Chesapeake Energy Corp (CHK.N) on Monday named a top executive at rival Anadarko Petroleum Corp (APC.N) to head the No. 2 U.S. natural gas producer, which has suffered a governance crisis and liquidity crunch over the last year.
Chesapeake hired Robert Douglas Lawler, senior vice president of international and deepwater operations at Anadarko, to fill the post vacated by co-founder Aubrey McClendon in April.
Shares of Chesapeake were up 4 percent as Lawler's appointment ends a three-month search for McClendon's replacement.
Lawler, who takes over as CEO on June 17, faces a number of challenges in his new job. Several years of low natural gas prices and Chesapeake's heavy spending to acquire oil and gas properties in shale formations have left the company saddled with about $13 billion in debt.
Chesapeake has forecast a funding shortfall of $3.5 billion this year and said it will sell up to $7 billion in assets to help cover the expected gap between operating cash flow and capital expenditures.
"He is coming into a company that has serious challenges," said Fadel Gheit, an oil company analyst Oppenheimer. It's a mine field that he has to navigate through, but he's very experienced and I feel he will live up to the challenge."
Lawler, 46, worked for 25 years at Anadarko and Kerr-McGee, which Anadarko acquired in 2006. The petroleum engineer has experience in both onshore and offshore operations and was mostly recently responsible for big projects including Anadarko's liquefied natural gas (LNG) project in Mozambique.
Lawler should help "to turn the page on the Aubrey McClendon saga that has consumed the story for the past year," Wells Fargo analyst David Tameron said in a research note and others noted that he would bring needed capital discipline to Chesapeake.
Under the watchful eye of top shareholders O. Mason Hawkins of Southeastern Asset Management and Carl Icahn, Chesapeake has cut spending this year and is focusing on drilling its best properties while producing higher quantities of more valuable crude oil.
Hawkins and Icahn took control of the board last June after McClendon was stripped of his title as chairman of the company he co-founded in 1989.
McClendon's departure came after a tumultuous year during which a series of Reuters investigations led to civil and criminal investigations of the company.
Chesapeake also faces probes by the U.S. Securities and Exchange Commission into a perk that gave McClendon a stake in company wells, and by the U.S. Department of Justice into possible antitrust violations over Michigan land deals.
A internal probe by Chesapeake into the land deals and the well program found no intentional wrongdoing on the part of McClendon, the company said in February.
Steven Dixon, Chesapeake's chief operating officer has been acting as interim CEO. At the time of his appointment in late March, the company created a three-person office of the chairman, that included Dixon, Chairmen Archie Dunham and Chief Financial Officer Domenic Dell'Osso. With the appointment of Lawler, the office of the chairman will be discontinued, the Oklahoma City, Oklahoma company, said.
Dunham will continue as the company's non-executive chairman, Dixon will continue as COO and Dell'Osso remains CFO.
Anadarko spokesman John Christiansen said the company would name a replacement for Lawler soon.
Chesapeake shares rose 82 cents to $21.09 in afternoon trading on the New York Stock Exchange. The stock has gained 22 percent so far this year.
(Reporting By Thyagaraju Adinarayan and Maria Ajit Thomas in Bangalore and Ernest Scheyder in New York; Editing by Sriraj Kalluvila, Jeffrey Benkoe and Tim Dobbyn)