Chesapeake Energy Corp. and chief executive officer Aubrey McClendon are under investigation by the U.S. Securities and Exchange Commission for a controversial perk that granted the executive a share in each of the natural gas producer's wells.
The investigation, disclosed on Friday by Chesapeake in a filing with the SEC, comes nine days after the company said an internal probe of the well program and McClendon's finances revealed no "intentional" wrongdoing by the executive.
Chesapeake was advised by the SEC in December that an informal inquiry, launched by the regulator in May, was continuing as an investigation and subpoenas for information and testimony have been issued. Both the company and McClendon are providing the SEC with information, according to the regulatory filing.
Shares of Chesapeake, the No. 2 natural gas producer in the United States, slumped 3 per cent to $19.55 in early trading on the New York Stock Exchange.
"I'm now confused because the board just said everything was fine," said Fadel Gheit, oil analyst at Oppenheimer. "I really thought the board had an iron-clad, air-tight grip on the situation. Unfortunately the saga continues."
Regulators in the SEC's Fort Worth office have been looking into the program that grants McClendon up to 2.5 per cent interest in every well that Chesapeake drills. He must also pay his share of well costs.
A Reuters investigation last April found that McClendon had arranged to personally borrow more than $1-billion from a big investor in Chesapeake, EIG Global Energy Partners, secured by his interest in the wells.
The board has since said the program would end in June 2014.
McClendon is stepping down on April 1, following a tumultuous year during which the company he founded faced the governance crisis and a liquidity crunch.
The Department of Justice is investigating whether Chesapeake violated antitrust laws in connection with the purchase and lease of oil and gas rights in Michigan.
The company said in a regulatory filing Friday that it was also responding to related inquiries from other regulatory agencies and self-regulatory organizations.