"Our motto is to always overpay," says Aubrey McClendon, chairman and chief executive of Chesapeake Energy Corp., one of the industry's most active asset buyers. "Investors always ask me, 'What does it feel like to overpay?' I always say, given their tone of voice, 'It doesn't feel so good.' Truthfully, our margins get better every year." McClendon spoke at the IPAA's annual meeting in Houston recently. He quipped, "Last night, I got back to my room at about 2 a.m....I went through some e-mails, and there's no telling what I did. So if I bought you, I probably overpaid. Congratulations." Important in Chesapeake's business strategy of regional consolidation and working with Pimbies or "Please, in my backyard" land-owners rather than dealing with Nimbies (not in my backyard) land-owners, McClendon added. After closing the pending $2.2-billion acquisition of Columbia Natural Resources, Chesapeake will be the fifth-largest gas producer in the U.S. As for the "graying of the industry," McClendon has found a way to keep the talent at Chesapeake young. In response to a rumor that he offered jobs to every petroleum engineering graduate from the University of Oklahoma, McClendon answered, "Well, there were only six, so we really knocked ourselves out." David Trice, president and chief executive of Newfield Exploration Co., said at the conference that, though compensation is critical in attracting and keeping young employees, it comes down to culture. "We all are going to be able to compete for talent dollar-wise," he said. "It has to be something deeper. We have a culture built on communication. We treat employees like owners and we allow them to have a sense of ownership in their projects." McClendon admits that it was difficult at one time to draw young graduates to Chesapeake's hometown, Oklahoma City, but the success of other Oklahoma City-based companies, such as Kerr-McGee Corp. and Devon Energy Corp., has helped attract new talent to the city. For more on this, see the December issue of Oil and Gas Investor. For a subscription, call 713-993-9320,ext. 126.
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