Last updated: January 30, 2013 5:24 am

Chesapeake soars as chief steps down

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Aubrey McClendon had 'philosophical differences' with Chesapeake's board©Reuters

Aubrey McClendon had 'philosophical differences' with Chesapeake's board

Aubrey McClendon, the chief executive of Chesapeake Energy, the second-largest gas producer in the US, is to leave the company on April 1, following what he described as “philosophical differences” with the board.

The announcement sent Chesapeake’s shares soaring 10 per cent in after-hours trading to $20.87.

A co-founder of the company and its chief executive for 24 years, Mr McClendon was forced to step down from the chairmanship last year after revelations about his personal borrowings secured on stakes in the company’s oil and gas wells.

Shareholders including Carl Icahn, the activist investor, forced a shake-up of the board last year after the revelation by Reuters of Mr McClendon’s previously undisclosed borrowings intensified concerns about corporate governance.

Chesapeake said an “extensive” board review of Mr McClendon’s dealings “to date has not revealed improper conduct”.

It added that his decision to retire from the company, at the age of 53, was “not related to the board’s pending review of his financing arrangements and other matters”.

The full details of the review will be published on February 21, alongside the company’s 2012 results.

Archie Dunham, the industry veteran who replaced Mr McClendon as chairman last year, said: “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 would be “working collaboratively with Aubrey to make a smooth transition”.

Heidrick & Struggles, the headhunter, has been hired to find a new chief executive.

Mr Icahn issued a statement paying tribute to Mr McClendon’s achievements in building the company and its asset base.

He added: “While it is known that some of these assets will be sold by the company in due course, I do not believe that this will in any way affect the ultimate realisation of Chesapeake’s potential. I am confident that history will prove that Aubrey has been correct about the value of natural gas in general and the value of Chesapeake in particular.”

Chesapeake was a pioneer of the US shale gas revolution, rapidly building a large portfolio of assets in the most productive areas, but has been hammered by the slump in gas prices caused by the surge in production, leaving its finances stretched.

Four new independent directors as well as Mr Dunham were appointed to the Chesapeake board last year.

Three of the new directors were nominated by Southeastern Asset Management, the largest shareholder with 13.5 per cent, and one nominated by Mr Icahn, who has 9 per cent.

Mr McClendon said in a statement: “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.”

In an email to the company’s staff, he said: “In many respects, our accomplishments are unique and I will always remain immensely grateful for the time I have spent with you building CHK [Chesapeake] into the industry leader that it is today.”

Mr Dunham also sent an email to staff, saying the company was “not for sale”.

He added that the board had “no intention of eliminating childcare, shutting down the Fitness Center, or selling the company cafeterias . . . Our truly top notch 12,000 employees remain the company’s best asset, and we will continue to retain and attract the best talent in the industry”.

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