Chesapeake CEO Goes Shopping for New Investors in Asia

Chesapeake Energy’s CEO Aubrey McClendon went on a 14-day Asian trip last month looking for new investors for his company.

McClendon met energy executives, government ministers and fund managers during his Feb. 4-18 tour through cities that included Seoul, Tokyo, Beijing, Hong Kong, New Delhi and Abu Dhabi. The meetings included existing investors in Chesapeake and potential future stakeholders, McClendon said.

“They all want to be here,” McClendon said…“Nobody over there believes for a second that five years from now we’ll have sub-$3 gas.”

“We are presently owned by a group of investors who don’t think gas prices will ever go above $4,” McClendon, 52, said in an interview in Oklahoma City, where Chesapeake is based. “I want to be owned by investors who live in a part of the world that believes gas prices will never go below $10.”*

McClendon has a couple of strategies to ride out the current low commodity price of natural gas. One of those strategies is to sell $17 billion in assets over the next two years:

McClendon plans to sell more than $17 billion in oil fields and other assets by the end of 2013 to cover a cash-flow gap aggravated by plunging gas prices. McClendon, who said he held 52 meetings in Asia, didn’t comment on pledges of new investment.

This year, divesting holdings in the Permian Basin of west Texas and New Mexico will generate at least $5 billion, he said during the interview.*

He’s also betting that natural gas exports will ramp up soon.

McClendon…is counting on energy companies building the U.S.’s first export capacity at ports in the lower 48 states, allowing his investors to ship U.S. gas to more expensive Asian markets. His assumption was seconded by Exxon CEO Rex Tillerson, who told analysts four days ago he had “no doubt” North America will develop an export market, reversing Exxon’s previous skepticism.*

McClendon believes that Chesapeake is in a great position to attract new investment, and he thinks the perspective from investors in Asia is the right one:

“We have the assets they want, and we need their money,” he said in the March 6 interview, referring to Asian investors. “They don’t say ‘You’ve got $2 billion too much debt.’ They say ‘You’ve got what the world wants, and someday gas prices are going to be unlocked from the jail cell where they are today, and you’re going to be the biggest winner.’”*

*The Washington Post/Bloomberg (Mar 12, 2012) – Chesapeake CEO Courts Asians for $100 Billion Resource: Energy