By Dow Jones Business News,
June 11, 2014, 06:59:00 PM EDT
By Daniel Gilbert
Wildcatter Aubrey McClendon has been all but absent from the public eye since his ouster as chief executive of
Chesapeake Energy Corp. last year. Now he is easing back into the spotlight.
Mr. McClendon, whose flair made him a fixture at the energy industry's marquee events, is working feverishly to
build a new energy empire, raising $10 billion in the last nine months for his American Energy Partners LP. On
Wednesday, he joined the head of the Environmental Protection Agency and the governor of Delaware at a Goldman Sachs
energy conference in Manhattan.
The executive's appearance at the event marked a re-emergence after a quiet period. Just over a year ago, Mr.
McClendon was shown the door at Chesapeake, the company he co-founded and built into the nation's second-biggest
natural-gas producer, behind Exxon Mobil Corp. Regarded by many as a visionary early to grasp the potential of American
shale, Mr. McClendon eventually lost favor with Chesapeake's largest shareholders because of his aggressive spending,
appetite for risk and mingling his personal finances with the company's drilling.
Mr. McClendon has kicked off his second act with characteristic speed and billion-dollar purchases, setting up shop
less than a mile from Chesapeake's headquarters in Oklahoma City. American Energy Partners on Monday said it had snapped
up oil and gas holdings from West Virginia to West Texas for $4.25 billion: about $1 billion shy of Chesapeake's
capital-spending budget for this year.
"I represent an industry which today is the largest producer of natural gas in the world," a low-key Mr. McClendon
said at Wednesday's conference. Wearing a bright-pink necktie, his long white hair tucked behind his ears, he held forth
on a favorite subject: the economic and environmental benefits of natural gas.
The U.S. drilling boom has catapulted the country ahead of Russia on the natural-gas leaderboard, thanks in part to
the prowess of companies like Chesapeake at wringing the fuel from shale-rock formations through hydraulic fracturing
and other techniques.
Mr. McClendon acknowledged that the industry has made mistakes, including poor construction that led to leaky
wells. But he argued against the more muscular regulation that is under consideration as the EPA and some states study
the environmental impacts of fracking.
"We have such powerful internal motivation to get things right that we can fix things on the fly pretty quickly
without, frankly, heavy-handed approaches to our problems," he said.
American Energy Partners is bulking up in some of the areas that Chesapeake pioneered. But this time around, Mr.
McClendon is running five closely held affiliates, each focused on drilling in distinct locations.
The approach offers an appeal similar to fantasy baseball, allowing investors to bet on their favorite oil and gas
fields, from Ohio's rust belt to the red-hot Permian Basin in Texas. For now, the various units are owned by a few big
investors each, with investment firm Energy & Minerals Group in Houston putting up the most cash.
Mr. McClendon hasn't made clear whether he intends to take American Energy or any of its affiliates public. The
unit focused in Ohio, American Energy--Utica LLC, in April sold debt that would convert into shares with a public
offering. The deal implied a value of $5 billion for the venture.
For now, American Energy's financing arrangements aren't public. Some analysts question whether the terms are as
onerous as deals Chesapeake struck under Mr. McClendon, which raised cash but saddled the company with a huge debt load
and expensive requirements to drill.
The new company's frenzied pace of spending on oil and gas leases has prompted some analysts to question whether
the company is moving too quickly. "Are you optimizing what you hold? That's the name of the game right now," said Mark
Hanson, a Morningstar Inc. analyst.
The company and Mr. McClendon declined to comment for this article.
Mr. McClendon hasn't lost his appetite for complexity. In addition to American Energy Partners, he is managing
operations for a separate energy outfit with a similar name: American Energy Capital Partners LP. The company is backed
by real-estate investors who have hired Mr. McClendon to acquire interests in oil and gas properties. Mr. McClendon
receives a percentage of such deals, including purchases from companies he runs.
The U.S. Securities and Exchange Commission in March sought expanded disclosures from American Energy Capital
Partners about potential conflicts of interest. The regulator also demanded that the firm delete a passage from Mr.
McClendon's biography that referred to his "long history as a successful manager."
"The biography should be limited to factual information, not evaluative statements," the SEC wrote in March.
The company made the change.
Write to Daniel Gilbert at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2014 Dow Jones & Company, Inc.
This article appears in: