Chesapeake Energy (CHK) Falls 8% on Yet Another Scandal

Chesapeake Energy (NYSE: CHK) just can’t seem to get out of its own way.

The natural gas giant saw its shares tumble another 8.5% today after a Reuters report revealed that Chesapeake Energy and Canadian natural gas company Encana (NYSE: ECA) may have conspired to hold down the price of a valuable piece of land in Michigan that the two companies were plotting to buy. If the two companies were in fact guilty of price fixing, they could find themselves charged with violating antitrust laws.

Encana shares were down 4.1% after the report surfaced.

For Chesapeake Energy, this is just the latest in a series of scandals that have inflicted serious damage to the company’s stock. First, shares were clobbered after it was revealed that the company took out a $4 billion loan from Goldman Sachs (NYSE: GS) to assist in its cash-flow problems.

Then the company got in more hot water after failing to disclose $1.4 billion in liabilities. Then, earlier this month, there was another report – again by Reuters – detailing the millions of dollars the company spent on the personal affairs of stakeholder Aubrey K. McClendon.

Add on top of it all the fact that Chesapeake’s profits went from $922 million in the third quarter of 2011 to a $28 million loss last quarter, and it’s easy to see why CHK shares have fallen 47% since the third week of March.

Even after today’s big losses, the stock is still $3.50 higher than its mid-May low. And the good news is that natural gas prices are slowly recovering from the decade low of $1.90 per MMBtu established back in April. Spot prices closed at $2.69 today, and are up 23% in the past 10 days.

But that won’t help Chesapeake Energy’s stock much if the company keeps finding itself embroiled in headline-grabbing scandals.

Published by Wyatt Investment Research at