New reports of Aubrey McClendon’s financial dealings continue to surface.According to Pittsburgh Post-Gazette reporter Erich Schwartzl, two of the well properties the Chesapeake Energy CEO mortgaged to obtain lucrative loans are apparently some of the least valuable available to him,
The mortgages would have been used to obtain loans to finance other wells under Chesapeake’s controversial Founder Well Participation Program.
That program gives McClendon a 2.5 per cent personal stake in any revenues and losses in wells drilled by the company.
The two wells, in Brooke County, W.Va., are “marred” by pockets of property out of Chesapeake’s control and are poorly situated for ideal drilling conditions, according to Schwartzl.
He writes that it is not clear what research McClendon’s financier, EIG Global Energy Partners, put into the properties when it approved the loans.
“By mortgaging properties that appear to be some of his company’s least desirable assets, Mr. McClendon can raise money off holdings that might not otherwise be profitable. And should he default on the loans, he would lose a stake in property that wasn’t his company’s best bet anyway.“