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Adam Wilmoth: CEO carousel continues to turn

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Chaparral Energy names new CEO, directors

Chaparral Energy's headquarters is shown at 701 Cedar Lake Blvd. in Oklahoma City. [OKLAHOMAN ARCHIVES]
Chaparral Energy's headquarters is shown at 701 Cedar Lake Blvd. in Oklahoma City. [OKLAHOMAN ARCHIVES]

It's the time of year when we often hear about coaching carousels, with many college and pro football coaches finding themselves out of a job or being recruited to another program.

This year, we're seeing a similar phenomenon in Oklahoma City's oil and natural gas industry as three local companies have announced new CEOs in less than two weeks.

Chaparral Energy Inc. this week said Charles "Chuck" Duginski has been named CEO and a director, replacing K. Earl Reynolds, who joined the company in 2011 and served as CEO since January 2017.

Reynolds led Chaparral out of bankruptcy reorganization and guided the company through a strategic transformation, selling its carbon dioxide recovery operations and redefining Chaparral as a pure-play producer in Oklahoma's STACK field.

Along with Duginski, Chaparral this week also announced the resignation of Matthew Cabell as a director, replaced by Michael Kuharski and Mark "Mac" McFarland in a move that expanded the board to eight members.

In regulatory filings with the U.S. Securities and Exchange Commission, Chaparral said the changes were made as conditions of the company's amended agreement with Strategic Value Partners, which now controls 30% of the company's stock, up from 16.8% in June 2018.

The filing also states that Reynolds' resignation "was not the result of any disagreement with the comapny on any matter relating to the company's operations, policies or practices." A separation agreement also filed with the SEC states that Reynolds will receive about $1.7 million in severance, depending on the calculation of his 2019 annual bonus.

Chaparral's new CEO has substantial experience in Oklahoma City. He previously has been an executive at Tapstone Energy LLC, Echo Energy, Continental Resources Inc. and Chesapeake Energy Corp.

Chaparral stock surged following Monday's announcement. The stock closed at $1.59 on Friday, up 50 cents, or 46% from the closing price one week earlier.

Chaparral's announcement followed 10 days after SandRidge Energy Inc. announced that John P. Suter has been named interim CEO, replacing Paul D. McKinney, who held the job since January. Suter became SandRidge's fourth top executive in less than two years.

Like Chaparral's Duginski, Suter has made the rounds on the Oklahoma City energy carousel, previously serving as an executive at Continental Resources, Chesapeake Energy and American Energy Partners.

SandRidge stated in regulatory filings that McKinney resigned from the comapny and received a lump sum cash payment of $300,000, plus immediate vesting of all outstanding stock options.

SandRidge shares closed at $4.11 on Friday, up 16 cents, or 4%, since Dec. 12 before the company announced the leadership change.

Tulsa money manager Jake Dollarhide said the shakeups at SandRidge and Chaparral reflect the broader instability of the oil and natural gas industry and Wall Street's growing concern about the sector.

"The market has oil and gas fatigue," said Dollarhide, CEO of Longbow Asset Management Co. "Even though the price of oil has doubled from its recent low, the oil and gas market is like the boy who cried wolf — no one is taking it seriously or giving it a chance at success."

When stock prices plummet and investors express concern, board members often look to the top for changes, he said.

"A CEO is just like a quarterback or a starting pitcher," Dollarhide said. "When a company does well, the CEO gets much more credit than is deserved. But when the stock underperforms, the CEO gets much more blame than is deserved."

But not all CEO changes are in response to problems, even in today's oil patch. Ideally, CEO successions allow long-term executives to move away from the day-to-day decision making while allowing other executives to take on more responsibility.

That appears to be the case at Continental Resources, where founder and majority shareholder Harold Hamm announced earlier this month he is stepping aside as CEO but will remain executive chairman.

Hamm is succeeded as CEO by William Berry, a ConocoPhillips executive who has been a Continental Resources director since 2014. Continental Resources President Jack Stark also will take on the additional role of chief operating officer.

Continental Resources shares closed at $33.94 on Friday, up 89 cents, or 2.7%, from Dec. 10, before the leadership changes were announced.

Adam Wilmoth

Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector.... Read more ›

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