Chesapeake Energy Shareholders: Meet Your Would-Be Savior
Meanwhile, in Chesapeake Energy's first quarter earnings, the oil and gas company reported a top and bottom line miss, but those weren't even the major issues for investors who sent the company's shares down by 14.5% on Wednesday. The company's spending guidance rose while its cash flow guidance declined, adecade-low natural gas pricing continues to heighten its liquidity risk, and the company's all-important liquids production guidance decreased while its natural gas production guidance went up.
"We believe that increased spending, coupled with a diminished discretionary cash flow outlook from less liquids revenue
On an analyst call Wednesday, CEO McClendon said that it needs gas prices to rise to $5 a thousand cubic feet by 2014 from present levels near $2 if it were to meet its goal of having $7 billion in cash. In a meantime, the company will look to sell $20 billion in assets to pay down debts and repair its finances.
Chesapeake shares closed at a 52-week low. The drop puts shares down nearly 25% and 50% in 2012 and the past 12 months, respectively. Since the start of 2011, the value of Southeastern Asset Management's Chesapeake Energy stake has fallen from above $2 billion to just above $1.5 billion, according to Bloomberg.
"I'm deeply sorry for all of the distractions of the past two weeks," said McClendon, who co-founded Chesapeake in 1989, on an analyst call Wednesday.
Hawkin's fund, which counts Dell (DELL) , Chesapeake Energy, Loews (L) , DirecTV (DTV) and Disney (DIS) as its five biggest holdings among 13 investments over $1 billion, according to Bloomberg data, has been involved in recent hotly contested corporate moves like Martin Marietta's (MLM) $5 billion offer for Vulcan Materials (VMC) . Vulcan has voted against the offer and is moving to slow the bid in courts so ahead of its June 1 shareholder meeting, where a hostile slate of Martin Marietta directors will seek board seats.