S&P Downgrades Chesapeake Credit Rating Over ‘Unusual’ CEO Perk

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

More bad news for Chesapeake Energy: Standard & Poor’s has downgraded the corporate credit rating of the Oklahoma City-based natural gas giant and its subsidiaries.

This afternoon, S&P downgraded Chesapeake to BB from BB+.

Chesapeake’s board is reviewing financing arrangements between CEO Aubrey McClendon and third parties tied to a controversial corporate perk. Today, the company and McClendon announced they were ending the Founder Well Participation Program.

From S&P credit analyst Scott Sprinzen:

“The downgrade and CreditWatch placement reflect our view that recent revelations about personal transactions undertaken by Chesapeake’s CEO relating to the company’s unusual Founder Well Participation Program underscore shortcomings in Chesapeake Energy Corp.’s corporate governance practices.”