Chesapeake CEO Sells His Stock

By Dave Jordan, NEWS 9

OKLAHOMA CITY -- Aubrey K. McClendon, chief executive officer of Chesapeake Energy Corporation, has sold all 33 million shares of his stock in the company in order to meet margin loan calls.

The move came on the heels of the worst week ever on Wall Street, and just hours after the Dow closed 128 points down Friday.

McClendon said he was forced to sell the stock to meet margin calls. Buying on margin involves using borrowed money to buy securities. Basically, when you buy stock on margin, you borrow money from a broker to cover a portion of your investment. When that price of the stock falls below a certain amount, the broker has the right to sell the assets to get the cash to recoup the losses.

In a statement McClendon said "In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential."

This past July, Chesapeake shares were trading at $74 dollars. McClendon snapped up 750,000 shares valued at $43 million that same month.

"I have been the company's largest individual shareholder for the past three years and frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company's strategy and assets," McClendon said.

When the energy markets began to mirror the economic downturn facing the rest of the market, Chesapeake, independent of Aubrey McClendon, began selling off assets to free up money in preparation for an uncertain future.

"They were really betting on energy prices staying higher, and they were paying more that. Maybe in hindsight, they should have," Oklahoma City University economics professor Ron Shaw said.

Chesapeake is the largest producer of natural gas in the country. There has been a lot of interest in the commodity since Billionaire T. Boone Pickens began promoting it as a viable alternative to foreign oil.

"In the eyes of the investing public, Aubrey McClendon is Chesapeake, and even though he sold his own shares, these actions are seen as those of the company," Shaw said.

Chesapeake's stock hit a 52-week low today of $11.99 before closing at $16.52 a share.

Last month, Forbes showed McClendon on its list of the nation's 400 richest people, with $3 billion, an increase from $2.1 billion the previous year.

Tom Ward, the CEO of SandRidge Energy received $60 million in cash for his interest in gas wells and reserves from that company. Ward, along with McClendon, co-founded Chesapeake Energy.

This story contains information from the Associated Press.