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McClendon Loses Chesapeake Chair Role In Overhaul

Directors remaining on Chesapeake's board are McClendon, Louis Simpson, Pete Miller, said the company in a press release. Final board assignments will be made by the reconstituted board, the Chesapeake added, and also said that it will continue to push to have its entire board up for election in 2013, after previously pushing for staggered elections.

Earlier in June, Chesapeake Energy said that following "extensive discussions" with its two largest shareholders, Southeastern Asset Management and Icahn, it had agreed to add four new independent directors to replace four existing independent directors who will resign from Chesapeake's board. The company also sold its midstream assets to privately held Global Infrastructure Partners for $4 billion in its biggest deal of 2012 as an over $10 billion cash shortfall continues to weigh on the company's shares.

The board changes and asset sales move, are Chesapeake's largest strategic decisions since questions emerged about CEO Aubrey McClendon's stewardship of the nation's second-largest gas driller.

In two separate deals, the Oklahoma City-based driller agreed to sell its stake in Chesapeake Midstream Partners and another subsidiary, Chesapeake Midstream Development, for a total of $4 billion. While the sales will help Chesapeake Energy to repair its finances, investors and analysts still expect billions more in asset sales.

"The proceeds of these transactions are an important part of our 2012 asset sales program that is on track to generate cash proceeds of $11.5-14.0 billion," said McClendon of Chesapeake's pipeline unit sale. He stressed that the move brings Chesapeake's divestiture total to $6.6 billion for the year, with its Permian asset sale and Mississippi Lime joint venture among other businesses that will be sold in the second half of 2012.

"Importantly, the sale of [Chesapeake Midstream] will also reduce previously planned capital expenditures by approximately $3.0 billion over the next three years," noted McClendon.

For Icahn, who announced a 7.6% share stake in Chesapeake in late May, new directors and asset sales appear to be a quick answer to his activist calls for more independence on Chesapeake's board to impart better financial management as the company works to sell assets, amid decade-low natural gas prices.

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