T. Boone Pickens, the billionaire Texas hedge-fund manager, sold almost half a million shares in Chesapeake Energy during the past six weeks, as the stock fell 24 percent on investor reaction to natural-gas prices and potential management conflicts.
Pickens’s BP Capital Management sold 71,000 shares, or 12 percent of its stake in Chesapeake, in the first three months of the year, according to a filing Tuesday with the Securities & Exchange Commission. The remaining stake, 499,055 shares, was sold by May 10, when Pickens said he no longer owned Chesapeake, once the third-largest of BP Capital’s U.S. equity holdings.
“We got out of the natural-gas stocks and Chesapeake was one of them,” Pickens said on CNBC Wednesday. Pickens, who has called Chesapeake Chief Executive Officer Aubrey McClendon a friend, said the company will survive. “Aubrey’s a visionary. He gets out over his skis sometimes, but don’t bet against Aubrey.”
Despite his statement that his Dallas-based fund has exited gas stocks, BP Capital added 936,000 shares in Canadian gas producer Encana during the first three months of the year. Pickens, 83, has expressed positive views on gas during the past month, telling CNBC on April 30 he’s buying “nothing but oil and gas” and a day later saying to CNN that gas prices have “bottomed.”
The fund, which invests in energy equities, has also boosted its stake in U.S. gas company Devon Energy, according to Tuesday’s filing.
Jay Rosser, a spokesman for Pickens, declined to comment Tuesday on the fund’s holdings. Pickens said May 10 he was exiting Chesapeake “not out of concern about the company, but amid general concerns about how the natural-gas sector was faring,” Rosser said.
Chesapeake’s shares have dropped as gas prices reached 10- year lows in New York and after the company said it was reviewing McClendon’s financial transactions. The CEO and co- founder got personal loans using his stake in wells from companies that were also investing in Oklahoma City-based Chesapeake.
The second-largest U.S. gas producer said on May 1 that it may run out of cash to fund its drilling operations as soon as next year. Standard & Poor’s cut Chesapeake’s credit rating yesterday, citing “less than adequate liquidity.”
Chesapeake said Tuesday it increased an unsecured loan from Goldman Sachs and Jefferies to $4 billion from $3 billion. The loan is meant as a bridge while Chesapeake raises billions in asset sales and joint ventures this year, McClendon has said.
BP Capital maintained its holding of gas companies SandRidge Energy and Gastar Exploration in the first three months of the year, according to the filing. The fund added stakes in power companies Exelon, NRG Energy and Calpine and sold its shares in Exxon Mobil, the largest U.S. gas producer, and McMoRan Exploration.