Last week, Activist investor Carl Icahn has increased his stake in Chesapeake Energy Corporation(NYSE:CHK), a company which is one of nation’s largest producers of natural gas. As per the regulatory filing, Icahn’s current holding in the company roses to 8.98 percent which is more than the holding of 7.6 percent which Icahn currently holds in Oklahoma City Company.
Carl Icahn after his first investment in Chesapeake Energy Corp in the month of May has pushed for many changes which includes removing CEO Aubrey McClendon of the chairmanship. Chesapeake Energy has been in news for its corporate governance issues and historical low natural gas prices which has not gone well with the investors. Moreover reports of CEO McClendon accepting personal loan from a company doing business with Chesapeake has angered investors further. Finally in June four new directors were appointed by Chesapeake Energy Corp as per choice of company’s largest investors.
The change in guard has shown some improvement as company share prices has risen by 20 percent from the point where company lost more than half of its market value in the three months leading up to Icahn’s initial investment.
However stock prices again decreased after company reported a third-quarter loss which is due low natural gas price and one-time charges.The25 percent drop in revenue in third quarter is a concern for the company. Chesapeake has disclosed its plan to concentrate on oil and gas liquids which might lead to decline in natural gas production by 7 percent in next year. The company predicts liquids production would increase 29 percent in 2013.
Chesapeake has also announced its intention of selling huge portions of its land and infrastructure which will help to pay off huge debts it has incurred while investing in land and other assets in recent years.