How Chesapeake Energy Can Be Saved (From Itself): Opinion
In retrospect, this frenzied trading activity in Chesapeake shares was the calm before the storm. The fact that Icahn's investment led to such a sharp reaction showed just how frustrated Chesapeake shareholders had become and how ripe the company was for some activist action.
Certainly, that ripeness has only intensified as the shares have dropped to an even lower mark than when Icahn invested in the low $20s, and the argument about the underlying value of the company's "great collection of assets" still attracts plenty of attention.
For those shareholders who were betting that Icahn was in it for one of his typical long activist campaigns, and who didn't sell out when Chesapeake shares hit $35, they could sorely use another SEC filing from Icahn revealing a new stake in Chesapeake.
Nevertheless, another quickie profit for Icahn -- and Icahn can't be relied on for more than that, as he tends to monitor his investment with a watch as opposed to the calendar -- may not solve the problems for Chesapeake or its shareholders.
Drastic action may be required...
Idea No. 5: Exxon Mobil creates hedge funds to short Chesapeake Energy and buy up all of its debt
Big Oil villain Exxon Mobil is already considered to be among the most secretive companies in the world, operating with all the influence of a sovereign nation. Therefore, maybe it wouldn't be too much of a stretch for Exxon to create hedge funds purely for the purpose of shorting Chesapeake to the hilt. Exxon could simultaneously buy up all of Chesapeake's debt and ultimately send the company into bankruptcy so it can pick up, and/or pick apart the pieces. This could be done either in tandem with Raymond being named independent chairman of Chesapeake, or not.
While this idea is meant to be tongue in cheek, it's also really just a logical extension of Exxon's existing strategy, and a trading vehicle to complement its nuts-and-bolts approach to oil and gas sector production.
As TheStreet has previously written, for all of Chesapeake's attempts early this year to slow production as a way to rescue natural gas pricing, the single biggest impediment to the plan was Exxon Mobil's what-me-worry attitude about drilling no matter how low natural gas prices sink. In the end, more bankrupt natural gas companies only creates more cheap acquisitions for Exxon Mobil.