Former Chesapeake CEO indicted, accused of antitrust conspiracy

Aubrey McClendon In the US, a federal grand jury has indicted Aubrey McClendon, former CEO of Chesapeake Energy and now chairman and CEO of American Energy Partners LP, for allegedly conspiring to rig the price of oil and natural gas leases in Oklahoma.

According to a statment released by the US Department of Justice dated March 1, the indictment alleges McClendon orchestrated an antitrust conspiracy between two large oil and gas companies between December 2007 and March 2012. He is accused of working with an unidentified competitor to keep the price of leasing land artificially low so that two large oil and gas companies would not bid against each other for leases in northwest Oklahoma during that time period. The conspirators allegedly decided ahead of time who would win the leases, and the winning bidder would then allocate an interest in the leases to the other company. The companies are identified in the indictment as only Company A and Company B. The two companies are not listed as defendants in the case.

"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 Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  "His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land.  Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions."  

McClendon responded to the March 1 filing of a single charge of an antitrust conspiracy with the following statement: "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 he will fight the charge.

As part of the same statment, McClendon's lead lawyers called the indictment "prosecutorial overreach."

"The Justice Department has taken business practices well known in the Oklahoma and American energy industries that were intended to, and did in fact, enhance competition and lower energy costs and twisted these business practices to allege an antitrust violation that did not occur," said lawyers from Chadbourne & Parke and Williams & Connolly.

McClendon left Chesapeake in April 2013 after it was revealed that he had taken out more than $1 billion in loans against his personal stakes in the company's wells. Following an inquiry from the US Securities and Exchange Commission, Chesapeake terminated the program through which McClendon acquired his stakes. In February 2013, Chesapeake issued a statement saying that, based on thorough reviews, the company had not violated antitrust laws in connection with the acquisition of Michigan oil and gas rights in 2010, and that the company was responding to a subpoena from the Antitrust Division, Midwest Field Office, of the US Department of Justice, which was investigating possible antitrust violations arising from 2010 leasing activities in Michigan.

Following McClendon’s departure from Chesapeake, he formed a new venture, American Energy Partners LP, that same year.

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