Aubrey McClendon’s stock advice
Aubrey McClendon says to buy Chesapeake. Whadya expect from a guy who owns $1.5 billion worth of the stock?
McClendon, chairman of Oklahoma City-based Chesapeake Energy Corp. appeared Monday on CNBC to discuss the recent decline in this company’s stock price. The drop mirrored a decrease in the price of natural gas, of which Chesapeake is one of the nation’s biggest producers.
Chesapeake Energy’s stock price has tracked the price of natural gas over the past couple of months.
McClendon pointed out that Chesapeake has hedged all of its natural gas production through 2009, and the lion’s share of its 2010 production. Most of those hedges are well above the current market price.
Those hedges offer protection for shareholders while the recent dips in the stock prices of Chesapeake and other producers offer something else, McClendon said — an opportunity.
“It gives investors an opportunity to build positions in E&P (exploration and production) stocks that they might not have had the opportunity to do when prices were higher,” he said.
The company’s hedging activities don’t reflect McClendon’s opinions about the future of natural gas prices, which he expects will head upward.
“I’m very very bullish about gas demand going forward,” McClendon said. “In the meantime, I always want to run scared as a company and that’s why we hedge, to make sure that we provide a downside risk to our shareholders through our hedging program.”
Don Mecoy
Business Writer
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