WHEELING - Aubrey McClendon is being replaced as chairman of the Chesapeake Energy board of directors by Archie Dunham who now will lead the most active natural gas producing company in the Ohio Valley.
Chesapeake officials made the announcement Thursday regarding Dunham amid published reports that China-based Sinopec Corp. is contemplating a multibillion-dollar bid for company assets across the U.S.
"Under Aubrey's leadership, Chesapeake has built an extraordinary portfolio of natural gas and oil assets in creating one of the world's leading energy companies," said Dunham, former chairman of global oil giant ConocoPhillips. "I am honored to join the Chesapeake board in the new role of independent non-executive chairman and I am excited about the exceptional opportunities ahead for this high-potential company."
McClendon, who founded Chesapeake, will remain the Oklahoma City-based company's chief executive officer and president. He believes Dunham brings a great deal of experience and leadership to Chesapeake.
"Archie is extraordinarily well regarded both inside and outside of the industry, and we are confident he is the right person to lead our board as we complete the transition from the asset identification and capture phase of Chesapeake's history to now harvesting those assets," McClendon said.
The change at Chesapeake is a result of investor concerns regarding some of McClendon's investment practices in Northern West Virginia.
In his personal business dealings with local Chesapeake leaseholdings, McClendon took a 2.5 percent personal interest in Brooke, Ohio, Marshall and Wetzel County Chesapeake operations. This left some investors concerned because Chesapeake is a publicly traded company on the New York Stock Exchange while McClendon's firms - Larchmont Resources and Jamestown Resources - are his own personal businesses. McClendon has since agreed to end this practice, formally known as the Founder Well Participation Program, by June 30, 2014.
In addition to its West Virginia operations, Chesapeake holds the most Utica Shale acreage in Ohio. The company is looking to sell 337,481 acres worth of leases in Northeast Ohio to help shed about $10 billion in debt. Along with the Ohio acreage, Chesapeake is also looking to sell leased land in Colorado and Wyoming.
Regarding the possible Chinese investment in this acreage, published reports indicate Sinopec Chairman Fu Chengyu was recently in Oklahoma exploring a possible deal.
Reports also state Chengyu was seen in a "high-profile seat" at a National Basketball Association Finals series game at the Chesapeake Energy Arena in Oklahoma City.
In addition to the naming rights at the arena, McClendon owns a portion of the Oklahoma City Thunder, the franchise he and other owners relocated to Oklahoma in 2008 after its former life as the Seattle Supersonics.
Chesapeake reported $71 million worth of losses to stockholders for the first three months of this year, while stock price fluctuations continue. NYSE records show the company's stock has dropped from $34.39 per share on July 18 to $18.12 on Thursday.
In May 2008, Chesapeake's stock price per share soared to $54.77, but collapsed to $15.81 just eight months later, records show.
O. Mason Hawkins is chairman and chief executive officer of Southeastern Asset Management, which is Chesapeake's largest individual shareholder. He believes the new chairman and board will benefit the company.
"Chesapeake has the assets and the opportunity to become the U.S.'s pre-eminent, low cost energy producer and to significantly grow its value per share. We believe this board will prudently guide, assist and complement management's efforts to capture its potential," he said.
In addition to Dunham, new board members will include Frederic Poses, chief executive officer of Ascend Performance Materials; R. Brad Martin, former chairman and chief executive officer of Saks Inc.; Bob Alexander, founder of Alexander Energy Corp.; and Vincent Intrieri, senior managing director of Icahn Capital L.P.