Chesapeake Energy Corp. CEO Aubrey McClendon has been borrowing money to cover his share of the company's drilling costs since the well participation program began in 1993, he revealed Thursday.
McClendon and his companies — Arcadia Resources LP, Larchmont Resources LLC and Jamestown Resources LLC — own oil and natural gas reserves worth $6 million more than they owed on them at the end of 2011, according to his disclosure statement.
McClendon also sold a share of his holdings last year for $108.6 million, netting about $61 million before taxes.
Despite that profit, McClendon's cumulative expenditures under the program have “significantly” exceeded production revenues because of increasing capital costs, according to Chesapeake's proxy statement.
McClendon and his affiliates owed $846 million on loans secured by his interest in wells granted to him by the shareholder-approved Founder Well Participation Plan as of Dec. 31.
The program is expected to be shut down before its scheduled expiration in 2015, the company announced Thursday, citing an agreement between McClendon and its board.
McClendon has opted to buy a 2.5 percent stake in Chesapeake's wells in all but five quarters since the program began in 1993, according to regulatory filings.