Chesapeake Energy Gets Subpoena Seeking Accounting Information

By Erin Ailworth 

Chesapeake Energy Corp. said Thursday that it has received a subpoena from the U.S. Department of Justice requesting information on the company's accounting for oil and gas properties.

The Oklahoma City-based company disclosed the Justice Department scrutiny of its accounting as part of a filing with the U.S. Securities and Exchange Commission in which it announced an $850 million debt offering.

Chesapeake shares, which hit a low Thursday of $6.06, fell 7.6% to $6.24 in afternoon trading in New York.

Gordon Pennoyer, a spokesman for Chesapeake, declined to discuss the subpoenas, referring all questions to the filing. A Justice Department spokesperson declined to comment Thursday.

Chesapeake previously had disclosed that it has received subpoenas asking for documents, information, and testimony in connection with possible violations of antitrust laws relating to how Chesapeake purchases and leases oil and gas rights. Its royalty payment practices also have been the subject of federal and state subpoenas.

The Thursday filing stated that Chesapeake has "engaged in discussions" with the Justice Department, U.S. Postal Service, and state agency representatives, and continues "to respond to such subpoenas and demands."

Previous scrutiny of Chesapeake by federal investigators led the Justice Department in March to indict the company's former chief executive, Aubrey McClendon, on one count of conspiring to rig the price of oil and gas leases.

Mr. McClendon -- a pioneering figure in oil and gas exploration who helped launch a renaissance in U.S. energy production -- died the next day, after his natural gas-fueled Chevy Tahoe crashed into a bridge abutment and caught fire. The Justice Department dropped its charge in the wake of Mr. McClendon's death.

Chesapeake has said it was cooperating with the price-rigging probe and that it didn't expect to face criminal prosecutions or fines related to the matter.

The company has struggled in recent years as it tries to complete a corporate overhaul amid the worst downturn in crude prices in a generation. Activist investors, including billionaire Carl Icahn, led a shareholder revolt in 2012 that ultimately forced out Mr. McClendon.

Earlier this month, Mr. Icahn sold more than half his stake in Chesapeake, citing tax planning reasons. In a statement on the move, Mr. Icahn praised Chesapeake's current CEO, whom he helped to install.

"We believe that over the last few years Doug Lawler and his team have done an admirable job, especially in light of the circumstances," Mr. Icahn said in a posting on his website.

After Mr. Icahn reduced his stake, two Chesapeake directors with ties to the billionaire resigned from the energy-producer's board on Monday.

Write to Erin Ailworth at [e-mail]

(END) Dow Jones Newswires

September 29, 2016 14:54 ET (18:54 GMT)

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