Asset sales and scandal aside, Chesapeake Energy (NYSE:CHK) still is the second-largest pure natural gas player in the United States — and that could make it a screaming buy if Pickens’ call turns out to be correct.
The firm’s second-quarter production increased 25% year-over-year with natural gas comprising 79% of that total volume. Chesapeake also increased its exposure to various liquids-rich plays as prices remain weak.
Perhaps more importantly, the company’s aggressive divestiture program seems to be bearing fruit as it has been able to reduce its debt burden. This high debt was mainly caused by persistently low natural gas prices and the rising capital cost of drilling. During the first half of 2012, Chesapeake sold $4.7 billion worth of assets and expects to end its third quarter with $7 billion worth of asset divestitures.
Shares of the natural gas player can be had for dirt-cheap P/E of less than 7, and CHK yields a respectable 1.9% in dividends. Given the bullish prediction for natural gas prices and the fact that it’s heavily tied to the fuel, Chesapeake finally might be a bargain for investors.