by Christopher Freeburn | March 4, 2013 8:20 pm
Regulatory documents filed by Chesapeake Energy (NYSE:CHK) last week revealed that federal investigators are continuing their probe of the financial relationship between the company and its CEO.
The Securities and Exchange Commission’s (SEC) Texas office is reviewing a controversial practice under which CEO Aubrey McClendon was awarded a 2.5% stake in drilling wells opened by Chesapeake. McClendon leveraged his stake in the wells to borrow $1 billion from an company investor, Reuters noted.
Investors were not amused when the arrangement — dubbed the Founder Well Participation Program (FWPP) — was revealed by media outlets. The company says the program will be terminated next year.
Last month, Chesapeake announced that an internal investigation of FWPP had discovered no deliberate misbehavior by McClendon, who has announced that he will leave the company on April 1.
Over the past year, the company has been selling gas fields and oil pipeline assets in a bid to cover a $10 billion funding shortfall.
Shares of Chesapeake fell almost 1% in Monday trading.
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