30th May 2013

Leadership Change at Chesapeake Energy

Chesapeake Energy has had a tumultuous 12 months. After an inquiry raised concerns about CEO Aubrey McClendon’s personal financial deals and their effect on the company, in May 2012 McClendon was ousted from his position as chairman of the Chesapeake Energy board. Then, amid increasing investor pressure, on 1 April this year the man once named “America’s Most Reckless Billionaire” (Forbes 2011) retired as CEO of the company he co-founded.

After a three month search Chesapeake has found its new CEO. Longtime Anadarko Petroleum executive Robert Douglas Lawler, 46, will take over effective 17 June.

Chesapeake Energy, founded in 1989 by McClendon and Tom Ward, is the second largest natural gas provider in the US. It started off small - 10 employees and an initial $50,000 investment, but during the mid 2000’s Chesapeake experienced rapid growth as gas prices went up and by 2006 the company was added to the S&P 500. Chesapeake became the biggest natural gas provider behind only Exxon Mobile. However as we all know, what goes up must come down. Yet while gas prices started to fall, Chesapeake continued spending, buying up oil and gas properties. The company accumulated massive debt, now estimated at around $13.5 billion.

It will take someone with clarity of vision and purpose to guide Chesapeake through this difficult time, and back to profitability. The Chesapeake board is confident that Lawler is the man for the job. Chairman of the board Archie Dunham said "Doug is a talented and proven executive with the ideal skill set to lead Chesapeake forward and capitalize fully on our world class assets…Doug has earned a reputation as a highly engaged and knowledgeable leader who delivers superior operational performance and capital efficiency."

Chesapeake is already on the right track to transforming itself. In the last few years the company has sold off more than $30 billion of assets, however the  $13.5 billion debt remains largely the same since early 2011. Lawler recently spoke of building on efforts already made, “I look forward to accelerating the momentum that the Chesapeake team has built to generate value for our shareholders in the years ahead”.

Lawler is inline for some challenging times as he endeavours to speed up the turnaround of the gas giant. For now, he will do well to focus on the first 100 days by preparing for the transition into his new role. In anticipating future difficulties, and how to deal effectively with them Lawler can get off to an accelerated start. The best way to do this? With a detailed and focused First 100 Days Plan.

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