Chesapeake's Hometown Woes
Oklahoma City Benefited From Aubrey McClendon's Boosterism and Largess, Which Now Is at RiskBy MIGUEL BUSTILLO
OKLAHOMA CITY—Chesapeake Energy Corp.'s CHK +6.33% name seems to be everywhere in this sleepy state capital turned natural-gas dynamo, from the arena of the scorching-hot pro basketball team to the Olympic-caliber rowing complex in what had basically been a drainage ditch.
Chesapeake's flamboyant chief executive, Aubrey McClendon, has pushed to turn Oklahoma City into a metropolis, showering arts groups and schools with millions in donations and sparking a building boom with an ever-expanding corporate campus of Georgian-style buildings that would fit in at his alma mater, Duke University.
He even lured the first Whole Foods Market WFM +1.62% to town, boasting that the high-end grocer "validates the revitalization we have experienced in Oklahoma City the past 10 years." He personally owns 19% of the Oklahoma City Thunder—whose games have become the hottest ticket in town after the team made short work of the Los Angeles Lakers in the NBA playoffs.
So charities and civic leaders are fretting about potential consequences for the city now that Chesapeake under Mr. McClendon has run into financial straits, amid low gas prices and a web of loans that entangled him and his company in debt.
"Everything good that has happened in Oklahoma City in the past decade, he's had a hand in it," Leonard Sullivan, Oklahoma County's tax assessor, said of Mr. McClendon. "It makes us nervous to think he might have some problems, because if something happens to him it is going to affect a whole lot of folks."
Assessed property values in Oklahoma County, which includes Oklahoma City, have nearly doubled to $6 billion over the past decade, with a Chesapeake subsidiary now among the 10 biggest taxpayers.
Chesapeake representatives and Mr. McClendon declined to discuss his civic role.
Battered by the 1995 terrorist bombing of the Alfred P. Murrah Federal Building, which killed 168 people, Oklahoma City has bounced back with a renaissance thanks to the growth of local natural-gas companies. One Chesapeake rival, Devon Energy Corp., DVN +2.56% recently opened the tallest skyscraper in the state.
Mayor Mick Cornett notes with pride that Oklahoma City's 4.4% unemployment rate is the lowest in the U.S. among metropolitan regions of more than a million people. Like many here, he is optimistic that Chesapeake's problems will fade as soon as the price of natural gas goes back up and the business of unlocking energy trapped in deep rock formations through hydraulic fracturing becomes more profitable.
"It's a commodity-based business and the price of the commodity is down," said Mr. Cornett, a former newscaster. "Those of us who have followed the company's history have seen them ride through periods like this."
But some locals fear Mr. McClendon has endangered livelihoods in his hometown through reckless financial dealings, after learning through news reports that he used his interest in company oil and gas wells as collateral to borrow as much as $1.4 billion from a private-equity group that was buying assets from Chesapeake.
Mr. McClendon agreed to step down as chairman earlier this month after revelations of the loans, which critics called a conflict of interest.
"It's embarrassing for a company like that, one of our own, to get into trouble like this," said Grover Ozmun as he left the Whole Foods store. "It's greed," added his wife, Sheral. The retired couple didn't know that Chesapeake owns the land on which the shopping center sits.
Across the street, the company's Silicon Valley-style campus embodies Mr. McClendon's drive to transform Oklahoma City. The campus, which holds more than 4,600 workers, has four restaurants, including one called Fuel where patrons order on touch-screen monitors; a 72,000-square-foot gym featuring basketball courts and a rock-climbing wall; and an on-site dermatologist who provides Botox treatments, though the company stressed that it doesn't subsidize that service.
Some Oklahoma City nonprofits recently held a news conference to support their benefactor as news of his troubles spread. One participant likened Mr. McClendon to George Bailey, the inspirational Jimmy Stewart character in the movie classic "It's a Wonderful Life."
Debby Hampton, the head of the United Way of Central Oklahoma, said Mr. McClendon started a culture of giving at his company that has led other executives to make generous donations and many younger workers to volunteer time tutoring students and helping communities recover from Oklahoma's frequent tornadoes. Of the chapter's record $22 million in donations last year, $5.5 million came from Chesapeake employees.
"We have had companies leave, and we weather those storms, but Chesapeake is our largest donor so we do worry," said Ms. Hampton, who acknowledged that the nonprofits conferred with Chesapeake before holding the news conference, calling it a "mutual idea."
Roy Williams, president of the Greater Oklahoma City Chamber of Commerce, cited the rowing district as an example of how Mr. McClendon has contributed ideas as well as cash. Civic leaders were struggling with what to do with a fetid leg of the Canadian River that had been rerouted to prevent flooding decades earlier by the U.S. Army Corps of Engineers.
The city developed a plan to build three dams and turn a seven-mile stretch into a waterfront district called the Oklahoma River. It's now a training facility for rowers and kayakers, and includes a $3.5 million community boathouse that Mr. McClendon helped pay for and a $7 million tower at the finish line donated by Chesapeake.
"You'd be naive to not be concerned about it," Mr. Williams said of Chesapeake's problems. "But we are used to ups and downs in that industry sector."
Write to Miguel Bustillo at
miguel.bustillo@wsj.com 
