Law and Regulations

Ex-Chesapeake Energy CEO indicted on conspiracy charges

Former Chesapeake CEO indicted on conspiracy charges

Former Chesapeake Energy CEO Aubrey McClendon was indicted Tuesday on federal charges of conspiring to rig bids for oil and natural gas leases.

The indictment, filed Tuesday in Oklahoma, alleges that McClendon led a conspiracy between two companies not to bid against one another for purchases of some leases in Oklahoma. The leases give a company the right to draw oil and natural gas from the land for a certain period of time.

The alleged conspiracy took place between December 2007 and March 2012, the indictment said. The companies are accused of deciding who would win the bids, then giving an interest in the leases to the other company. The Justice Department did not say which other company it believes was involved in the alleged scheme.

"While serving as CEO of a major oil and gas company, the defendant formed and led a conspiracy to suppress prices paid to leaseholders in northwest Oklahoma," said U.S. Assistant Attorney General Bill Baer in a statement. "His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land."

Chesapeake is the second-largest natural gas producer in the United States. McClendon stepped down from the company in 2013.

"The charge that has been filed against me today is wrong and unprecedented. I have been singled out as the only person in the oil and gas industry in over 110 years since the Sherman Act became law to have been accused of this crime in relation to joint bidding on leasehold," McClendon said in a statement. "Anyone who knows me, my business record and the industry in which I have worked for 35 years, knows that I could not be guilty of violating any antitrust laws."

Chesapeake said it has cooperated with the investigation and "does not expect to face criminal prosecution or fines relating to the matter," its director of strategic communications, Gordon Pennoyer, said in a statement.

"Chesapeake has taken significant steps to address legacy issues and enhance legal and regulatory compliance throughout the organization," he said.

Chesapeake shares fell more than 3 percent in after-hours trading. The company's stock has dropped nearly 40 percent this year amid sustained low natural gas prices.

American Energy Partners, McClendon's current company, did not immediately respond to a request for comment.