Is Chesapeake Sitting on Massive Growth Potential Without McClendon?

On Tuesday, Chesapeake Energy (NYSE:CHK) announced that co-founder, CEO, and president Aubrey McClendon would retire from the company effective April 1. McClendon, who has been the company’s only CEO and, until 2012, the company’s only chairman, is stepping down flanked by praise and controversy.

On one hand, he is hailed as one of the most innovative energy businessmen in the world. Under his leadership, Chesapeake grew to become the second-largest gas producer in the United States, bested only by Exxon Mobil (NYSE:XOM). McClendon identified the tremendous value of shale gas early, outbidding competitors for fields and drilling aggressively. As natural gas boomed, and while prices remained high, Chesapeake and McClendon both prospered enormously. At one point, he had a net worth of over $1 billion.

But his aggressiveness is also what led to his having to resign from the company he founded. After the shale gas boom entered second gear and production skyrocketed, prices fell. Alongside them, so did the value of Chesapeake’s assets and equity. The company, which had borrowed billions to fuel its aggressive exploration and drilling campaign, soon found itself crushed by debt and forced to sell $12 billion in oil and gas fields to relieve some pressure.

At the heart the controversy surrounding McClendon is his participation in the Founders Well Participation Program, a mechanism that allowed him to buy up to 2.5 percent stakes in every well drilled by Chesapeake. Using these stakes as collateral, he supposedly borrowed over $1 billion from EIG Global Energy Partners, a major investor in Chesapeake…