Chesapeake Energy Corp. is less than a week away from a historic leadership change.
The company is poised to appoint a new chairman for the first time since it was founded 23 years ago by Aubrey McClendon and Tom Ward.
Industry analyst Fadel Gheit said there are many qualified candidates for the position, but the biggest question is whether any of them wants to accept the challenge of rehabilitating Chesapeake's tarnished image.
McClendon, who has shepherded Chesapeake since 1989, has agreed to step down as chairman amid questions about the company's corporate governance after an April 18 report indicating he had secured up to $1.1 billion in personal loans, including some from a private equity firm that does business with Chesapeake. He will remain the company's CEO.
Chesapeake has said it will name a new chairman — and four new board members — by Friday, but the company has not given any indication of who its new leader will be. The board hasn't even accepted the resignations of two directors who were overwhelmingly denied re-election at Chesapeake's June 8 annual meeting.
The board's nominating committee has been considering candidates for chairman since May. The two-man committee is close to making its selection, member Don Nickles said earlier this week.
Chesapeake is the No. 2 natural gas producer in the United States, behind industry giant ExxonMobil, but media reports continue to portray the company as the personal fiefdom of McClendon, who no longer even holds a major stake in the company he co-founded.
McClendon's aggressive moves have helped Chesapeake grow into a major player in the energy industry, but his bets on natural gas have failed to pay off on at least two occasions. A 2008 margin call wiped out much of his personal holdings in Chesapeake, while recently decade-low gas prices have put a dent in the company's revenue stream.
Chesapeake is being forced to sell valuable assets to overcome a cash crunch caused by its move toward oil and liquids production.
The company recently sold the bulk of its midstream assets for $4 billion to fill a budget shortfall estimated to be as much as $22 billion.
Another package of deals earlier this year netted about $2.6 billion.
That is the backdrop for the company's search for a new chairman.
Analysts say the rumor mill has churned out a number of names, but many are eliminated from consideration as quickly as they were raised.
“I have no idea how legit any of the rumors are,” Sterne Agee analyst Tim Rezvan said.
Gheit, an analyst at Oppenheimer in New York, floated several names last week in a conversation with The Oklahoman, but he said he is not sure any of them would be suitable.
He suggested possible candidates for Chesapeake could include former Chevron CEO David O'Reilly, ex-Exxon Mobile Corp. executive Edward Galante and retired ConocoPhillips CEO Jim Mulva.
Gheit said any legitimate candidate for the position ideally should live in Oklahoma City to play an active role in managing Chesapeake's transition, which McClendon has described as a move from asset acquisition to asset harvest.
“The new chairman must be closely involved in all decisions and that cannot be done long distance,” he said.