Chesapeake Energy revealed last night the IRS was examining transactions related to CEO Aubrey McClendon’s Founder Well Participation Program.Buried deep within an amended filing of its Form 10-K, Chesapeake states:
“…in connection with its audit of our 2008 and 2009 returns, the IRS is reviewing certain issues with respect to the FWPP. We have been in discussion with representatives of the IRS and believe that resolution of these issues will not have a material impact on the Company.”
The Wall Street Journal’s Russell Gold first reported the amendment.
SEE MORE: The Fabulous Life of Aubrey McClendon
The plan has been a massive money pit for McClendon — from 2009 through Q1 2012 they’ve lost $661 million.
In the amended filing, Chesapeake finally admits that to pay off these losses, McClendon has been mortgaging his interests in the well stakes.
“…over the life of the FWPP, Mr. McClendon has typically mortgaged his interests acquired under the FWPP with one or more lenders, some of which also have lending, investment or advisory relationships with the Company. Mr. McClendon’s mortgages with these lenders secure loans used in whole or in part to fund Mr. McClendon’s well costs.”
Of all the three-letter agencies that could possibly have jumped into the mess, we would not have expected this one.
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