Departure of Chesapeake CEO McClendon signals new era in natural gas

If anyone needed confirmation that America's boom in natural gas has entered a new phase, the fall of Aubrey McClendon just provided it.

Over a quarter century, the flamboyant but shrewd dealmaker helped build tiny Chesapeake Energy into the second-largest natural gas producer in the United States after ExxonMobil. He made a dizzying array of deals, negotiating with the likes of international players like Total in France and CNOOC in China. Eventually, the company acquired rights to drill for oil and gas more than 16 million acres of land in several states.

Now the brash and acquisitive chief executive is out. In a press release Tuesday, Chesapeake Energy said Mr. McClendon had agreed to retire April 1, but would stay on until his successor was found.

It's not hard to see why the company is making a change. Under McClendon, the company ran up huge debts in its buying spree. That worked as long as gas prices stayed high. But when all that new drilling created a glut of gas, prices collapsed and the fortunes of Chesapeake – and McClendon himself – declined with it.

The company in recent months has had to reverse course, selling assets to pay off its debts.

After peaking at just under $66 a share in 2008, Chesapeake's share value has plunged along with the price of natural gas. On Tuesday, shares closed at $18.97, although they gained 9 percent in after-hours trading following the news of McClendon's impending retirement.

Signs of shareholder dissatisfaction with McClendon were apparent last summer, when the company's two biggest shareholders – Southeastern Asset Management and activist investor Carl Icahn – were given several seats on the board of directors and called for a change in strategy to get its balance sheet in order.

That's what the company seems to be prepared to do.

" Chesapeake is at an important transition in its history and Aubrey and the Board of Directors have agreed that the time has come for the company to select a new leader," Chesapeake Chairman Archie Dunham said in the release. "Going forward, the company will strive to continue as a low cost producer of oil and gas while further enhancing and strengthening its balance sheet."

If the change at Chesapeake is any indication, the next phase of the gas boom is going to be far more sober and buttoned-down, as companies move to shave their debts and boost operating profits as they wait for natural gas demand to catch up with supply.

McClendon didn't grab the limelight simply because of his company's acquisitions. His personal investments and intertwined financial maneuverings with the company and its customers prompted Chesapeake to investigate those dealings. (He once sold  his collection of antique maps to the company for $12 million, well above its value, according to The Wall Street Journal, before shareholder lawsuits forced him to buy it back.)

Chesapeake says the review has nothing to do with McClendon's pending departure. "The Board’s extensive review to date has not revealed improper conduct by Mr. McClendon," the company statement says, although its full report won't be released until next month with its earnings report.

 A new era in an industry often calls for new leadership in the companies within that industry.

In a statement of his own, McClendon cited "philosophical differences" with  the new board but pledged to work to ensure a smooth transition of power.