Chesapeake Energy subject of antitrust probe

Oklahoma City-based Chesapeake Energy finds its stock plummeting. As Nancy Cordes reports, investors worry the company is being run into the ground.

(AP) NEW YORK - Chesapeake Energy Corp. (CHK) says the federal government is investigating whether there were antitrust violations relating to its purchase of some oil and gas land in Michigan.

The Oklahoma City-based company said in a regulatory filing on Thursday that it was subpoenaed on June 29 by the U.S. Department of Justice to hand over paperwork related to those purchases. Chesapeake said it has also received demands for documents and information from state government agencies.

It said it intends to cooperate while its board conducts an internal investigation.

Chesapeake has spent about $400 million to buy leases in Michigan.

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Its shares fell 39 cents, or 1.9 percent, to $19.92 per share in morning trading Friday. Its shares are down about 12 percent since the start of the year.

Four days before Chesapeake received the federal subpoena, Reuters reported that the company colluded with a Canadian rival to suppress land prices in areas that were considered to be rich in oil and natural gas.

The report said that Chesapeake CEO Aubrey McClendon worked with executives at Encana Corp. to avoid bidding against each other in public land auctions in Michigan. Reuters, which based the report on emails obtained from the two companies, said those discussions appeared to violate federal and state antitrust laws. Chesapeake wouldn't comment on the allegations.

The story followed a string of reports about potential corporate governance violations by McClendon. News reports in April revealed that McClendon took out more than $1 billion in loans to cover his personal stake in the company's wells. Also, while leading Chesapeake, McClendon ran a private hedge fund that traded in contracts for oil and natural gas - commodities that Chesapeake produces.

Chesapeake has since stripped McClendon of his board chairmanship although he remains CEO.

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