Drilling Down

Chesapeake Sues McClendon, Claims Theft of Trade Secrets

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YOUNGSTOWN, Ohio — Chesapeake Energy Corp. today filed suit in Oklahoma County District Court alleging its former CEO and chairman, Aubrey McClendon, “misappropriated highly sensitive trade secrets” in the weeks before he was forced out of the company and used this information to start a new oil and gas venture.

Chesapeake, the most prolific driller in eastern Ohio’s Utica shale, claims that McClendon used this data to establish American Energy Partners LP, which he founded in 2013.

The civil suit alleges that McClendon, 55, asked his assistant to print maps and provide other information related to unleased acreage in the Utica shale play. Chesapeake claims that the information was used by American Energy to acquire leaseholds in four separate land deals.

Chesapeake claims McClendon began taking the information “approximately 36 hours after the announcement of his departure.” Although McClendon retained stakes in Chesapeake wells in which he had previously invested, he was not entitled to information regarding “open acreage” Chesapeake was considering whether to acquire.

McClendon’s American Energy Partnership, based in Oklahoma City, raised $1.7 billion from investment firms to buy 110,000 Utica acres and begin drilling operations, his company announced in July 2013 – seven months after he left Chesapeake.

The lawsuit names AEP affiliates as well as “John Doe Investors 1-20.”

It does not specify the amount of monetary damages Chesapeake is seeking.

McClendon responded to the lawsuit with a statement released by AEP.

“It is beyond belief that the company I co-founded 25 years ago and where I worked tirelessly to build it into one of America’s largest and most successful oil and gas producers has now decided to add insult to injury — almost two years to the day after my resignation — by wrongly accusing me of misappropriating information,” he said.

McClendon and his attorneys claim that under his agreement with Chesapeake, the former CEO is “entitled to possess and use the 20 terabytes of information I own. It is a sad day to see Chesapeake stoop so low as to sue its co-founder for having information that was earned, paid for and provided through my contracts with Chesapeake.”

The AEP statement calls the complaint “baseless” and notes that contracts with Chesapeake allowed McClendon to use information related to 16,000 wells, leasehold acreage and future wells that he jointly owns with Chesapeake.

McClendon was ousted by a shareholder revolt in the wake of revelations first reported by Reuters that he had used his interests in these wells to help leverage personal loans amounting to $1.5 billion, which he acquired from a major lender to Chesapeake.

Published by The Business Journal, Youngstown, Ohio.