Wednesday, May 2, 2012

More on the "Aubrey Problem"

Last week we asked if there were more shoes to drop on Chesapeake Energy and the "Aubrey problem".

This morning - Reuters dropped a huge shoe.

Special Report: Inside Chesapeake, CEO ran $200 million hedge fund
By Joshua Schneyer, Jeanine Prezioso and David Sheppard
NEW YORK | Wed May 2, 2012 8:03am EDT


Behind the scenes, a Reuters investigation has found, McClendon also ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities Chesapeake produces.

On Tuesday, two weeks after Reuters reported that McClendon has taken up to $1.1 billion in loans against his stakes in Chesapeake oil and gas wells, the company stripped McClendon of the chairmanship and reiterated that it's reviewing details of the loans. A statement quoted McClendon, who will stay on as CEO, saying that the move will enable him to focus his "full time and attention on execution of the company's strategy."
During that time, said a veteran trader who helped run McClendon's private hedge fund, the Chesapeake executive engaged in "near daily" communications and "exhaustive" calls to help direct the fund's trading.

The fund, Heritage Management Company LLC, was started by McClendon and Chesapeake co-founder Tom Ward. The hedge fund listed Chesapeake's headquarters in Oklahoma City as its mailing address, documents show. Heritage's staff included an accountant who was simultaneously employed by Chesapeake. The fund also earned McClendon and Ward management fees and a cut of profits from outside investors.

For more information regarding Heritage, Tom and Aubrey see Aubrey McClendon: Chesapeake Energy’s Little Problem Connecting the Dots: The Marcellus Natural Gas Play Players–Part 6

As we asked in a previous blog post, we will ask the question again. 

Is Aubrey TOAST?

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