Not Supported by AEP Founder McClendon
The latest chapter of the Aubrey McClendon/Chesapeake (ticker: CHK) saga has closed. For now.
On April 14, 2015, a subsidiary of American Energy Partners (AEP) agreed to hand over 6,000 acres in Ohio and pay up to $25 million to Chesapeake, ultimately settling a lawsuit launched by the latter E&P in February. Chesapeake alleged that McClendon, its co-founder, stole confidential land leasing documents and maps before he was pushed out of his Chief Executive Officer role in early 2013. McClendon went on to found American Energy Partners, a privately held E&P that has amassed more than 530,000 net acres in several prolific United States plays for more than $7 billion, while more than $14 billion had been raised by last fall. About 280,000 of those acres are in the Utica Shale, where AEP was forced to give up a portion of its position to CHK.
The disconnect between McClendon and the Energy & Minerals Group, AEP’s largest equity investor, is apparent in news releases spanning back to the start of the lawsuit. The pair called CHK’s claims “meritless” in a February 17 press release, and added: “Chesapeake clearly does not understand the ownership or structure of AEU (American Energy Utica), which is controlled by EMG, and Chesapeake has made no attempt to understand the ownership structure prior to carelessly and erroneously naming AEU as a party to its lawsuit.”
The tone was much different in an April 14, 2015 release – one that AEP issued on its own. “AEU apparently chose to settle with Chesapeake before any discovery was taken, evidently for the business purpose of mitigating further damage that Chesapeake’s litigation has been having on AEU’s business and financing activities. AEU has the right to resolve the case in this fashion, but this resolution should not be mistaken as reflecting an informed view of the merits of Chesapeake’s claims or a concession of any liability by any party to Chesapeake.”
The release saved its most choice words for the end of the release, saying: “Although Mr. McClendon is a director and the single largest non-institutional shareholder in AEU, he did not approve the settlement and neither he nor AELP were advised of the negotiated terms of this settlement. AELP and Mr. McClendon will continue their efforts to have the dispute arbitrated as required by Mr. McClendon’s agreements with Chesapeake.”
Chesapeake has not publicly commented on the issue, but its existing lawsuit against McClendon and AEP as a whole has not been settled. An AEP news release asserted that McClendon’s unique agreements with Chesapeake allowed him to have access to well information for his own general purposes, and said that he will prove he rightfully possessed the information “in the appropriate forum.”
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