CHESAPEAKE ENERGY, the second-largest US natural-gas producer, fell to its lowest in three years after a news report that chairman and CEO Aubrey McClendon used his stakes in company wells as collateral to finance his share of the well costs.
Chesapeake fell 6.7 per cent to $17.84 at 1.44pm in New York. Earlier, shares declined as much as 10 per cent to $17.17, the lowest intraday since July 8th, 2009. Before today, shares of Oklahoma City-based Chesapeake had fallen 14 per cent this year.
McClendon has borrowed as much as $1.1 billion during the past three years to pay for his share of well costs, using his well stakes as collateral, Reuters reported today, citing loan documents.
The arrangements may compromise his duty to shareholders, Reuters said, citing interviews with academics, analysts, and attorneys.
“We do not believe any conflicts of interest exist but if any arise there are numerous mechanisms to counteract any such conflict,” Chesapeake General Counsel Henry J Hood said in a statement emailed today by the company. – (Bloomberg)
