The Internal Revenue Service is reviewing certain aspects of a Chesapeake Energy Corp. program that allows CEO Aubrey McClendon to buy a stake in every well the company drills.
The IRS is reviewing “certain issues” in connection with Chesapeake's Founder Well Participation Program as part of its audit of the company's 2008 and 2009 tax returns, the company disclosed Monday in a regulatory filing. It does not include any additional details about the inquiry.
“We have been in discussions with representatives of the IRS and believe that resolution of these details will not have a material impact on the company,” according to Chesapeake's amended annual report, which was filed Monday.
McClendon and Chesapeake have come under fire for the well program since Reuters reported April 18 he had secured up to $1.1 billion in loans to fund his participation. At least two of the loans came from private equity firms that also have dealings with Chesapeake.
The company announced last week it intended to end the perk program before its scheduled expiration in 2015.
McClendon and companies he controls owe $846 million on loans connected to his participation in the program, which since 1993 has allowed him to buy a 2.5 percent stake in every Chesapeake well. McClendon estimated his personal stake in Chesapeake wells is worth $852 million, according to a disclosure released last week.
Michael Kehs, a Chesapeake spokesman, said the review is “nothing new. It's a routine IRS audit that was started more than a year ago.”