The natural gas explorer who allegedly conspired with the late Aubrey McClendon to rig drilling auctions was Tom Ward, then chairman and chief executive officer of SandRidge Energy Inc., according to people familiar with the matter.
Ward is an industry veteran who in 1989 co-founded Chesapeake Energy Corp. alongside McClendon, a shale pioneer who built the company into a U.S. gas giant before being pushed out in 2013. McClendon died in a one-vehicle car crash on Wednesday, according to Oklahoma police, one day after the U.S. Justice Department announced his indictment for allegedly rigging auctions for oil and natural gas leases in northwestern Oklahoma.
Tuesday’s indictment alleged that from December 2007 to March 2012, McClendon orchestrated a scheme between his company and the chief executive officer of another large oil and gas company to coordinate bidding. McClendon at the time led Chesapeake. The second company was SandRidge, led at the time by Ward, according to the people familiar with the matter.
SandRidge didn’t immediately respond to a voicemail seeking comment. Ward didn’t immediately respond to an e-mail seeking comment and no one picked up the phone at his office.
Chesapeake has been cooperating with prosecutors, receiving immunity under a Justice Department leniency program, according to company spokesman Gordon Pennoyer.
SandRidge Founder
Ward, after leaving Chesapeake, helped found SandRidge in 2006. It would grow into a $10 billion company.
Ward was fired as SandRidge’s chief executive officer in June 2013 “without cause” — after a four-month independent review following questions by investors over transactions he and his family members made with the company. The review found nothing that merited termination with cause. In 2013, after leaving SandRidge, Ward formed Oklahoma City-based Tapstone Energy LLC using his own capital.
Ward, through his lawyer, said at the time that investigations by SandRidge’s board showed that his his actions had been proper.
In early 2014, SandRidge disclosed that it had received a subpoena from the Justice Department related to a probe into potential antitrust violations during the purchase or lease of land, oil or natural gas rights.
SandRidge, which rode a boom in energy prices largely supported by junk debt, has fallen on hard times as oil and gas prices have plummeted. Saddled with $4.1 billion of debt, it skipped an interest payment on its bonds last month. The company said it was in discussions with its investors about how to restructure the debt and decided not to pay the interest despite the fact that it had enough cash, according to a company statement. It has until mid March to pay the $21.7 million of interest.