American Energy Partners LP to Shut Down -- Update

By Bradley Olson

American Energy Partners LP, the Oklahoma City oil and gas company founded by the late shale pioneer Aubrey McClendon, plans to shut itself down this summer.

About half of the 100 employees that remained there after Mr. McClendon's death in a car crash in March were laid off Wednesday, and the company plans to wind down operations completely over the next three months, according to a person familiar with the matter.

The plan to shutter the business, which has shrunk in recent months as its oil-and-gas exploration units were spun off into several subsidiaries, is the first step in what many anticipate will be an extended process of untangling the complex estate of the former billionaire who co-founded Chesapeake Energy Corp. in 1989.

"Aubrey's legacy will be carried forward by each of these businesses as they continue to grow, by the numerous landmarks all over our city in which he had a hand in developing and by the many philanthropic organizations to which Aubrey gave generously," the company said in a statement.

The decision to shut down American Energy Partners was made in consultation with Mr. McClendon's family, the company said.

In a widely followed second act after his 2013 ouster from Chesapeake, Mr. McClendon, his management team and a group of private equity backers raised more than $15 billion and hired 800 employees to create 10 new energy exploration outfits. Most of those workers have joined subsidiary companies created by private equity backers including John Raymond of the Energy and Minerals Group that were then spun off into stand-alone entities.

Those companies include Ascent Resources LLC, White Star Energy LLC, Permian Resources LLC, Traverse Midstream LLC and Heritage Resources Management. None of them will be affected by the decision to close American Energy, the company said.

American Energy in January struck a deal with Argentina's state-run oil company, YPF SA, to help develop a large shale field in that country. At the time, YPF said Mr. McClendon's company would make a $500 million commitment to energy exploration in Argentina. Mr. McClendon had also leased a vast lease in Australia.

Mr. McClendon died in a fiery wreck March 2, one day after being indicted on one count of conspiring to rig the price of oil and gas leases. His vehicle was traveling at a speed of 88 miles an hour before it crashed into a concrete embankment. The day before he had vowed to fight the charge.

He left behind a tangled financial legacy stemming from an array of personal and philanthropic investments that were tied to loans valued at more than $400 million. To finance his comeback attempt, Mr. McClendon had pledged cash proceeds from his stake in the Oklahoma City Thunder basketball team, a 2,000-bottle wine collection and a broad set of investments from antique boats to vacation homes.

Mr. McClendon's estate has been entered into probate and a court in Oklahoma has begun to take petitions and hold hearings in the matter. His will was filed last month with the court.

Write to Bradley Olson at Bradley.Olson@wsj.com

(END) Dow Jones Newswires

May 18, 2016 21:42 ET (01:42 GMT)

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