Former Chesapeake Energy CEO Aubrey McClendon Indicted on Bid Rigging Charges

Aubrey K. McClendon, the former CEO of Chesapeake Energy, has been charged by a federal grand jury with conspiring to rig bids for the purchase of oil and natural gas leases in northwest Oklahoma.


The indictment alleges that McClendon orchestrated a conspiracy between two large oil and gas companies to not bid against each other for the purchase of certain oil and natural gas leases in northwest Oklahoma.

During this conspiracy, which ran from December 2007 to March 2012, the conspirators would decide ahead of time who would win the leases.

The winning bidder would then allocate an interest in the leases to the other company.

McClendon instructed his subordinates to execute the conspiratorial agreement, which included, among other things, withdrawing bids for certain leases and agreeing on the allocation of interests in the leases between the conspiring companies.

“While serving as CEO of a major oil and gas company, the defendant formed and led a conspiracy to suppress prices paid to leaseholders in northwest Oklahoma,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “His actions put company profits ahead of the interests of leaseholders entitled to competitive bids for oil and gas rights on their land.  Executives who abuse their positions as leaders of major corporations to organize criminal activity must be held accountable for their actions.”

The indictment, filed in the U.S. District Court for the Western District of Oklahoma, alleges that McClendon’s conspiracy affected certain bids for leasehold interests and producing properties in northwest Oklahoma.

Leasehold interests give a lessee the right to develop the land and to extract oil and natural gas from the land for a time period typically lasting three to five years.

Producing properties are tracts of land where the existing lessee has drilled wells on the land and the wells are producing a stream of oil and/or natural gas.

Purchasing a producing property includes not just the underlying leasehold interests to drill on the land, but also the producing wells and infrastructure already on the land.

This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the oil and natural gas industry.


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