The Buzz

All markets and investing news all the time

Chesapeake sells more assets. Market shrugs.

September 12, 2012: 11:44 AM ET

It has been a tough year for Chesapeake Energy CEO Aubrey McClendon, And even though the company just announced sales of assets for nearly $7 billion, investors are still not pleased.

Shares of embattled natural gas company Chesapeake Energy (CHK) have bounced back sharply in the past few months. The stock is up more than 50% from its 52-week low in mid-May, a time when investors were very nervous about low natural gas prices and the backlash facing a controversial company program that allowed CEO Aubrey McClendon to borrow money by using stakes in Chesapeake wells as collateral.

One reason for the excitement is that the company has been busy unloading assets to raise capital and pare down debt. But investors mostly yawned Wednesday after the company said it was selling portions of land and infrastructure in West Texas for nearly $7 billion to several groups, including oil giants Chevron (CVX) and Royal Dutch Shell (RDS-A).

Shares of Chesapeake rose more than 2% at the opening bell but they quickly slipped into the red and were down nearly 2% by late morning.

Traders on StockTwits were divided about the merits of the deal. Some wondered why the market didn't view it more favorably.

CapCube: $CHK sale brings 2012 total to $11.6 B (out of $14 B planned) - and @jimcrameron TV criticizing the sale .. too funny

At first blush, it is odd that investors weren't more excited. It's clear that Chesapeake needs to cut its massive debt load in order to remain viable. What's more, some think that the sale signals that things may be turning up for natural gas prices.

Jason100: $UNG I'm inclined to think that this morning's $CHK news confirms the bottom in$NG_F prices.

Still, skeptics astutely point out that Chesapeake may have been forced into fire sale mode because of how low gas prices were. Even though the worst may be over with the McClendon scandal now that Chesapeake bowed to pressure from big investors Carl Icahn and Southeastern Asset Management and agreed to strip McClendon of his chairman title, there are legitimate worries that Chesapeake may be selling too much of a good thing.

NAPManagement: Sorry but $CHK is gutting itself. They are selling all the best assets and leaving themselves with nothing. Then what?

DinaMoeHumm: $CHK Selling assets again? Aubrey get another margin call?

Ouch. Another StockTwits user summed up the situation pretty succinctly.

justkyle: $CHK another example how everyone makes money except the investor

Join the Conversation
Fear & Greed
Sponsored by
About This Author
Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Move of the Day! Meg Whitman doing good job with lousy hand. But $HPQ up 4%? Sales must improve to justify more upside, right?
Powered by WordPress.com VIP.
Follow

Get every new post delivered to your Inbox.

Join 242 other followers