Icahn's Harsh Words For Chesapeake Energy Light on New Ideas (Update 1)

That's why Icahn's 7.6% share stake in Chesapeake Energy, which makes him the company's third largest shareholder, is slightly confounding. Aside from board seats, the legendary activist's statements about Chesapeake at times sound similar to the self-promotional talk with which CEO Aubrey McClendon, who co-founded Chesapeake on 1989, is associated.

"We believe that Chesapeake has collected some of the best oil and gas assets in the world," writes Icahn in his letter, echoing a long-used refrain of McClendon in earnings releases and on analyst calls.

"The stock price suffers because of the enormous risk associated with an ever changing business strategy, enormous capital funding gap, poor governance, and unchecked risk taking," Icahn writes in more contentious language, adding, "What is important is that this pernicious funding gap, which we believe this board has created, must be filled."

Already, as Icahn talks up board change, Chesapeake Energy is separately putting new oil and gas assets up for sale to meet its funding needs.

On Wednesday, Chesapeake Energy listed 57,000 acres for sale in the Woodbine shale play of East Texas, according to a prospectus from energy asset M&A boutique Meagher Energy Advisors, said its president Matthew Meagher. Last week, Chesapeake listed a prospectus for 503,863 of net acres for sale in the DJ Basin of the Niobrara shale of Colorado and Wyoming on Meagher's Web site.

Icahn argues that shareholder representation could help instill discipline and a more singular focus on asset sales.

But Chesapeake's problem and its still sub-$20 share price -- on Wednesday shares hovered at the $16 mark where shares rested before Icahn announced his stake on Friday afternoon -- is not about whether McClendon is serious about asset sales, but about whether the company can execute them quickly enough to meet 2012 funding needs amid falling commodity prices, uncertain debt financing flexibility, and weakened leverage to command high prices in a buyer's market.