American Energy Partners (AEP) is shuttering its doors in Oklahoma City and reducing staff after the company suffered from a bad market and the untimely death of its founder, Aubrey McClendon, according to several news reports.
AEP did not respond to a request for comment and several direct employee phone lines were disconnected.
McClendon was the centerpiece of AEP and a magnet for attracting capital after his ouster from Chesapeake Energy Corp. (NYSE: CHK). On March 1, McClendon was accused by the U.S. Department of Justice of rigging bids for the purchase of natural gas leases in northwest Oklahoma over a four-year period. AEP said it would continue business following McClendon’s death the next day.
However, since then two former affiliates have spun off. In April, American Energy – Woodford LLC changed its name to White Star Petroleum LLC. In March, American Energy – Permian Basin LLC and its parent American Energy Permian Holdings LLC were renamed Permian Resources and Permian Resources Holdings.
On April 6, Energy 11 LP, a public, non-traded partnership also terminated its management agreement with AEP.
Energy 11’s management agreement could be terminated if, among other reasons, McClendon, as key employee, ceased to be employed and the company did not approve of a proposed replacement. In 2015, general and administrative costs for Energy 11 were $745,884 and included accounting and legal fees, consulting fees and cost reimbursements to the management company.
“On April 5, 2016, we elected not to approve a replacement key employee for Mr. McClendon and exercised our right to terminate the management agreement,” Energy 11 said in a Securities and Exchange Commission filing. “Accordingly the fees under the management agreement will no longer accrue as of the effective date of termination”
The Oklahoman, quoting an unnamed source, said about half of AEP’s 100 employees were laid off May 18 and the remaining employees will close the company within two to four months.
“After considerable thought and discussion with [founder] Aubrey McClendon's family, and our employees, we have made a collective decision to wind down the operations of American Energy Partners LP," the company's leadership team said in a statement, The Oklahoman reported.
The termination also canceled 37.5% of the company’s Class B units owed through the arrangement.
Darren Barbee can be reached at dbarbee@hartenery.com.
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