* McClendon added to Frac Tech board
* Frac Tech IPO shelved on Friday
By Anna Driver
HOUSTON, May 9 (Reuters) - Chesapeake Energy Corp (CHK.N) has a higher stake in privately held Frac Tech Holdings Inc and its top executives will hold two seats on the board, even as the U.S. natural gas producer pursues a possible sale of its interest while growing its own oilfield service business.
Chesapeake and a consortium of Asian investors said on Monday that a leveraged buyout of Frac Tech is complete. Chesapeake now owns 30 percent of the company, up from 26 percent.
Aubrey McClendon, Chesapeake’s chief executive officer, has said he aims to grow its existing drilling and trucking businesses as a means of offsetting rising drilling costs.
Frac Tech, McClendon said in a March interview, was the “best in the business” and could serve as a blueprint for the hydraulic fracturing business Chesapeake is building from scratch by putting together crews of workers.
“We think it makes sense to duplicate that model when and if we can,” McClendon said.
Chesapeake initially said it would sell its 26 percent stake in Frac Tech as part of a plan to reduce debt. Frac Tech also planned a $690 million initial public offering, but canceled the IPO on Friday, according to a filing with the U.S. Securities and Exchange Commission.
In the March interview with Reuters, McClendon said Chesapeake was pursuing a number of ways to wring value from its stake in Frac Tech, including an IPO or outright sale.
“There’s been a lot of interest,” he said at the time, valuing Chesapeake’s possible profit on its Frac Tech investment at $1 billion.
A spokeswoman for Cisco, Texas-based Frac Tech did not have an immediate comment.
In its earnings release earlier this month, Chesapeake said it expected the “monetization” of its oilfield service assets in 2012.
McClendon will hold a seat on Frac Tech’s board of directors, joining Chesapeake Chief Financial Officer Domenic Dell’Osso, who already holds a seat.
Chesapeake’s former chief financial officer, Marc Rowland, left the company in October to take a job as CFO at Frac Tech. Following the completion of the recapitalization, Rowland is now CEO of the firm, which provides hydraulic fracturing services to energy companies.
Frac Tech in April agreed to sell 70 percent of the company to a unit of Singapore’s Temasek and RRJ Capital, a fund run by Asian investor Richard Ong. [ID:nN20144700].
Shares of Chesapeake rose 38 cents, or 1.2 percent, to $31.33 on the New York Stock Exchange, about in line with at 1.4 percent gain in the ARCA index of natural gas companies .XNG. (Reporting by Anna Driver, editing by Gerald E. McCormick)