Chesapeake Faces Shareholder Lawsuit, SEC Investigation

CEO Aubrey McClendon criticized over personal stakes in wells, jet use

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    NEWSLETTERS

    TK
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    Natural gas drilling in the Barnett Shale is being cut back due to the low price of natural gas.

    Oklahoma City-based Chesapeake Energy is facing a host of troubles.

    The nation's second-largest natural gas producer is drastically cutting back drilling in the Barnett Shale and cutting more than half of their independent land agents in North Texas, both due to low natural gas prices.

    That news comes as the Securities and Exchange Commission launches a formal investigation into the company and CEO Aubrey McClendon -- specifically a deal that gave him a personal stake in the company's oil and natural gas wells.

    Chesapeake opened it's own investigation into the program and stripped McClendon of his position on the board.

    If that weren't enough, a Chesapeake shareholder has brought forward a lawsuit alleging the company has underreported the use of corporate jets by executives -- including McClendon.

    Gilberta Norris filed the lawsuit Tuesday in Oklahoma state court where she accuses the board of directors of breach of fiduciary duty by misleading shareholders about the true cost of personal use of aircraft.

    Norris alleged the “the true costs of personal use of the aircraft would have increased by close to an estimated $10 million a year” and that they are "costs that should be borne by the responsibile individuals and not the Company." See the lawsuit here.

    Any funds recovered by the lawsuit would be returned to the company coffers and not individual shareholders, Bloomberg reported.

    Chesapeake shares closed at $17.48 Wednesday, up 3.25 percent on the day but still down more than $6 per share since Jan 3.