Chesapeake Energy’s newly minted chairman called CEO Aubrey McClendon a “brilliant explorer, entrepreneur and risk taker,” but he added the company’s board of directors has a difficult job as it works to rebuild value for shareholders and damaged reputation due to scandals involving the embattled CEO.
Archie Dunham, 73, said the board of directors will focus on the balance sheet and cost structure of the Oklahoma City-based company. He said the company must also examine the work of McClendon and repair damaged done by several negative media reports.
“Aubrey is an exceptional, brilliant explorer, entrepreneur and risk taker. He’s done a great job of building a company and creating and capturing high-quality assets,” Dunham told The Oklahoman in an exclusive interview. “No. 2, the company is in trouble, reputationally, with a lot of investigations and apparent ethics problems.”
Chesapeake has endured numerous scandals over the past few months and is currently under investigation by the Securities and Exchange Commission. McClendon is accused of leveraging his personal stake in natural gas well to obtain $1.5 billion in personal loans.
Earlier this week, Reuters reported Chesapeake allegedly colluded with Canada-based Encana Corp. to drive down land prices in Michigan. The report forced Encana to immediate open an investigation and saw Chesapeake lose $1.4 billion since Friday.
Dunham did not comment about any of the ongoing investigations or allegations against the company to The Oklahoman, saying “I haven’t been here long enough.”
Dunham, who said he told McClendon that he has no interest in the CEO role, said a strong board of directors can help lead the company out of its current situation and build value for shareholders.
To do that, Dunham said the company will carefully examine and compare its cost and staffing levels to its competition.
“To me the best way to look at your cost structure is to benchmark your organization with your competition,” Dunham told The Oklahoman. “That’s what I did when I was running Conoco. We benchmarked our best competition. We looked at layers of management. When you’re benchmarking against your very best competition and your cost structure is out of line, you have to ask yourself why. There’s usually not an excuse. So then you have a tough job of cutting jobs.”
Chesapeake employs more than Anadarko Petroleum Corp. and Devon Energy Corp. combined, but the Oklahoma company is valued at half to a third of what those companies are.
The Oklahoman has a much more in-depth story on their website. You can read it here.