Key gets stuck in ignition
- Employers cut back on holiday office parties
- Small stores take big gamble by not upgrading credit card readers
- Travelers contend with increase in ground delays
- $170.4M AmEx charge yields whopping perk for Chinese billionaire
- Paying pals digitally catches on