Less than a month after “retiring” as CEO of Chesapeake Energy Corporation (NYSE:CHK), Aubrey McClendon decided it was time to get back to work. In going back to what he knows best, McClendon has come to the point in the process where his new venture, American Energy Partners, is lacking one important ingredient: money. That’s why it’s not at all surprising that Aubrey McClendon is searching high and low for that one critical component.
According to reports, McClendon is targeting a billion dollars in capital from private equity groups and sovereign wealth funds. McClendon would use this capital to fund his plans to build American Energy Partners into a best in class exploration and production company. It’s not yet known how much capital he has been able to secure, if any.
As an investor, this is an interesting story to watch as there are many lessons to be learned from studying the past. Many Chesapeake Energy Corporation (NYSE:CHK) investors loathe McClendon because his lavish pay packages and aggressive approach burned them. However, he did build the company into the second-largest natural gas producer in the country trailing only Exxon Mobil Corporation (NYSE:XOM). In the process, he amassed vast tracks of land and data that are just waiting to be unlocked. If gas prices hadn’t plunged then McClendon might be known as an energy visionary, instead his imaged has been forever tarnished.
There is a valuable lesson to be learned here for investors. Sometimes you can have the right idea, but just the wrong approach. In the case of Chesapeake Energy Corporation (NYSE:CHK), and other industry peers, the idea of growing energy production was a noble one, but the aggressive approach taken turned to be the wrong way to go about it. The growth in gas production fueled a growing bubble which when burst incinerated investor’s portfolios and tarnished the reputations of some very smart men.
That same tarnish can also be found on SandRidge Energy Inc. (NYSE:SD) CEO Tom Ward, also a co-founder of Chesapeake with McClendon. Ward followed the same Chesapeake Energy Corporation (NYSE:CHK) blueprint when he took over SandRidge which, unfortunately, didn’t work there either. It’s entirely possible that Ward will soon experience the same fate as McClendon – his board has until the end of this month to determine whether he remains its CEO.