Aubrey McClendon, the natural gas wildcatter who was fired from Chesapeake Energy last year after assembling a shale portfolio that rivaled Exxon Mobil’s, is following an old script to build a new empire.
McClendon’s American Energy Partners LP agreed to buy shale-drilling rights from West Virginia to Texas in three transactions for a total of $4.25 billion, the closely held Oklahoma City-based company said in dual statements Monday.
The combined deals represent the biggest so far in the 14 months since McClendon, 54, was dismissed from Chesapeake amid a shareholder revolt over conflicts between personal and corporate business. His quarter-century tenure at Chesapeake included some of the most significant U.S. shale discoveries and helped vault the U.S. into the ranks of the world’s top gas and oil producers.
“The guy is very charismatic,” said Fadel Gheit, an analyst with Oppenheimer & Co. in New York who in a 2012 interview described McClendon as “the image” of Chesapeake. “He puts his money where his mouth is, and other people’s money as well.”
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Since forming American Energy last year with financial backing from First Reserve Corp. and the son of retired Exxon CEO Lee Raymond, McClendon has followed the playbook he rode to success at Chesapeake, which he co-founded in 1989. Chesapeake remains the second-largest natural gas producer in the Barnett Shale, but the field has become an afterthought as producers, including McClendon, headed to more profitable plays.
With corporate offices a few blocks from Chesapeake’s sprawling Oklahoma City campus, American Energy has raised about $10 billion for acquisitions and hired ex-lieutenants from Chesapeake and high-ranking executives from other shale explorers such as Devon Energy Corp., the largest producer in the Barnett Shale.
Steven Lipin, an American Energy spokesman who works for Brunswick Group LLC, didn’t immediately respond to a request for an interview with McClendon.
McClendon has a long way to go before his new company approaches Chesapeake’s scale. American Energy has amassed or announced deals to acquire drilling rights on about 400,000 acres, equivalent to 3 percent of Chesapeake’s 12.79 million acres.
Before its latest deals, American Energy concentrated on the Utica Shale, a Ohio formation that Chesapeake was among the first to explore four years ago. McClendon, who in 2011 predicted the Utica would rival the prolific Eagle Ford Shale in South Texas, with one of Monday’s announced deals added 27,000 acres to his holdings in the formation through transactions with East Resources and an unidentified company.
American Energy also bought 48,000 acres of drilling rights in West Virginia from East Resources and another firm. The Ohio and West Virginia transactions were valued at a combined $1.75 billion.
In the Permian, a subsidiary of McClendon’s company, known as American Energy — Permian Basin LLC, is acquiring about 63,000 acres in the formation from Enduring Resources LLC for $2.5 billion, the company said. Denver-based Enduring is backed by EnCap Investments LP.
The eastern half of the Permian, known as the Midland Basin, may hold as much as 75 billion barrels of untapped crude, according to Pioneer Natural Resources, more than the national reserves of all but six of the world’s oil-producing countries.