What was one of the first stocks you ever looked up?
When you initially began your journey into investing, what was the company that peaked your interest into the world of Profit/Loss reports, trailing returns, and charting techniques?
Was it a company in the news? Or maybe an idea that came to you from your daily work? Or was it the marketing that drew you in to learn more.
For me, it was the name.
The name of the company was Chesapeake.
I knew nothing about energy or gas. I figured maybe I needed to look into an oil company to invest in, so I went searching for ideas. And, when I saw the name Chesapeake Energy, I knew I had to learn more about them.
As an East-Coaster heavily influenced by the coastal waterways of the Mid-Atlantic, the Chesapeake Bay map is one of the only maps on my wall.
I would learn later that the CEO had a huge antique map collection of his own. But, not of the Chesapeake. He was way out in Oklahoma.
When I went searching for more info on Chesapeake, assuming they were located somewhere along the middle-eastern coast of the United States, all I could find online back then was the reckless debt issues of the founder.
I remember seeing a picture of a dirty truck near a drilling rig with no brick colonial corporate images in sight. I couldn’t find glowing articles about their business possibilities. Only worrisome, bankruptcy prone analysis.
Much like the song out of the musical “Oklahoma” it seems the CEO felt: “I cain’t say no.”
So, I put my dream of the Chesapeake to the side. I put a little Google notification tag on it to keep me updated by email of any news. But, I figured if the word on the street is the owners are not good business men, I should look elsewhere.
In 2011, the media hits kept coming for the charismatic, eager-eyed landman Aubrey McClendon. By 2012, his board was upended and re-worked by activist investor, Carl Icahn. And, in 2013, Aubrey himself, was ousted from the company he had built with $50,000.00, a buddy, and unbridled optimism in 1989.
In the summer of 2014, my own family and I stood out on our open farm land above the Taylorsville Basin in the Chesapeake Bay Act region of the Commonwealth of Virginia, while a persuasive salesman from Shoreline Explorations taught us all about mineral rights and hydraulic fracturing. We were in a prime location and there was a lot of goods under our ground. His job was to find as many landowners as possible to sign a lease so when the time was right, they could put up rigs, and draw out the plentiful natural gas down deep in the rocks. (Spoiler Alert: we didn’t bite)
I didn’t know it then but at the same time our area was being pursued for land rights, Aubrey was scrambling for his life. He was pushing hard to build his own new venture (with stolen maps and info from Chesapeake’s files) so he could continue to do what he has always loved.
Wild-catting.
Back in the 90’s, McClendon had this reckless abandon to get as much land as possible and use as much leverage as he could muster up. It seemed he had a magic diviners rod that led him to all the right spots.
It paid off even bigger in the 2000s when the innovation of hydraulic fracking required a lot of land horizontally, not just a hole deep down vertically.
The shale revolution from 2008 - 2015 was all the rage and Aubrey was on top. His bets had paid off. From all the articles written, it seems he was passionate that natural gas was the solution to oil and coal. He felt that it would solve all the problems with the environment, the economy, and trade.
But, why the name Chesapeake? He was focused in Oklahoma and Texas.
I spent the day looking into his life a few weeks ago. I probably should have done this in 2020 when the company filed bankruptcy and the stock randomly skyrocketed for a bit. But, at the time, I figured I had missed my golden ticket and Chesapeake would just be in the history books.
I don’t know exactly what drew me back into the world of natural gas recently. Maybe that Gmail that still pops up with the words “Chesapeake Energy” on it got me to thinking…..
In 2008, Aubrey McClendon almost lost it all. He had so much debt that when the markets fell a part, due to the Mortgage Backed Securities issue, he was caught in a bind he couldn’t quite outbid his way through. His diviners rod like instincts that put him in the right places at the right time for land accumulation, which interestingly enough gave him similar investment instincts into his impressive wine collection, weren’t saving him as the global banking crises had the calls coming in.
He didn’t have to sell off his famous wine collection then, though. But, he took a big hit, almost lost everything and yet came out to continue on until the shareholder revolt of 2012.
He hadn’t fully learned his lessons. He still risked way too much, treated his company like his own personal accounts, generously gifted out to his employees, clients, and charities, and above all just kept pushing.
As the natural gas trend started to dwindle, he was caught yet again with too many financial obligations, too much wrapped up in “old buddy” ways of contracts, rampant conflicts of interest, disclosure issues, personal stakes in wells, and the Clos Dubreuil wine from St. Emilion as his dinner pairing recommendation.
That antique map collection sale was the final “Hail Mary” but even quick fixes and opportune investments wouldn’t work this final time.
The fracking revolution hit a hard wall with environmentalists. The electric car push with lithium batteries became the new solution. And by 2015, as the Department of Justice went after the internal workings of Aubrey McClendon, the Natural Gas play had run out of momentum.
Aubrey defiantly wrote that he would fight all charges and clear his name, but he never got the chance as a horrific car accident took his life the day after indictment. There was sleep medication in his system and he was under an immense amount of stress, but no one knows for sure if the light tapping of the brakes at 90 miles an hour toward a solid concrete wall on that March morning was a health event, a suicide mission, or something more.
I searched and searched for why he would call the company “Chesapeake.” The only thing I could find is that he always admired the Bay when he and his wife would go on holiday and he named the company something more known so his work would seem bigger. He also felt that the company probably wouldn’t make it and he chose a name he was comfortable with failing.
Funny, seeing that Aubrey wasn’t a man that accepted failure. No matter what, he felt he could always figure something out. He wrote of himself that the only way to do business is to have a short memory and a thick skin. He just should have listened to his frugal mom a bit more over the years.
The crazy thing is that the Chesapeake area does have the basin of natural gas, although much smaller than the ones he was working with through Pennsylvania, Ohio, Oklahoma, and Texas.
I sit and wonder now if he chose not to pursue the Taylorsville one because he wanted to see it untouched. Maybe he loved it that much.
Or, maybe he was prophetic in nature. To look at him, you think you are going back in time to the origins of America. He looks like a sage old congressman from back when the Revolution started in 1776, with his flowing white hair, spectacles, and wise structured face.
He put an old architectural campus across the plains of Oklahoma. It made sense that he would mimic the elite elegance of Duke University, his alma mater, but was his soul continuing to connect to the Reconstruction era after the Civil War? Unlike most gas and oil executives, his major was in history, not geology or engineering.
He loved the build. He loved grand ideas and old school wisdom. He talked of the great titans of industry in America and many associated him with gilded age philosophy.
The company IPO’d in 1993 but by 2015, he was entrenched in unprecedented antitrust legal proceedings.
Deep down did he know that the name wouldn’t last?
We will never fully know now as once Chesapeake arose from bankruptcy in 2021, it changed its name and acquired another competitor named Southwestern to become Expand Energy.
Very apropos to name it EXPAND!
The new board moved their corporate location to Houston, although keeping the Oklahoma spot for the day to day industry work. Under immense complexity, the ever-evolving board of executives pushed through and worked to restructure.
Icahn had left in 2016. The company tried to figure out ways to release the debt but by 2020 the only answer was a full Chapter 11.
The truth was, it wasn’t the end of Chesapeake, the company, back then during the pandemic lockdowns. Just the name. And, now by 2026, $EXE is the dominant natural gas upstream company in the country.
Aubrey’s legacy lives on.
To take a look at them now, you would never know the tumultuous, impulsive, high risk path that it took to get there. And the humanly impossible energy it took to build through multiple economic events.
McClendon is all over YouTube talking about the promise of natural gas as the energy leader. He believed whole-heartedly that when done well, and with care for the environmental impacts, it could be the perfect solution to the clean energy world most people were hoping for. He saw its promise.
Amazingly, natural gas does even more as it produces the ammonia needed to make fertilizer and the fuel and resource needed for steel fabrication. As the headlines roar right now about the price of oil due to Middle East tensions, to dig even further is to see that so much of the fertilizer for farmers comes out of that same small little Persian Gulf our sailors are watching with a steady, on-guard eye.
The finance journalists spent so much time writing up on Aubrey McClendon’s blurred lines, he didn’t really have a full chance to push through the headwinds and be here and present for our current energy crises. Lithium batteries were the winning bid in government influence networks. Aubrey couldn’t quite get ahead of lithium.
Yes, the energy metal, (critical mineral), that, in medical reports, balances our mood. Ironic, isn’t it?
The nice thing about lithium is it is a more renewable resource and it’s considered zero-emissions in its impacts. With his love of basketball, though, I figure he didn’t overthink the intensity needed to compete for energy policy. He was sure that with the right protections in place during and after drilling, that liquid gold, trapped in those rocks, could change the world.
Commodity volatility suited him well. The industry’s structure is divided into 3 segments: Upstream, Midstream, and Downstream. For every wild-catting landman, there has to be pipes that flow the product out, infrastructure that supports the flow, and trucks and ships that transport it outward to customers.
As the institutional investment community gets closer to rotating out of energy stocks after a hot summer, and into the cool neutral time of fall before the uncertain temps of winter, one has to pause and think on the story of McClendon.
His charismatic power and ever-enduring quest for more hit a wall as lithium forced the world to re-strategize energy dependence and the natural gas world struggled to keep it shareholders happy.
I think now, would lithium have saved him? Or, in the end, was his destiny to save the Chesapeake Bay for the long run…..
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