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Chesapeake Energy audit committee chairman resigns

BY BEN FOX RUBIN   
 
OKLAHOMA CITY -- Chesapeake Energy Corp. said its board accepted the immediate resignation of its audit committee chairman, V. Burns Hargis, who decided to step down following the completion of a probe into the company' s CEO.

The company in January said its review of alleged conflicts of interest involving co-founder and Chief Executive Aubrey McClendon found no improper conduct. Mr. McClendon plans to leave the company in about a month.

"With the completion of my final assignment, it is the appropriate time for me to step aside," said Mr. Hargis, who joined the board in 2008.

Louis A. Raspino has been elected to fill the vacancy and has been appointed chairman of the audit committee. He will stand for election at the annual meeting of shareholders in June. Mr. Raspino most recently served as chief executive of oil and gas drilling and services company Pride International Inc., until it merged with Ensco in 2011.

The probe began last April, after it was revealed that entities controlled by Mr. McClendon had borrowed up to $1.4 billion from private-equity firm EIG Global Energy Partners, which has paid hundreds of millions of dollars for preferred shares in Chesapeake subsidiaries. Some corporate-governance experts said there was the potential for a conflict of interest. Mr. McClendon borrowed the money largely to pay for his share of the drilling costs for wells in which he owns a small interest--investments he acquired through a perk that allowed him to take a small stake in every well Chesapeake drilled. The company and Mr. McClendon in May agreed to end that perk in June 2014.

The Oklahoma City-based company disclosed in a regulatory filing this month that the U.S. Securities and Exchange Commission is investigating the perk.

Last month, the company said its fourth-quarter earnings fell as it was hurt by debt-buyback expenses and other items that masked strong revenue growth.

Dow Jones Newswires

03/07/2013

 

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