Chesapeake Energy Corp. (CHK:US) picked Chief Operating Officer Steven C. Dixon to be acting chief executive as co-founder Aubrey K. McClendon steps down from the natural gas explorer he led for almost a quarter century.
Chesapeake’s board appointed Dixon and two others to a newly-established Office of the Chairman while it continues the search for a permanent CEO, the Oklahoma City-based company said in a statement yesterday. The other members of the office are Chairman Archie Dunham and Chief Financial Officer Domenic Dell’Osso, the company said.
McClendon, 53, agreed in January to resign no later than April 1 after a shareholder revolt by Carl Icahn and Southeastern Asset Management Inc.’s O. Mason Hawkins cost the CEO his annual bonus and the chairmanship last year. A board inquiry into McClendon’s use of personal stakes in company-owned wells to obtain more than $800 million in private loans cleared him of any intentional wrongdoing in February.
Dixon, 54, is a University of Kansas-trained geologist who joined Chesapeake in 1991, two years after the company’s founding, as vice president of exploration. He has been COO since 2006, a role he will continue to perform, according to the statement.
“Steve has full authority to lead our company and will ensure that Chesapeake maintains its culture of excellence, hard work and agility,” Dunham said in an e-mail to employees yesterday. Dixon “has the reins and he knows the path forward.”
U.S. equity markets were closed yesterday for the Good Friday holiday. Chesapeake’s stock has risen 23 percent this year, erasing almost all of 2012’s 25 percent decline.
Directors are working with Chicago-based executive-search firm Heidrick & Struggles International Inc. (HSII:US) to find a permanent CEO, according to the statement.
A tireless promoter of gas as an alternative to coal and Middle Eastern oil imports, McClendon built Chesapeake into the largest U.S. gas producer by employing cutting-edge drilling techniques in domestic shale formations overlooked by major international energy giants.
McClendon oversaw a 500-fold increase in Chesapeake’s market value from its 1993 debut as a public company to a peak of $35.6 billion in June 2008, according to data compiled by Bloomberg. Since then, stung by cratering gas prices and growing investor mistrust, the company’s value fell by more than half to about $13.6 billion.
Chesapeake agreed to sell $12 billion in pipelines, oilfields and other assets in 2012, short of McClendon’s original sales target, as a cash flow shortfall threatened to derail drilling plans and erode the company’s compliance with lending covenants.
The new permanent CEO will inherit a $4 billion to $7 billion asset-sales target for this year and the unfinished task of converting a company that pumps enough gas to supply 20 percent of American household demand into an oil producer.
Icahn and Hawkins, who together control 22 percent of Chesapeake’s stock, pushed for McClendon’s resignation after concluding his presence and the controversy surrounding his personal business deals was hurting the company’s share price, a person with knowledge of the discussions said in January.
As one of the first explorers to embrace horizontal drilling and hydraulic fracturing, McClendon helped usher in a revival of U.S. gas and oil production with discoveries such as the Haynesville Shale in Louisiana and Utica Shale in Ohio.
The success of the drilling methods led to a glut of North American gas that drove prices to a 10-year low in early 2012, prompting Chesapeake to cut jobs, curtail capital spending and offer oilfields and other assets up to the highest bidders.
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