Chesapeake Energy CEO under the microscope
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Chesapeake Energy CEO under the microscope
David Brancaccio: We’ll learn more about Chesapeake Energy’s finances as it reports profits today. Chesapeake has just disclosed that the Internal Revenue Service wants to know more about perks for its CEO. The IRS is interested in questionable loans taken out by the company’s CEO.
From the Marketplace Sustainability Desk, Scott Tong reports.
Scott Tong: Chesapeake Energy bets big on fracking — the controversial way to coax oil and gas out of rock. The issue now, though, is the fracking balance sheet.
Investors just learned CEO Aubrey McClendon used his personal stake in company wells as collateral to borrow a billion dollars to invest in more wells.
Accounting professor Edward Ketz at Penn State says McClendon could be serving two masters.
Edward Ketz: The CEO of Chesapeake Energy would find himself owing allegiance to the firm and to the lender of this fund.
And he wonders why McClendon borrowed from a board member — who helped decide his salary.
Chesapeake debt has been downgraded. At least seven law firms have begun inquiries and class-action lawsuits, and the feds are sniffing.
Analyst Michael Breard at Hodges Capital Management says McClendon attracts scrutiny.
Michael Breard: Well you listen to his conference calls, he does have a very high opinion of itself. This company now it’s the second largest gas producer in the U.S. and one of the top 10 oil producers.
In the oil business, he says, if you’ve done it, it ain’t bragging.
I’m Scott Tong for Marketplace.
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