| HOUSTON, March 28
HOUSTON, March 28 Chesapeake Energy Corp's
search for a new chief executive to replace Aubrey
McClendon is likely to extend beyond an April 1 deadline,
according to a person familiar with the situation.
McClendon is expected to step down on Monday even if a
successor has not been named, leaving Chief Operating Officer
Steve Dixon and Chairman Archie Dunham to lead the U.S. oil and
gas company in the interim, the source said.
McClendon's departure was announced in late January,
following a governance crisis and a liquidity crunch caused by
heavy spending on oil and gas properties, and a collapse in the
price of natural gas.
Chesapeake's board of directors is considering both internal
and external candidates for the job they had initially said
would be filled by April 1.
The reason for the delay was not immediately clear. A
spokesman for the Oklahoma City, Oklahoma-based company did not
return a telephone call seeking comment on the process.
Analysts said several factors may be complicating the
search: the second-largest U.S. natural gas producer faces
financial and regulatory headwinds, it has a knotty financial
structure that needs to be simplified, and there is a crowded
field of public energy companies on the hunt for a CEO.
McClendon, who co-founded Chesapeake in 1989, was one of the
first oil and gas executives to recognize the vast potential of
the country's shale basins. But he oversaw $43 billion in
spending over 15 years to snap up drilling rights across the
country, putting the company under severe financial strain when
natural gas prices tumbled.
Chesapeake has to fill a projected $4 billion gap between
cash flow and spending this year and sell up to $7 billion in
assets to help make up that shortfall in an environment where
deal valuations have softened.
A Reuters investigation last April found that McClendon had
arranged to personally borrow more than $1 billion from a big
investor in Chesapeake, EIG Global Energy Partners, secured by
his interest in the wells..
That program granting McClendon stakes in the company's
wells is the subject of a formal investigation by the U.S.
Securities and Exchange Commission. The U.S. Department of
Justice has also launched a probe into possible antitrust
violations related to land deals Chesapeake struck in Michigan.
Those deals were first reported by Reuters.
A company probe of the same matter found no intentional
wrongdoing on the part of McClendon.
"I don't think the company is out of the woods," said Phil
Weiss, oil analyst at Argus Research. "They are going to need
somebody who can get their leverage and budget under control and
sort through all the joint ventures and off-the-balance sheet
Chesapeake has competition for talented executives. Other
oil and gas companies that are looking for new CEOs, or
executives who are meant to be part of a succession plan,
include Encana Corp, Occidental Petroleum Corp
and Marathon Oil Corp.
The search for a CEO typically takes about three months, but
often takes longer because of the difficulty of scheduling
interviews, negotiations over contract terms, and due diligence,
according to executive search firm Egon Zehnder.
"From a board's perspective, it's a pretty complex thing
when you talk about a CEO search," said Trent Aulbaugh, head of
Egon Zehnder's Houston office. His firm is not involved in the
Chesapeake search process.
A partner at Heidrick & Struggles, the recruiting firm that
Chesapeake hired, was not available to comment.
McClendon, 53, appears eager to leave Chesapeake as quickly
as possible, the source said.
He has created at least two new Oklahoma companies in the
last few months, McClendon Energy Operating LLC and Arcadia
Capital LLC, according to documents filed with the Oklahoma
Secretary of State. The documents did not provide any details
about the nature of the companies.
A spokesman for McClendon did not immediately respond to an
email seeking comment on his plans.
(Additional reporting by Michael Erman; Editing by Edward Tobin
and Tiffany Wu)