The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters by Gregory Zuckerman

Author:Gregory Zuckerman [Zuckerman, Gregory]
Language: eng
Format: mobi, epub
Publisher: Penguin Group US
Published: 2013-11-05T00:00:00+00:00

CHAPTER NINE

Henry Harmon had a hunch why Aubrey McClendon was calling.

It was the summer of 2005 and McClendon was on the phone asking if he could fly to Charleston, West Virginia, to meet Harmon.

Harmon, who ran a natural gas company in the Appalachian Basin called Columbia Natural Resources, was intrigued by the call. McClendon was the industry’s rising star, and Harmon was thrilled that he wanted to visit.

Days later, McClendon took a private jet to Charleston to take Harmon to dinner. Aware that McClendon was a big steak fan, Harmon took his guest to the Chop House, one of the city’s most upscale restaurants, eager to hear why McClendon had come all the way to see him.

McClendon and Harmon sat in a private dining room featuring rich oak floors and comfortable leather chairs. McClendon had a juicy cowboy steak on his plate, but he couldn’t focus on his food. He fired question after question at Harmon: What was it like operating on the East Coast? Are there environmental concerns that Chesapeake didn’t have to worry about in Texas, Oklahoma, and elsewhere? What about the company’s unions?

Harmon quickly realized why McClendon had flown to see him—McClendon was coming after his company. For three years, McClendon had privately lusted after Columbia’s natural gas wells, which stretched from the Finger Lakes region in upstate New York all the way south to central Alabama, with the heart of its operations in West Virginia. By then, McClendon and Ward had made a decision that it was time for Chesapeake to head to the East Coast, after the company had gobbled up so much land elsewhere in the country. Now it was time to act.

Columbia, the second largest producer on the East Coast, hadn’t given any indication that it wanted to sell itself. But McClendon knew the company was owned by a number of parties—including investment bank Morgan Stanley—that likely would pursue a sale someday. He wanted to be ready to pounce if they did.

Harmon cautioned McClendon about an acquisition. The East Coast is a more densely populated region, he noted, making it harder to drill new wells near people’s backyards without sparking a backlash from some landowners and environmentalists. It’s very different here, Harmon told McClendon.

McClendon shrugged off the warning, exuding optimism and self-confidence. He told Harmon that natural gas prices were heading still higher and his company would be a natural fit within Chesapeake’s growing empire. “We’re the best buyer” of Columbia if it’s going to be sold, he said.

A few months later, Columbia’s owners put the company up for sale, just as McClendon had hoped. Some of the largest oil and gas companies in the country showed immediate interest. McClendon insisted to Ward that Chesapeake needed to beat their rivals in the quest for Columbia.

One day, McClendon showed up, unannounced, in the New York City lobby of Morgan Stanley’s headquarters. Chief executives of major companies normally don’t fly anywhere without a handler or two, and they usually don’t show up anywhere unannounced. Aubrey McClendon wasn’t a typical CEO, though.

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