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OKLAHOMA CITY - At the 100-acre headquarters of Chesapeake Energy Corp., cranes continue to erect new glass-walled buildings and the company is seeking a sushi chef for what will be the fifth restaurant on its campus.
But the buzz here is that the nation's second-biggest natural-gas producer is cutting back on spending. And that worries some of its 5,000 employees here, as well as local government officials, nonprofit leaders and even some sports fans, all of whom have benefited from the largess of Chesapeake and its co-founder and chief executive, Aubrey McClendon.
Mr. McClendon, a native son of Oklahoma City, was ousted last week by directors insisting on financial austerity. His departure follows Chesapeake's decision to cut in half its charitable contributions, which totaled more than $56 million in 2010 and 2011 combined, within three years and to chop $190 million in overhead within 24 months.
The natural-gas company's finances have suffered from low prices for natural gas, compounded by its heavy spending to find and pump greater amounts of more-lucrative oil.
The company plans to sell assets to raise at least $5 billion this year to pay for its drilling and to reduce debt, which at the end of September exceeded the company's current $13 billion market capitalization.
Directors of local nonprofits, from food banks to arts organizations, that have received donations for years from Chesapeake and from Mr. McClendon say they are worried.
"It's hard not be concerned," said Lori Dickinson, president of the Foundation for Oklahoma City Public Schools, which doles out school supplies and pays for programs for city schoolchildren. Chesapeake accounts for 15% of its budget.
Energy companies, including Devon Energy Corp. (DVN), SandRidge Energy Inc. (SD) and Continental Resources Inc. (CLR), have helped drive an economic expansion here in recent years. The companies have recruited workers from across the country and have built big headquarters. Unemployment in the metro area was 4.7% in December, compared with the national average of 7.8%.
But Chesapeake has taken a leading role in transforming a city that used to be dismissed as a cow town. Its name is on the arena that is home to its professional basketball team, the Thunder, a major source of civic pride. The team reached the finals of the National Basketball Association's championship last year, losing to the Miami Heat.
Mr. McClendon, who helped bring the team from Seattle and owns 19% of it, has pledged to donate to Oklahoma schools the amount of fees Chesapeake pays for naming rights multiplied by his ownership stake in the team for at least this year and last.
"Oklahoma City's national and international perception has changed because of the Thunder," said Jim Couch, the city manager. A framed team jersey, autographed by the players, hangs on the wood paneling of his office.
"It's been pretty public that they're going to shed some assets," Mr. Couch said of Chesapeake. "How that goes and what means for Oklahoma City, I don't know."
Michael Kehs, a Chesapeake spokesman, said: "Our commitment to being a helpful and engaged corporate citizen will continue." Chesapeake employees will continue to volunteer their time local organizations, and the corporation will make financial and in-kind contributions, he added. A spokesman for Mr. McClendon declined to comment.
Mr. McClendon has his own financial issues to contend with. He owed at least $846 million in loans at the end of 2011, according to a regulatory filing in April.
He used most of the proceeds to participate in a perk that allows him to acquire a small stake in every well Chesapeake drills as long as he pays his share of the costs, which totaled $457 million in 2011.
The perk sparked controversy last year after disclosures that Mr. McClendon borrowed from firms that invested in Chesapeake, and he and the board of directors agreed to end the practice next year.
A board review hasn't found any misconduct, the company said last week.
Despite an exit package of almost $50 million, to be paid out over four years, Mr. McClendon's cash needs are likely to remain high. He is again investing in the company's new wells this year. A state filing in January indicated that he and his wife have repaid a 2009 loan from George Kaiser, a Tulsa oil magnate. Mr. McClendon has pledged as loan collateral many of his assets, including a wine collection and a warehouse full of old gasoline pumps and oil memorabilia, and has plans to develop lakefront property in Michigan.
Mr. McClendon's departure, coupled with Chesapeake's spending cuts, have prompted anxiety among some employees, which Chairman Archie Dunham moved to address last week. He told employees in an email that the board isn't planning to eliminate its child-care facility, shut down its 72,000-square-foot gym or sell its campus restaurants.
Except for a recent increase in the gym-membership fee, which the company won't divulge the size of, the flagship campus isn't showing signs of a financial squeeze.
Modern, glass-walled offices are going up next to Chesapeake's red-brick, Georgian-style buildings and will house employees currently working elsewhere in the city. A fifth restaurant called Skyline, will be perched on the top floor and offer a view of downtown six miles away. Chesapeake has posted job openings for a sushi chef and cooks to serve Mongolian and Italian offerings.
But some members of Chesapeake's board, controlled since June by directors nominated by its largest shareholders, have raised eyebrows at the company's amenities. Chesapeake, however, has long argued that they are key to attracting talented employees and maximizing productivity.
Some Thunder fans have speculated Chesapeake's spending diet could hurt the basketball team it sponsors. But the company has a sponsorship agreement that runs for at least a decade under which it pays between $6 million and $7 million a year in sponsorship fees and naming rights to the Chesapeake Energy Arena.
The team is a big hit with Oklahomans like Gary May, who drove an hour to see the Thunder play the Dallas Mavericks here on Monday. The 57-year-old contract driller pumped his fist as the hometown team scored, en route to a 112-91 victory.
Mr. May said he is sorry to see Mr. McClendon leave Chesapeake. But taking in the glitz of the arena, and thinking of his glimpses of Chesapeake's sprawling campus, he marveled at all the funds that went to things other than producing oil and gas.
"There's probably a lot of money spent where it didn't need to be spent," he said.
Copyright (c) 2012 Dow Jones & Company, Inc.
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