Redefining an industry: Aubrey K. McClendon, CEO of Chesapeake Energy Corporation, named Ernst & Young National Entrepreneur Of The Year® 2011 Energy, Cleantech and Natural Resources Award winner
Palm Springs, CA, 12 November 2011
McClendon honored for entrepreneurial courage and foresight to keep company at forefront of industry despite economic downturn
Chesapeake Energy Corporation CEO Aubrey K. McClendon has been named the Ernst & Young National Entrepreneur Of The Year® 2011 Energy, Cleantech and Natural Resources Award winner. Celebrating its 25th anniversary, Ernst & Young’s Entrepreneur Of The Year is the country’s most prestigious business award for entrepreneurs. The award encourages entrepreneurial activity and recognizes leaders and visionaries who demonstrate innovation, financial success and personal commitment as they create and build world-class businesses.
McClendon was recognized for redefining Chesapeake’s focus and strategy, taking it from its small-time Oklahoma origins to its current position as the second-largest producer of natural gas and the most active driller of new wells in the US. McClendon was honored at the Entrepreneur Of The Year Awards gala, the culminating event of the Ernst & Young Strategic Growth Forum®, held in Palm Springs, California. The Forum is the nation’s premier gathering of high-growth, market-leading companies. Awards were given in nine additional categories. The Ernst & Young Entrepreneur Of The Year Award winners were selected by an independent panel of judges from approximately 300 regional award recipients.
“Successful entrepreneurs embrace new ways of thinking, and can execute smart decisions quickly in the face of adversity,” said Bryan Pearce, Americas Director, Entrepreneur Of The Year, Ernst & Young LLP. “This perfectly describes Aubrey McClendon. By constantly looking ahead at the changes occurring in the industry and continuing to innovate, Chesapeake is now one of the top 15 oil producers in the US, proving McClendon deserving of the Ernst & Young Entrepreneur Of The Year 2011 Award in the Energy, Cleantech and Natural Resources category.”
Pearce continued, “The economy has taken its toll on so many industries, especially natural gas, and while some companies really suffer from volatile markets, truly entrepreneurial ones like Chesapeake thrive even when the chips are down, because they are constantly innovating and changing the way their industry operates. Entrepreneurs would do well to emulate McClendon, focusing on anticipating the future direction of their industry so that they can better plan and execute the decisions that will keep their companies at the forefront.”
A young entrepreneurial sprit
McClendon learned at a young age growing up in Oklahoma that work ethic was important, and throughout his early teenage years he creatively applied his skills to start both a lawn care business and a fireworks business. After high school, he attended Duke University, where he graduated with a bachelor’s degree in History, but also took enough hours in Accounting to make himself employable — and in fact, initially accepted a position in public accounting after leaving Duke.
He had a great deal of exposure to the oil and gas business because his father worked for Kerr- McGee Corporation, a large independent exploration and production company. Naturally, the industry intrigued McClendon as well, and he quickly left public accounting and went to work in the land department for a small oil and gas company in Oklahoma City. There he discovered that he loved the “competitive chase” of obtaining leases for drilling. But he also liked to feel in control of his own destiny, and he soon went out on his own as an independent land man, working to obtain leases in his own name so he could participate in wells that would eventually be drilled by others. He formed Chesapeake Energy in 1989 with former President and COO Tom Ward, with an initial capitalization of only $50,000.
Challenges before opportunity prevails
The two partners’ objective was to build a sizable natural gas exploration and production company through the application of new technologies, primarily horizontal drilling. Today, Chesapeake has an enterprise value of approximately $40 billion, but this accomplishment did not come easy. The company had a rough start, with an initial public offering in February 1993 that turned out to be the worst-performing IPO of 1993.
However, a major natural gas discovery in Texas in 1994 helped Chesapeake become the best stock market performer in the US from 1994 to 1996, with a stock price increase of more than 80-fold. The oil and natural gas price collapse of 1997 to 1999 brought huge challenges to the industry, and Chesapeake was no exception, with its stock falling 97% from 1996 to 1999.
However, it was in the depths of the industry’s recession in 1999 that McClendon redefined the company’s focus and strategy, becoming the first to recognize that US natural gas prices were likely to begin a sustained and substantial price increase, and from 2000 to 2005, Chesapeake led the industry in natural gas production growth. Natural gas prices soon rose, sending Chesapeake’s stock prices up accordingly.
Along the way, Chesapeake became one of the first companies to recognize that new technologies would enable the industry to develop vast new supplies of natural gas from unconventional reservoirs, especially from shale. Since 2005, Chesapeake has been the world’s leading discoverer and developer of natural gas shale plays, which are revolutionizing the worldwide energy business and influencing geopolitical events. Chesapeake has now turned its attention to developing vast new reserves of unconventional oil plays that could have similar effects on the world’s energy business and geopolitical events.
Originality when the chips are down
Due to low natural gas prices over the past few years, Chesapeake has shifted its strategy to reach a more balanced mix of natural gas and liquids revenue. In 2009, McClendon launched an initiative to move the company’s focus from natural gas to oil and natural gas liquids. The company is currently developing 12 unconventional oil plays and over the next few years is projected to move from its current position as a top 15 oil producer in the US to a top five oil producer.
National Entrepreneur Of The Year 2011 Energy, Cleantech and Natural Resources finalists
In addition to McClendon, The Ernst & Young National Entrepreneur Of The Year Energy, Cleantech and Natural Resources finalists were: George P. Sakellaris, President and CEO of Ameresco Inc., based in Framingham, Massachusetts, a leading independent provider of comprehensive energy efficiency and renewable energy solutions for facilities throughout North America; Dr. Alan Shaw, President and CEO of Codexis, Inc., a Redwood City, California-based cleantech company that develops customized biocatalysts for use in creating faster, cleaner, more efficient industrial manufacturing processes in the advanced biofuel, pharmaceutical, chemical, air and water treatment industries; and CEO Dan H. Wilks and COO Farris Wilks of Frac Tech Services in Cisco, Texas, providing oil and natural gas well stimulation services to oil and gas exploration and production companies operating in the US, focusing primarily on high-pressure hydraulic fracturing services.
National Entrepreneur Of The Year 2011 Overall Award winners
Reid Hoffman, Chairman, and Jeff Weiner, CEO, of LinkedIn Corporation were named the Ernst & Young National Entrepreneur Of The Year 2011 Overall Award winners.
Video and photos
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About Ernst & Young’s Entrepreneur Of The Year
Ernst & Young’s Entrepreneur Of The Year is the world’s most prestigious business award for entrepreneurs. The unique award makes a difference through the way it encourages entrepreneurial activity among those with potential and recognizes the contribution of people who inspire others with their vision, leadership and achievement. As the first and only truly global award of its kind, Entrepreneur Of The Year celebrates those who are building and leading successful, growing and dynamic businesses, recognizing them through regional, national and global awards programs in more than 140 cities in 50 countries.
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