HOUSTON – Aubrey McClendon was the face area of the nation’s natural gas boom, a swashbuckling innovator who pioneered a shale revolution.
Former Chesapeake CEO Aubrey McClendon dies in car crash next day of being indicted
McClendon was charged on Tuesday with conspiring to rig bids to purchase oil and gas leases in Oklahoma, and on Wednesday his car crashed right into a wall and burst into flames.
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He built a lot of money as head of Chesapeake Energy, whose embrace of new production techniques unlocked previously untapped deposits and helped wean the United States from ever-increasing reliance on imports.
But late Tuesday, he was indicted on federal bid-rigging charges accusing him of conspiring to suppress prices for oil and natural gas leases. As well as on Wednesday morning, he died inside a crash in Oklahoma City after his car hit a bridge at high-speed. McClendon, 56, ended up being to have appeared in court later in the day.
“He was charismatic along with a true American entrepreneur,” said T. Boone Pickens, popular oilman himself, is not McClendon for 25 years. “No individual is without flaws, but his effect on American energy will be long-lasting.”
Even in a business noted for bigger-than-life executives, McClendon was a mythical character. His interests went far beyond the oilpatch, including part ownerships from the Oklahoma City Thunder professional basketball team and a winery in Bordeaux, France. He bragged about his $12 million antique map collection.
In his years at Chesapeake, which he co-founded in 1989, it would end up being the second-biggest gas producer in the usa. Only Exxon Mobil produces more.
But his spectacular rise was accompanied by a similarly stunning fall with his ouster in 2013.
And his indictment this week cast a dark shadow over his career. It had been with the Justice Department late Tuesday, accusing McClendon of orchestrating a conspiracy in which two unidentified companies colluded to not bid against each other for that purchase of several oil and gas leases in northwest Oklahoma between late 2007 and early 2012.
Under McClendon’s leadership, Chesapeake would be a darling of Wall Street as he acquired leases across the country and liberally employed hydraulic fracturing to unlock vast amounts of gas in Texas, Oklahoma, Ohio and Pennsylvania.
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But Chesapeake and a handful of other companies released so much gas they glutted the market. Natural gas prices collapsed, pulling down the worth of Chesapeake’s shares over the past five years.
The company’s problems were compounded by revelations that McClendon had a personal stake in Chesapeake wells and then used those investments as collateral for approximately $1.1 billion in loans, used mostly to pay for his share from the cost of drilling those wells.
Those revelations ignited a revolt by Chesapeake’s board, and that he was instructed to leave the company 3 years ago.
When McClendon began quietly acquiring leases around 2005, most energy analysts thought america faced the next of gas shortages. Billions of dollars were committed to import terminals that will receive liquefied natural gas from Qatar and other gas-producing countries. But McClendon’s explorations were so successful that there wasn’t any longer any need for imports, and also the terminals quickly became virtually unusable.
He was charismatic and a true American entrepreneur
Now, in a once-unthinkable turnabout, some are being converted to export liquefied natural gas.
McClendon’s corporate pursuits reflected his eclectic interests. Because the company grew from the origins in 1989, he developed a corporate campus in Oklahoma City that looked more like an Ivy League school than a bit of the oilpatch, having a cafeteria that served international fare along with a gymnasium outfitted just like a spa.
McClendon dabbled in politics and personally appeared in television commercials promoting the benefits of gas as a replacement of coal burning for power. He unsuccessfully pushed for natural gas-fuelled cars.
Aubrey Kerr McClendon, the son of Joe and Carole Kerr McClendon, was born July 14, 1959, in Oklahoma City into a family steeped within the oil industry. His father was a petroleum products salesman. Aubrey McClendon’s lineage also included Oklahoma notables, included in this Robert S. Kerr, an old Oklahoma governor and senator as well as an oilman himself.
Classmates at Duke University remembered McClendon, who studied history, for his expansive appetite for reading as well as for having copies of Businessweek magazine strewn round his room. He graduated almost 30 years ago with a bachelor of arts ever.
It was at college he met his future financier, Ralph Eads III, a good investment banker with Jefferies. McClendon married his college girlfriend, Kathleen Upton Byrns. In addition to his wife, he’s survived by two sons, Will and Jack; a daughter, Callie; and a grandchild.
As an entrepreneur, he’d an identity for aggressive practices.
He used to be fined US$250,000 through the National Basketball Association for bragging that he and the partners did not buy the Seattle SuperSonics to keep the team in Seattle – an argument which was at odds using the NBA commissioner’s intentions. The Sonics gone to live in Oklahoma City anyway – a far smaller market – for that 2008-09 season. They play in Chesapeake Energy Arena.
While the indictment did not find out the two companies, most energy experts believe they are Chesapeake and SandRidge Energy, also located in Oklahoma City and formerly led with a onetime partner of McClendon. The 2 companies previously disclosed in regulatory documents that they were being investigated through the Justice Department’s Antitrust Division.
SandRidge had yet to discuss the indictment, while Chesapeake said hello was cooperating with the investigation and didn’t be prepared to face criminal penalties.
According towards the Antitrust Division, the companies secretly decided who would win leases, and also the winning bidder allotted a desire for the leases to the other company. The indictment said that McClendon instructed his subordinates to conspire with other people from the second company to allocate leases among themselves.
“His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land,” said William J. Baer, assistant attorney general within the Antitrust Division. “Executives who abuse their positions as leaders of major corporations to organize criminal activity must be attributed for his or her actions.”
The indictment on Tuesday was filed in the U.S. District Court for the Western District of Oklahoma. The Justice Department said it was the first case caused by a federal antitrust investigation into price-fixing, bid-rigging along with other anti-competitive conduct within the oil and gas industry.
At first, McClendon and the lawyers expressed indignant disagreement with the indictment, although McClendon did not expressly deny there have been discussions having a competitor.
He was always looking for worlds to conquer. And he did that.
“The charge that has been filed against me today is wrong and unprecedented,” McClendon said in statement released Tuesday night. “I’ve been designated as the only person in the oil and gas industry in over 110 years because the Sherman Act became law to have been accused of this crime with regards to joint bidding on leasehold.”
Under the government Sherman antitrust statute, violations carry a maximum penalty of Ten years in prison and a $1 million fine.
The indictment followed a four-year federal investigation that began after Reuters revealed in 2012 that Chesapeake had discussed with EnCana, a rival Canadian energy giant, how to suppress land lease prices in Michigan. This past year, Chesapeake settled by receiving pay $25 million as compensation to landowners with leases.
While the police didn’t characterize the death like a suicide, Capt. Paco Balderrama of the Oklahoma City police asserted McClendon drove “via a grassy area before colliding in to the embankment.” He added, “There is lots of chance of him to correct and obtain back on the roadway, and that didn’t occur.” McClendon wasn’t wearing a seatbelt.
The state medical examiner’s office determines the cause of death, the police said.
After his ouster from Chesapeake in 2013, McClendon quickly turned his attention to his next venture, co-founding American Energy Partners, a personal oil company. His goal ended up being to take the fracking revolution worldwide.
“He was always searching for worlds to conquer,” said Melvin Moran, an Oklahoma oil executive is not McClendon for a long time. “And that he did that.”
