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The late Aubrey McClendon thrived on risk.
John Raymond, his biggest backer, not quite as much.
But with McClendon gone, the price of oil so low and debts piling up, Raymond could be in a tight spot.
McClendon, who died March 2 in a car crash, had recently been ousted from Chesapeake Energy Corp. when he invited a handful of private equity firms to bankroll what he called "the second half of my career."
The terms outlined in the April 2013 pitch, obtained by Bloomberg, were so favorable to McClendon, however, that most investors turned him down, according to people familiar with the response.
After some haggling, one of the few that accepted was Energy & Minerals Group, the firm led by Raymond, son of the former Exxon Mobil Chief Executive Lee Raymond.
Though there's still time to salvage the bets, much if not all of the estimated $2.6 billion that an EMG fund put into a half-dozen enterprises set up by McClendon's American Energy Partners LP could be lost, according to Carin Dehne-Kiley, a Standard & Poor's credit analyst, who tracks three of the four biggest ventures.
Side bets by EMG investors added hundreds of millions of dollars to that figure, said two people familiar with the matter who asked not to be identified because the information is confidential. That, too, is at risk.
"There's a good chance these guys will default in the next 12 months," barring an oil-price rebound, Dehne-Kiley said of the EMG-backed American Energy Partners ventures that she tracks.
Dehne-Kiley, who has scrutinized the finances, said the ventures produce too little cash flow to support their current level of debt over the long run. EMG could take steps such as injecting more money to brace them until commodity prices recover, she said.
Hours after it was revealed that McClendon, who was 56 years old, was charged with rigging bids for oil and natural gas leases, Raymond told investors in a letter that EMG would suspend future investments with McClendon and American Energy Partners.
Spokesmen for EMG and American Energy Partners declined to comment.
EMG and its investors provided the bulk of the equity for McClendon to go on a buying tear that lasted from mid-2013 to early 2015.
Raymond and McClendon's firms bought up drilling rights to tens of thousands of acres around the country — in Texas's Permian Basin, Oklahoma's Woodford Shale and the Utica and Marcellus shale deposits in Ohio and West Virginia — that they hoped to use or sell.
EMG got first dibs on every deal McClendon proposed, according to people familiar with the arrangement. EMG would be majority owner, with McClendon and another private equity firm, First Reserve Corp., owning a fractional share.
The acquired businesses collectively took on billions of dollars of debt, according to public documents.
The timing couldn't have been worse.
Starting in 2014, a global supply glut hammered oil prices, turning into a rout in which crude lost more than 60 percent. Many explorers and producers sank into insolvency.
Because McClendon's ventures were privately financed and don't report earnings, the toll on EMG's investment portfolio isn't easy to pin down.
Yet based on the ventures' debt prices, the damage may be deep.
The platforms' secured senior loans trade far below their issue price, ranging from a high of 77 cents on the dollar for the Permian second-lien loans to 4 cents on the dollar for Marcellus second-liens, according to three people who track debt prices of nonpublic energy companies. Secured debt has first claim to a company's value, outranking the equity held by EMG.
Among those on the hook are college endowments, charitable foundations and state employee retirement funds for Arizona, Florida, Minnesota and Oregon, according to data compiled by Bloomberg.
They invested in a $4.1 billion EMG fund that staked most of McClendon's deals.
As of Sept. 30, EMG, which is trying to raise a new fund, saw things differently.
The firm valued its stake in Woodford — whose second-lien loans traded at 15 cents on the dollar last week — at 80 percent of investment cost, according to a confidential memo to clients seen by Bloomberg.
By the firm's reckoning, its Permian bet was worth precisely what it paid, and its combined stake in Utica and Marcellus — ventures that were merged last year into a new company called Ascent Resources — was up 25 percent.
Its year-end valuations, which EMG declined to provide, could be as much as 25 percent lower, a person familiar with the matter said on condition of anonymity.
McClendon died in his Oklahoma City hometown a day after being charged in a federal indictment. He was accused of bid-rigging from late 2007 through 2012, when he led Chesapeake Energy, the nation's second-largest natural gas producer.
The free-spending McClendon was under suspicion for various conflicts of interest in 2013, when he left Chesapeake, the company he co-founded more than 20 years ago.
What scared off other investors who received his April 2013 solicitation wasn't McClendon's checkered record so much as his insistence on a king-sized "carry," or share of deal profits, the people with direct knowledge said.
His take would start at 30 percent of gains after an investment had achieved an 8 percent annual return, then climb as high as 60 percent as returns rose. That's compared with the flat 20 percent of profits that private equity managers typically charge.
EMG persuaded McClendon to reduce his take, according to a person with knowledge of the discussions who requested anonymity because they were private.
The existing investments may still have a shot at profitability if oil prices rebound, said S&P's Dehne-Kiley.
"The one wild card is what EMG and First Reserve are planning," she said. "They have deeper pockets and could feasibly support the companies for another couple of years if they wanted to."
The operations have breathing room in the form of cash reserves and hedging contracts that blunt the impact of low oil prices, which have begun to ratchet back upward. In the Permian, cost cuts may help ease the crunch. But most of the hedges roll off this year, which will make it harder for the companies to outrun their debt.
Just last week EMG and other investors agreed to pump an additional $500 million of equity into their biggest investment, Ascent, to pay down debt. That brought to $712 million the equity Ascent has raised in 2016 to shore up its finances.
"This will certainly help Ascent," Dehne-Kiley said.
Stephen Sexauer, chief investment officer of the San Diego County Employees Retirement Association and an EMG client, said "the big story" is the price of oil, which surged above $40 a barrel in New York on Thursday for the first time since December.
"EMG still has capital to put to work, and they'll be able to buy assets cheaper," he said. "How they invest it will be a measure of how good they really are."