Ding, Dong, McClendon's Gone!

Embattled CEO of Chesapeake Energy (NYSE: CHK  ) , Aubrey McClendon, announced his intention to retire after the closing bell yesterday... and the stock rallied nearly 10% on the news! That would be the collective sound of countless investors and shareholders applauding the soon-to-be exit of a man that's been a corporate drag in the worst possible way.

McClendon's retirement announcement puts him on a path to vacate the CEO position on April 1 (how fitting right?) and comes before the release next month of Chesapeake's internal investigation into whether or not he acted improperly as CEO.

As far as past results go, nothing would indicate McClendon has done anything illegal, although there are countless examples of poor corporate governance and opulence that greatly distracted from Chesapeake's business of drilling for oil and natural gas.

One blaring example involves a Reuters article that cited McClendon borrowed $1.1 billion in funds from three separate financial institutions. That's normally not an issue, except for the fact that $500 million came from EIG Energy Partners, who at the time was a financier for Chesapeake. That exposed McClendon to a conflict of interest that could potentially put EIG's interests ahead of shareholders. Again, there's nothing to suggest this occurred, but to even place himself in that position was foolish.

McClendon's personal spending habits were also often in the spotlight, and rarely in a good way. Chesapeake's 19% ownership in the NBA's Oklahoma City Thunder, as well as private use of the company's jets, dictated little faith to shareholders that he kept their best interests in mind.

Perhaps McClendon's greatest fault had little to do with his personal finances and everything to do with being distracted from running Chesapeake. Having spent a great portion of the mid-2000's rapidly acquiring natural gas assets, Chesapeake was forced to sell off nearly $7 billion in assets last year to raise capital because of a 2013 funding gap, and reduce its reliance on natural gas after prices plummeted. It sold its Permian Basin assets to Chevron (NYSE: CVX  ) , Royal Dutch Shell (NYSE: RDS-A  ) (NYSE: RDS-B  ) and EnerVest for $3.3 billion in mid-September, losing 21,000 barrels a day of oil-equivalent production in the process, as well as 90 million cubic feet of natural gas production per day. Chevron and Royal Dutch Shell came away like bandits. Knowing that Chesapeake was facing a $10 billion funding gap for 2013 they were in the prime bidders' position and didn't have to worry about overbidding for the assets. 

Encana (NYSE: ECA  ) , Canada's equivalent to Chesapeake Energy, made a similar move last February, when it sold 40% of its vested interest in undeveloped shale gas assets in British Columbia to Mitsubishi for $2.9 billion. That move helped lessen some of the blow brought on by natural gas' brief dip below $2 per thousand cubic feet, and positioned Encana better from a capital standpoint to switch to higher-margin liquid fuels.

Is anyone actually going to miss Aubrey McClendon when he retires on April 1? Perhaps the financial journalists who've skewered McClendon over the previous couple of years. Other than that small group of individuals, I forecast a very welcome transition at Chesapeake where a new successor (hopefully from outside the company) can step in and refocus Chesapeake, taking it in a different path than the one McClendon sent it down in previous years. Chesapeake has been a solidly profitable company in the past and can be great once again -- now it's just a waiting game. I know I've circled April 1 on my calendar, how about you?

Is McClendon's retirement a game-changer for Chesapeake?
Energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While these issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy, and as an added bonus, you'll receive a full year of key updates and expert guidance as news continues to develop.

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