Shale Pioneer McClendon, Charged in Bid Rigging, Dies in Crashby and
Speeding car crashed and burned in Oklahoma City Wednesday
McClendon known as innovator during long tenure at Chesapeake
Aubrey McClendon, the one-time billionaire wildcatter whose meteoric rise and swift fall traced the arc of the shale revolution, died in a car crash in Oklahoma City on Wednesday morning.
His death comes less than one day after McClendon, who was 56, was charged with rigging bids for oil and natural gas leases.
McClendon drove his 2013 Chevrolet Tahoe “at a high rate of speed” and slammed into a bridge embankment in the northeast side of the city, Paco Balderrama of the Oklahoma City Police Department said at a press conference. The car burst into flames before responders could pull McClendon’s body from the vehicle, he said.
"He pretty much drove straight into the wall," Balderrama said, according to KFOR News Channel 4 in Oklahoma City. "The information out there at the scene is that he went left of center, went through a grassy area right before colliding into the embankment. There was plenty of opportunity for him to correct and get back on the roadway, and that didn’t occur."
McClendon’s rise in the North American energy arena was rapid. He grew to become a towering figure in the industry, building Chesapeake Energy Corp. from modest beginnings into a vast energy empire, thanks to his nimble championing of controversial hydraulic fracturing and horizontal drilling at a time when larger, more established players were skeptical of shale’s potential. At its height in June 2008, Chesapeake was valued at $37.5 billion.
McClendon’s fall from grace was just as swift. The very gas boom he helped create caused prices to crater, reducing the company’s value by more than half within years. A shareholder revolt by Carl Icahn and Southeastern Asset Management Inc.’s O. Mason Hawkins cost the CEO his annual bonus and the chairmanship in 2012, and McClendon was terminated in March 2013.
After his ouster from Chesapeake, McClendon formed American Energy Partners LP and raised more than $10 billion for acquisitions. With financial backing from private-equity heavyweights including First Reserve Corp. and Energy & Minerals Group, controlled by John Raymond, McClendon’s new vehicle amassed drilling rights and exploratory stakes from the Appalachian Mountains to Australia and Argentina before commodity prices cut the company’s growth and restricted its access to credit.
“I’ve known Aubrey McClendon for nearly 25 years," said T. Boone Pickens, chairman of BP Capital LLC in an e-mailed statement. "He was a major player in leading the stunning energy renaissance in America. He was charismatic and a true American entrepreneur. No individual is without flaws, but his impact on American energy will be long-lasting.”
He was charged Tuesday by a federal grand jury in connection with orchestrating a scheme between two “large oil and gas companies” to not bid against each other for leases in northwest Oklahoma from December 2007 to March 2012. McClendon called the charge “wrong and unprecedented” in a statement late Tuesday.
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 government said.
The natural gas explorer who allegedly conspired with McClendon to rig drilling auctions was Tom Ward, then chairman and chief executive officer of SandRidge Energy Inc., according to people familiar with the matter.
SandRidge didn’t immediately respond to a voicemail seeking comment. Ward didn’t immediately respond to an e-mail seeking comment and no one picked up the phone at his office.
The antitrust law McClendon was accused of violating, the Sherman Act, carried a maximum prison sentence of 10 years and a $1 million fine for individuals, according to the Justice Department statement.
“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 Tuesday in a statement. “I will fight to prove my innocence and to clear my name.”
Aubrey Kerr McClendon was born July 14, 1959, in Oklahoma City to Joe and Carole McClendon. His great uncle was Robert Kerr, a former governor of Oklahoma and U.S. senator who had earlier founded the company known today as Kerr-McGee Corp., the oil giant where his father was an executive.
As a teenager, he started both a lawn-care business and fireworks business, according to a profile accompanying his naming as Ernst & Young National Entrepreneur of the Year in 2011. He graduated from Duke University with a history degree in 1981, and a year later he founded Chesapeake Investments to acquire drilling rights to properties that may hold oil or gas. In 1989 he and Tom Ward co-founded Chesapeake Energy.
Unlike most oil and gas CEOs, McClendon had no flair for geology or engineering. Instead, he was one of the preeminent land men of his era, using his skill at amassing energy-rich acreage to build what at one point was the largest U.S. shale empire, equivalent to half the size of New York state.
An unflagging advocate of natural gas as an agent of U.S. energy independence, McClendon was a perennial speaker at energy conferences. He wore his oil pride on his tie, patterned with drilling rigs and hard hats, and was known for telling staff, ”onward and upward.” McClendon befriended many in the industry, such as Charif Souki, former chief executive officer and co-founder of natural gas exporter Cheniere Energy Inc.
“He is probably one of the most important persons in the shale revolution and responsible for what’s happened to the energy situation in the U.S.,” Souki said in a television interview with Bloomberg Wednesday. "This is tragic.”
McClendon was also a significant corporate booster for Oklahoma City, where he used Chesapeake’s company campus as a magnet for redeveloping the city’s rundown north side. He was a booster of the University of Oklahoma, where the Center for Intercollegiate Athletics is named for him.
By 2005, Aubrey and Katie McClendon had given more than $16 million to Duke University. The Tower in Duke’s Keohane Quad and the Commons in the Office of Undergraduate Admissions are named for the couple.
McClendon was part of a group led by Oklahoma businessman Clay Bennett that bought the Seattle SuperSonics in 2006 and moved them to Oklahoma City two years later. In the interim and amid swirling rumors of the team’s departure, McClendon was fined $250,000 by the National Basketball Association for telling an Oklahoma newspaper that the group hadn’t bought the team "to keep it in Seattle." The move was celebrated in Oklahoma City but reviled in Seattle, an animosity that persists today.
“We will always appreciate and remember Aubrey’s generosity and civic pride in our community, from his support of countless local charities to the Oklahoma City Thunder to the Boy’s and Girl’s Club of OKC to the arts,” Oklahoma City Mayor Mick Cornett said in a statement. “His philanthropic investments in local schools and universities, the Boathouse District and throughout our city consistently raised the standards of what Oklahoma City could be."
He and his wife, the former Kathleen Byrns, had two sons, Jack and Will, and a daughter, Callie.