McClendon Defends Chesapeake at Shareholder Meeting

Chesapeake Energy

tried to calm the nerves of its shareholders during its annual meeting today. Chesapeake's CEO Aubrey McClendon recently used his interest as collaeral for $1.1 billion in loans made by the firm, causing an uproar amongst shareholders. Chesapeake annouunced the preliminary voting results. Directors Burns Hargis and Richard Davidson were re-elected to the Board of Directors, but they have tendered their resignations because of the company's new majority voting bylaw. The resignations are still going to be reviewed. They have plans to evaluate further changes. McClendon will stay as chairman until June 22, when a new chairman is elected. When commenting on the CEO McClendon, Carl Icahn, a majority shareholder, said CEO Aubrey McClendon is "a great oil and gas man," but needs board oversight. Chesapeake commented on on the voting, stating, "Chesapeake appreciates shareholder feedback and will act appropriately with regard to the matters voted on today. Chesapeake has recently taken important actions to enhance corporate governance and increase management oversight by, among other things, reconstituting the Board of Directors. As previously announced, Chesapeake will add a new independent Non-Executive Chairman and four new independent directors proposed by shareholders to its nine-member Board within the next two weeks. Chesapeake will also take the necessary actions so that shareholders will have the opportunity to elect the entire Board of Directors at the 2013 Annual Meeting of Shareholders." Chesapeake began the meeting with a re-cap of 2011, in which it saw a massive decrease in their stock price. Throughout 2011, Cheapeake had increases in revenues, production, and decreases in long-term debt. These positive aspects were off set by the decrease in natural gas prices which sunk 36% in 2011. Chesapeake stated that $2 natural gas prices are the break even point for the company. Objectives addressed for 2012 included completing their 25/25 plan, which plans to result in 25% debt reduction in the next two years and cut its produciton growth rate to 25% over the next two years. They also plan on a transition to greater liquids production, reduce natural gas drilling capex, and provide leadership to increase domestic natural gas consumption. Another goal of the company is to and simplify the company and complete transition from capture to harvest mode. Chesapeake is moving form capture to harvest mode for oil because all of the large US fields have been discovered. Chesapeake went on to announce that they are halfway to their 2012 asset sales target. Earlier today, Chesapeake set a plan to sell $4 billion dollars worth of assets in its energy pipeline and infrastructure business. When commenting on their fields, Chesapeake stated that twenty companies have already looked at their Permain Basis, with ten more companies scheduled to look. Chesapeake believes that their market cap is undervalued. They believe that it should be at least $30 billion, but right now it is at $11.8 Billion.