Why McClendon's Ouster At Chesapeake Energy Is Bearish
By Dana Blankenhorn: Shares in Chesapeake Energy (CHK) jumped nearly 10% today on news that Aubrey McClendon is out as CEO amid a probe by the SEC into his dealings with the company.
This has to be one of the dumbest moves up in a stock I've seen in many a year.
Fact is, McClendon WAS Chesapeake. Who is going to deal with the company's weak cash flow and its declining credit rating with him gone?The story here is that McClendon bet big on natural gas prices remaining strong and lost the bet. It's not much different from what happened with Jon Corzine and MF Global - only the bet was different. The recent rise in natural gas prices - to $2.40/mcf on the futures market and $2.11 on the spot - are not enough to turn the financial situation around. Most industry experts figure the industry needs a price of $3.50/mcfComplete Story »