Aubrey McClendon’s new public offering plan is an echo of the bad old Chesapeake Energy. He lost his job as chief executive of the energy company over excessive spending and conflicts of interest. A new $2 billion venture would allow him to cherry-pick assets ahead of his investors and reward him generously. Despite Mr. McClendon’s knack for buying oil and gas properties, investor skepticism is in order.
The former Chesapeake chief executive is a talented entrepreneur who helped pioneer America’s shale revolution, transforming the company from a $61 million minnow in 1993 to a $37.5 billion giant by 2008. Those who buy into the new partnership, American Energy Capital Partners, could benefit from Mr. McClendon’s ability to spot emerging shale fields ahead of the crowd.
A big downside – as it also turned out at Chesapeake – is that they can’t rely on Mr. McClendon’s undivided attention or loyalty. In addition to selecting wells for American Energy, he will be at liberty to do so in other capacities, whether corporate or personal, without any need to give his venture first dibs. That recalls his personal dealings, often self-serving, at Chesapeake – and sometimes with Chesapeake. One obvious temptation might be take the best opportunities personally and leave American Energy with the rest.The whole article can be read here.
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