Chesapeake Energy says its CEO is stepping down despite no finding of alleged conflicts of interest or improper conduct.
Aubrey McClendon, the co-founder of the gas giant, has been embroiled in controversy over management of the company. He stepped down as chairman a few months ago, and according to a Chesapeake news release will step down after April 1, following the naming of his successor.
"Over the past 24 years, Aubrey McClendon has created one of the most valuable and innovative companies in the energy industry," said Archie W. Dunham, chairman of the board. "Under Aubrey's strong leadership, Chesapeake has built an unmatched portfolio of natural gas and oil assets in creating one of the world's leading energy companies. He has been a pioneer in the development of unconventional resources, and he has also been a leader in the effort to make the United States energy independent.
"However, as the company moves towards more fully developing the value of its outstanding assets, Chesapeake is at an important transition in its history and Aubrey and the Board of Directors have agreed that the time has come for the company to select a new leader. The Board will be working collaboratively with Aubrey to make a smooth transition to Chesapeake's next Chief Executive Officer."
McClendon had already volunteered to not take a bonus last year. Following media reports of questionable finances at Chesapeake, largely centered on actions by McClendon, its stock price declined about 25 percent last year.
The company recently sold about $11 billion in assets in an attempt to reduce debt.
Chesapeake has a significant presence in West Virginia, increasingly so with the expansion of drilling in the Marcellus Shale. It recently announced, as part of an effort to recover debt, a massive decrease in charitable and political expenditures.
Record low natural gas prices over the past year have made Chesapeake's primary product less profitable than in the past. Despite low natural gas prices, the company has continued to drill and expand its positions in various shale gas plays.
McClendon has been a prominent figure in the gas industry, receiving attention for the rapid growth of Chesapeake under his watch. He called his past 24 years of developing Chesapeake into "one of the world's premier energy companies" a privilege
"I am extremely proud of what we have built over the last quarter of a century, and I am confident that Chesapeake is in a great position to continue to grow and achieve great success in the future as it realizes the full value of its outstanding assets," McClendon said. "While I have certain philosophical differences with the new Board, I look forward to working collaboratively with the company and the Board to provide a smooth transition to new leadership for the company."
The board's review of alleged discrepancies with McClendon's financial arrangements in respect to Chesapeake is to be released at a later date.
"Mr. McClendon will resign from the Board of Directors at the time his successor is appointed and will receive his full compensation and other benefits to which he is entitled in accordance with the terms of his employment agreement," the release states. "Mr. McClendon will continue to be an important partner with the company given his stock ownership as well as his interests in certain of the company's wells in connection with the Founder Well Participation Program, which will terminate on June 30, 2014."
Under the Founder Well Participation, McClendon was given the right to invest up to 2.5 percent working interest in new wells drilled by Chesapeake. Chesapeake was put under pressure when analysts became wary of the company's financial structure.
Media reports revealed McClendon borrowed up to $1.1 billion from EIG Global Energy Partners, a private-equity firm involved with the company. Chesapeake had not disclosed the loans. EIG also is an investor in Chesapeake.
Analysts criticized the conflicts of interests of the scenario among EIG, Chesapeake and McClendon soon after it was reported.
Chesapeake acquired Columbia Natural Resources in 2005, making the company active in West Virginia, through its predecessors, since the early 1900s, according to information from the company. Chesapeake had more than 4,500 wells that produced about 81 billion cubic feet of natural gas equivalent in 2011.
Chesapeake drilled its first horizontal well in the Marcellus shale in 2007.
The company is the largest leaseholder in the Marcellus shale gas play that stretches from New York to West Virginia.