Chesapeake Plots to Suppress Land Prices in Michigan
According to a Reuters report published on Monday, Chesapeake Energy (NYSE: CHK)--the natural gas and oil exploration and production company--and its CEO Aubrey McClendon, colluded with Canadian competitor EnCana (NYSE: ECA) to keep land prices down in Michigan.
The news publication examined a series of emails that appeared to suggest that the two companies were plotting to avoid "bidding each other up."
In response to an email from McClendon, a Chesapeake vice president said that he had contacted Encana, "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim."
It has been a tough year so far for McClendon, and it will get even tougher if he and his company are found guilty of price fixing, a crime that carries fines into the millions of dollars.
A Chesapeake spokesman said that, while there have been conversations between the two companies, no agreement was ever made.
That may be hard to prove, and the emails seem to suggest that, even a deal was not reached, there was an element of plotting and planning going on.
The potential scandal is the last thing that McClendon needs after the Chesapeake board stripped him of his chairmanship earlier this month. McClendon came under fire after it was revealed that he took out over $1.3 million in personal loans from a company that also finances Chesapeake.
Before that, McClendon was the major cause of a Chesapeake stock free-fall after he sold hundreds of millions of dollars in stock to raise personal funds.
At this point, it is fair to say that McClendon is earning himself a shaky reputation. As the co-founder of Chesapeake, he is obviously a savvy businessman, but Forbes did not name him "America's Most Reckless Billionaire" last year for nothing.
It seems astounding that, after the year that he has had, McClendon would have made an extra effort to keep his nose clean. Unfortunately, that has not been the case.
On Monday afternoon, Chesapeake Energy was trading at about $17, down roughly 8.8%.
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