Cash Crunch
The indictment says the bid-rigging conspiracy started on Dec. 27, 2007, a time when the energy tycoon's career was about to accelerate. Chesapeake's share price closed at $39.12 that day, on its way to an all-time high of $69.40 six months later. The company was amassing drilling rights that would grow to more than 14 million acres, nearly the size of West Virginia.
In the first year of the alleged criminal conspiracy in Oklahoma, Forbes magazine put McClendon's net worth at $3 billion. In 2012, he dropped off the Forbes 400 list of richest Americans. The magazine's new estimate: McClendon had a net worth of $500 million.
As oil and gas prices tumbled over the past 18 months, eroding his wealth, McClendon scrambled to raise cash.
In the month before he died, for example, McClendon asked close friends and family members from whom he'd raised money before if they would like to invest again, two people familiar with the situation said. One of these people had participated in an investment round with individual buy-ins of between $50,000 and $100,000 for energy assets in the so-called Utica shale formation in the U.S. Northeast. The person said he turned down the offer this time because he had lost his job in the oil and gas bust.
In late October, property records and creditor filings show, McClendon staked many of his personal assets as collateral for loans - including his 19 percent stake in the NBA team, property in Oklahoma and Connecticut, antique boats and investments in privately held companies. Some assets had previously been pledged as collateral to other lenders.
McClendon was dipping into his depleted assets to prop up AEP, his new company. Records filed in Oklahoma County Court show that McClendon and an AEP unit called Scoop Energy put up collateral for a loan to Scoop from investor Oaktree Capital. McClendon was personally guaranteeing the loan to Scoop, according to a person familiar with the matter. Oaktree declined to comment.
Another foundation of McClendon's wealth was under pressure. For many years, he was able to raise cash thanks to an unusual incentive he enjoyed from Chesapeake. The perk, known as the Founder Well Participation Plan, granted McClendon up to a 2.5 percent stake in every well drilled by Chesapeake during his 24-year tenure.
When McClendon left Chesapeake in April 2013, he held onto his well interests through four companies he controlled. As Reuters reported in 2012, mortgage records show that McClendon had borrowed as much as $1.4 billion through those companies by pledging the Chesapeake well interests as collateral.
But as oil and gas prices fell, the cost of operating the wells began exceeding the returns McClendon got from the hydrocarbons they produced. Unable to keep up, he eventually lost control of three of the firms - and thus of any future cash they would generate. Control passed to one of his lenders, EIG Global Energy Partners, a Washington, DC-based private equity firm, Oklahoma County records show. A spokesman for EIG declined to comment.