“(Reuters) – The U.S. Securities and Exchange Commission has escalated its investigation intoChesapeake Energy Corp and Chief Executive Aubrey McClendon for a controversial perk that granted him a share in each of the natural gas producer’s wells.
The investigation, disclosed on Friday by Chesapeake in an SEC filing, comes nine days after it said an internal probe of the well program and McClendon’s finances revealed no “intentional” wrongdoing by the executive.
Regulators in the SEC’s Fort Worth, Texas, office have been looking into the Founder Well Participation Program (FWPP) that grants McClendon up to a 2.5 percent interest in every well that Chesapeake drills. He must also pay his share of well costs.
A Reuters investigation last April found that McClendon had arranged to personally borrow more than $1 billion from a big investor in Chesapeake, EIG Global Energy Partners, secured by his interest in the wells.
The board has since said the FWPP program would end in June 2014.
“I’m now confused because the board just said everything was fine,” said Fadel Gheit, an oil analyst at Oppenheimer. “I really thought the board had an iron-clad, air-tight grip on the situation. Unfortunately the saga continues.”
Chesapeake was advised by the SEC in December that an informal inquiry, launched in May, was continuing as an investigation and subpoenas for information and testimony have been issued. Both the company and McClendon are providing information….”
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