(Reuters) – Chesapeake Energy Corp’s chief executive officer or board, or both, should be replaced because of a growing debt pile, the opaque nature of the oil and gas company’s finances and CEO Aubrey McClendon’s “questionable” transactions with the company, Argus Research oil analyst Phil Weiss said on Friday.
“When we consider the full financial picture at Chesapeake, including its high debt levels, its use of financial engineering, the relatively low quality of its financial data, the questionable nature of some of the CEO’s transactions with the company, and the apparent unwillingness of the board to put a stop to at least some of these practices, we believe the best thing for investors would be to replace the board and/or the CEO,” Weiss wrote in a note to clients.
On Wednesday, Reuters reported that McClendon has taken out $1.1 billion in previously undisclosed loans against his share in company wells, transactions that analysts, academics and lawyers said may pose a potential conflict of interest.
A spokesman for Chesapeake didn’t immediately respond to an email seeking comment, but the company has said previously that there are no conflicts with the loans and that shareholders endorsed the program allowing McClendon a stake in company wells.
(Reporting by Anna Driver; Editing by Gerald E. McCormick)
