Chesapeake Energy replaced former Chief Executive Office Aubrey McClendon with one of the co-founder’s lieutenants as the second-largest U.S. natural gas explorer shifts its focus to pumping oil.
Chesapeake’s directors named chief operating officer Steven Dixon acting CEO and established a three-person Office of the Chairman while they search for a permanent chief, the Oklahoma City-based company said Friday. The new office includes Dixon, Chairman Archie Dunham and Chief Financial Officer Domenic Dell’Osso, Chesapeake said.
McClendon, 53, agreed in January to resign no later than Monday after a shareholder revolt by Carl Icahn and Southeastern Asset Management’s O. Mason Hawkins cost the CEO his annual bonus and the chairmanship last year. A board inquiry into McClendon’s use of personal stakes in company-owned wells to obtain more than $800 million in private loans cleared him of any intentional wrongdoing in February.
Dixon, 54, is a University of Kansas-trained geologist who joined Chesapeake in 1991, two years after the company’s founding, as vice president of exploration. He has been COO since 2006, a role he will continue to perform, according to the statement.
“Steve has full authority to lead our company and will ensure that Chesapeake maintains its culture of excellence, hard work and agility,” Dunham said Friday in an email to employees. Dixon “has the reins and he knows the path forward.”
U.S. equity markets were closed for the Good Friday holiday when Dixon’s appointment was announced. Chesapeake’s stock has risen 23 percent this year, erasing almost all of 2012’s 25 percent decline.
Directors are working with Chicago-based executive-search firm Heidrick & Struggles International Inc. to find a permanent CEO, according to the statement. Dixon’s appointment to acting CEO was effective Friday, company spokesman Michael Kehs said in an email.
Among Chesapeake’s top executives, only senior vice president of corporate development Thomas Price has had a longer association than Dixon with the company McClendon founded in 1989 with 10 employees and $50,000 in cash. Price began working as a consultant for the company that first year and joined full time in 1992.
McClendon has been a tireless promoter of gas as an alternative to coal and Middle Eastern oil imports. Using cutting-edge drilling techniques in domestic shale formations overlooked by major international energy giants, he built Chesapeake into what was at one time the largest U.S. gas producer.
McClendon oversaw a 500-fold increase in Chesapeake’s market value from its 1993 debut as a public company to a peak of $35.6 billion in June 2008, according to data compiled by Bloomberg. Since then, stung by cratering gas prices and growing investor mistrust, the company’s value fell by more than half to about $13.6 billion.
Chesapeake agreed to sell $12 billion in pipelines, oilfields and other assets in 2012, short of McClendon’s original sales target, as a cash flow shortfall threatened to derail drilling plans and erode the company’s compliance with lending covenants.
The new permanent CEO will inherit a $4 billion to $7 billion asset-sales target for this year and the unfinished task of converting a company that pumps enough gas to supply 20 percent of American household demand into a producer of crude and gas by-products such as propane.
Icahn and Hawkins, who together control 22 percent of Chesapeake’s stock, pushed for McClendon’s resignation after concluding his presence and the controversy surrounding his personal business deals was hurting the company’s share price, a person with knowledge of the discussions said in January.
As one of the first explorers to embrace horizontal drilling and hydraulic fracturing, McClendon helped usher in a revival of U.S. gas and oil production with discoveries such as the Haynesville Shale in Louisiana and Utica Shale in Ohio.